/ a-constitutional-rebuttal-to-the-massena-p...
Assemblywoman Sarahana Shrestha's invocation of the Massena, New York, public power takeover as a model for her Hudson Valley Power Authority Act (A.10332/S.9534, introduced in 2024 and pending as of August 2025) overlooks critical distinctions in scale, process, and legal structure that render the analogy inapposite. While the Massena story, as detailed in Colin Kinniburgh's June 2023 article "How an Upstate Town Took Back Its Power," illustrates a successful municipal buyout after protracted negotiations and voter approvals, the proposed Act seeks a state-mandated acquisition of Central Hudson Gas & Electric Corporation by a newly created public benefit corporation, the Hudson Valley Power Authority (HVPA). This approach implicates profound constitutional concerns under Article I, Section 10 of the U.S. Constitution (the Contracts Clause), the precedent of Dartmouth College v. Woodward (1819), and Article I, Section 1 of the New York State Constitution. Moreover, issues of eminent domain, inverse condemnation, and regulatory conflicts further undermine the bill's viability, distinguishing it from Massena's voluntary settlement and exposing it to legal challenges that could render it unconstitutional.
The Massena Case: A Limited, Negotiated Buyout, Not a Precedent for Forced Acquisition - The Massena narrative begins in 1968 with local initiatives leading to voter-approved bonds for acquiring Niagara Mohawk's local grid. After initial approval in 1974, the town endured seven years of legal battles, including federal court trials, before settling in 1981. Crucially, the acquisition was not a forced condemnation but a negotiated buyout: Niagara Mohawk agreed to sell for approximately $10 million (funded by voter-approved bonds), handing over operations without invoking eminent domain in a contested manner. Rates dropped 24% post-acquisition, largely due to access to low-cost hydropower from the New York Power Authority (NYPA), which provided clean, affordable energy. Massena's success hinged on its small scale (serving ~12,000 residents), direct municipal ownership, multiple referendums (three, with increasing support), and a settlement that avoided outright seizure.
In contrast, the Hudson Valley Power Authority Act authorizes the HVPA—a state-owned public benefit corporation—to acquire Central Hudson's assets or securities through negotiation or, if necessary, eminent domain under the Eminent Domain Procedure Law (EDPL). The bill's Section 1022-h mandates initial negotiations but permits court petitions for condemnation if talks fail, with compensation based on fair market value for stocks or capitalized future earnings for assets. Unlike Massena's consensual transfer, this could compel a sale from an unwilling private utility serving over 300,000 customers across a broader region. The Act's scale amplifies risks: Massena's legal fees nearly exhausted its $4.5 million bond allocation before settlement, suggesting exponentially higher costs for Central Hudson, potentially burdening ratepayers through HVPA-issued tax-exempt bonds repaid via customer bills. Furthermore, as the article notes, NYPA's hydropower allocations are fully committed, depriving HVPA of Massena's key cost-saving mechanism and casting doubt on promised rate reductions.
The Contracts Clause prohibits states from enacting laws "impairing the Obligation of Contracts." In Dartmouth College v. Woodward (17 U.S. 518, 1819), Chief Justice John Marshall held that a corporate charter, like Central Hudson's franchise to operate as a public utility, constitutes a contract between the state and the corporation, inviolable absent forfeiture, breach, or consent. Central Hudson's charter, granted upon building its network and providing service, guarantees perpetual operation unless mutually altered. The Act's authorization for HVPA to revoke or transfer this franchise via acquisition—potentially without full consent—directly impairs this contract.
Massena's settlement sidestepped such impairment by obtaining Niagara Mohawk's agreement, but the Act's eminent domain provisions risk unilateral revocation. Historical parallels to railroad and utility franchises, as in Munn v. Illinois (94 U.S. 113, 1876), affirm that once infrastructure is built, the franchise becomes "inviolable" property. Courts have applied Dartmouth to utility takeovers; for instance, in Long Island Lighting Co. v. Cuomo (1988 N.Y. Misc. LEXIS 1024), attempts to alter utility charters faced scrutiny under the Contracts Clause.
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