Property Rights Foundation of America®
Founded 1994

by Carol W. LaGrasse, New York Property Rights Clearinghouse, Vol. 2, No. 3 (PRFA, Oct. 1995)

An Overview
The Brave, Hopeful Watershed Settlement

Mayor Rudy Guliani called the watershed agreement announced on November 2 "the historic water accord." Governor George Pataki was hailed by many parties as the mediator par excellence. He, in turn, hailed the new agreement for "reflecting a new spirit of partnership." A pleased U.S. Environmental Protection Agency Region 2 Administrator, Jeanne M. Fox, said the measures in the agreement "should ensure that the people's drinking water is safe."

If the City, State and Federal government extolled the perfection of the agreement, could it possibly cool the rancor of the towns in the mountains from which the City draws its water?

Apparently yes. The chief elected negotiator for the watershed towns, Perry W. Shelton, a councilman from the Town of Tompkins, gave the agreement his imprimatur.

"Forming a partnership with New York City to protect the watershed while at the same time protecting the rights of those who live in the watershed signals the dawning of a new day in the Catskills," effused Shelton, who is chairman of the Coalition of Watershed Towns.

From the watershed on the other side of the Hudson, Robert Bondi, Putnam County Executive, said the agreement took a "significant historical note in terms of the magnitude of the compromise which advances the interests of both upstate and downstate communities."

Environmentalists were equally effusive. Robert F. Kennedy, Jr., chief counsel for the environmental group Riverkeeper, hailed the agreement as "a framework for partnership."

The New York Times hailed Governor Pataki's council and close friend Michael C. Finnegan, New York City environmental Commissioner Marilyn Gelber, and Daniel A. Ruzow, of Whiteman, Osterman & Hanna, the lawyer for the coalition of communities west of the Hudson, for centering their kitchen table talks on "areas of agreement instead of areas of conflict," while munching on the blueberry muffins of Perry Shelton's wife.

The final areas hashed out in the last of a flurry of meetings, according to the New York Times, were the City's contribution of "$350 million to help upstate communities reduce pollution and spur economic growth," and the "watershed towns' consent to drop their long-standing lawsuits against the city and abide by the rules."

The City's objective, of saving from $4 billion to $8 billion for construction of a water filtration plant, was met with a pledge of a total of $1 billion for a number of purposes.

Big questions remain
Could there be any flaws with the watershed agreement? Participants merely allude to ironing out details.

But with respect to the interests of the watershed towns, the flaws of the "agreement in principle" are fundamental and legion.

The concessions by the watershed towns will permanently straightjacket their economic development and cast a pall over the future of the communities.

The City will acquire title to an additional 355,050 acres of land, more than triple its current holdings to approximately 10% of the land in the watershed. The acreage to be acquired by the city over 8 or more years is fully equivalent to the size of New York State's Catskill Forest Preserve holdings. This acquisition plan is supposedly softened by the City's agreement to proceed with willing sellers, forego eminent domain, and consult local municipalities before acquiring land in their borders.

The new acreage will not only enlarge the State and City holdings to 20% of the watershed area, but it will have a vastly more significant impact on economic activity than the State's forest preserve holdings because it will be focused on "environmentally significant" land. State holdings are disproportionately located at steeper, higher elevations. The City's new acquisitions will be along watercourses, broadly defined. The acreage sought will enable the City to acquire every undeveloped parcel or portion thereof within 300 foot or more of watercourses within its concern, as yet undefined, in addition to many partly developed parcels designated for acquisition. All of the lands will be effectively condemned by designation and the City's refusal to grant septic permits under its new power of micromanagement of that facet of all construction.

With its contribution capped at $300 million for land acquisition, the City's cost will supposedly not exceed $845 per acre, a far cry from the magnitude of $50 million to $200 million for 17,000 acres of Sterling Forest to the south, or $3,000 to $12,000 per acre.

It appears that the watershed towns are now in process of making one of the most important mistakes the Long Island Pine Barrens local interests made - working out an agreement in principle before "environmentally sensitive lands" are mapped. If the mapping is done beforehand, the agreement is dead.

Eminent domain has been ruled out by the agreement, reports claim, but the "Agreement in Principle" states:

"... the City will preserve the right to acquire property through eminent domain to remedy a demonstrated condition posing a threat to the public health safety, or welfare."

The City will control all development by acquiring power over all septic permits. The rights of real estate tax payers will be drastically compromised, with the City free to sue over assessments after an initial hiatus of only 20 years. The Towns' right to litigate will be sacrificed while environmental lawsuits are allowed to continue. The Towns will agree never to challenge the 110 pages of new State regulations in court, but environmentalists may sue to "enforce" environmental goals and collect major cash settlements as has become their practice.

SEQRA & the Watershed Agreement
The New York State Environmental Quality Review Law gives citizens broad protections against government environmental misjudgments that may negatively affect the public health and welfare. Under this law, the impact of increased open space government land-ownership under the agreement will have to be quantified and its effects predicted, the impact of limitation of all development in any town for commercial and industrial purposes to 50 acres analyzed, and the impact of the City's many additional powers over localities from PILOTS (payments in lieu of taxes) to septic approval analyzed.

One ominous facet to the agreement is that the Ad Hoc Environmental Coalition to be established is defined so that three of its five groups are wealthy land trusts, tax-exempt "non-profit" acquisition agents that have worked with the State DEC to acquire land often at substantial profit to themselves and exempt from public scrutiny. The groups afforded this special status are the Hudson Riverkeepers, New York Public Interest Research Group; and three groups involved in acquiring land for preservation and the government, Catskill Center for Conservation and Development, Open Space Institute and the Trust for Public Land.

Why did the towns cave in?
The shocking capitulation by the negotiators on behalf of the towns has several possible explanations centered in the negotiation technique and the package of benefits to be funded by the City.

One criticism is that the negotiation's secretiveness made the process immune from scrutiny and built up a psychology of anticipation so that anyone who criticizes the final product will strike an unattractive sour note.

Another potential fault along the way was in the watershed towns' selection of a law firm which often represents environmental litigants, rather than a firm known for successful private property rights litigation.

The cash benefits to the localities could have been a possible corrupting influence on the negotiators because the new entities to dish them out, the West of Hudson and East Hudson Advisory Committees, will naturally be accorded significant power and prestige. The settlement of the benefit package indeed was given credit for the final accord, along with the towns' concession to drop lawsuits.

After retaining one of the most prestigious law firms in New York, negotiating over a period of years, and investing hundreds of thousands of dollars in litigation, why are the towns considering an agreement with unfavorable written terms which relies heavily on the good faith of a City whose bad faith is demonstrated during the course of this entire century?
- Carol W. LaGrasse


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