## Facts

- Spring Valley Water Company, Inc. (Spring Valley), a private water supplier, provided water to most residents and many industrial users in Rockland County from multiple sources, including numerous wells and existing reservoirs and filtration facilities.
- In 1979, responding to growth and increasing water demand, Spring Valley filed a water-supply application with the New York State Department of Environmental Conservation (DEC) seeking approval to develop an additional water source.
- The proposed “Ambrey Pond” project contemplated a new reservoir on a several-hundred-acre site near Stony Point, along with related facilities such as a filtration plant and a diversion pipeline to convey water from a nearby brook to the reservoir.
- The project was intended to increase dependable supply (including improved peak-demand capacity) and to address (a) an existing deficit in a service area, (b) a near-term inability to meet peak demand across the system, and (c) a longer-term inability to meet average demand.
- During DEC’s administrative hearings, the need for additional supply was generally evident, but the parties disagreed sharply about when the need would become pressing enough to justify construction.
- The record also reflected environmental concerns, including that the project would likely result in the loss of an important trout habitat associated with the affected stream corridor.
- An administrative law judge recommended conditional approval rather than immediate authorization to build, and proposed a “triggering mechanism” tying issuance of construction permits to objective water-demand thresholds.
- DEC Commissioner Henry G. Williams adopted the conditional approval, including the trigger mechanism and environmental conditions, so that construction permits would not issue until demand showed the additional supply was imminently needed.
- Hudson River Fisherman’s Association and other petitioners commenced an Article 78 proceeding challenging the Commissioner’s determination as arbitrary and capricious, an unlawful delegation of authority to Spring Valley, and contrary to SEQRA and related environmental requirements.

## Issues

1. Whether the Commissioner’s conditional approval of the Ambrey Pond water-supply project, including the demand-based trigger mechanism for construction permits, was arbitrary and capricious or lacked a rational basis.
2. Whether conditioning construction permits on demand thresholds amounted to an unlawful delegation of governmental authority to Spring Valley.
3. Whether DEC violated SEQRA and related environmental duties by failing to sufficiently evaluate environmental impacts (including trout-habitat loss), alternatives, and conditions.

## Decision

- The Appellate Division, Third Department confirmed the Commissioner’s determination and dismissed the Article 78 petition.
- The court held the record supported DEC’s findings of need for additional peak-demand capacity and that the conditional approval with a demand-based trigger had a rational basis.
- The court rejected the delegation claim, concluding the trigger mechanism was a condition imposed by DEC using objective criteria, with DEC retaining control over whether and when permits would issue.
- The court upheld DEC’s SEQRA review, finding the agency identified environmental concerns, took the required “hard look,” and provided a reasoned explanation for its decision to approve the project subject to conditions.

## Legal Principles

- Under Article 78 review, a court does not substitute its judgment for an agency’s technical and planning determinations if the challenged determination has a rational basis in the record and is not arbitrary or capricious.
- An agency may approve a project conditionally and defer issuance of construction permits until objective, measurable criteria (such as demand levels) are met, where the agency sets the criteria and retains final authority over permit issuance.
- A permit condition tied to objective demand thresholds is not an unlawful delegation to a private applicant when the agency remains the decision-maker and the condition serves regulatory goals, including avoiding premature environmental harm.
- SEQRA is satisfied when the agency identifies the relevant areas of environmental concern, takes a “hard look” at impacts and alternatives, and makes a reasoned elaboration of the basis for its determination, including the use of conditions to address environmental effects.

## Conclusion

Hudson River Fisherman’s Association v. Williams upheld DEC’s conditional approval of Spring Valley’s Ambrey Pond water-supply project, ruling that the demand-based trigger for future construction permits was a lawful regulatory condition supported by the record, did not transfer governmental authority to the utility, and satisfied SEQRA because DEC evaluated the principal environmental concerns and explained its decision.


Hudson River Fisherman's Association v. Williams, 139 A.D.2d 234, 531 N.Y.S.2d 379 (1988)