Niagara Gazette

August 29, 2013

Hornblower vows appeal as judge upholds state's handling of no-bid agreement with Maid of the Mist

By Mark Scheer
Niagara Gazette

— A state supreme court justice from Niagara County has dismissed a competitor's legal challenge aimed at reopening a contract currently held by the Maid of the Mist Corp. to operate boat tours at the base of the Falls.

In a decision issued Thursday, New York State Supreme Court Justice Catherine Nugent Panepinto ruled that state officials, including New York State Parks Commissioner Rose Harvey and New York Power Authority President and CEO Gil Quiniones, acted appropriately and within the law when they agreed to modify the terms of a 2002 agreement between the state and the Maid to cover plans for the conversion of the state-owned Schoellkopf Power Station site into storage facilities for the company's fleet. 

Hornblower Cruises, a California-based firm that will begin offering boat tours of its own from the Canadian side next year, had challenged the legality of the process that led to the signing of the 2012 memorandum of understanding that altered the terms of the Maid's original tour operation deal with the New York state. The company's attorneys argued that state officials entered into the modified agreement without seeking competitive bids for service as required by law. 

In her ruling, Panepinto noted that the court is compelled to "exercise a high degree of judicial deference to the involved state agencies" and that the court may also "recognize other reasonable interpretations of the work described in the amendment." Panepinto determined that it was "not irrational" for the New York State Comptroller's Office to conclude that the docking facility "does not alter the identity or main purpose of the original contract." Her ruling describes the state comptroller's conclusion that public bidding was not required prior to construction as "reasonable."

"This is just another confirmation that everything was done properly," said Maid attorney Brian Gwitt. "From the Maid of the Mist's standpoint, they believed they did everything properly and this is just confirmation." 

Richard C. Jacobs, vice president and general counsel for San Francisco-based Hornblower, said his company is "deeply disappointed" with Panepinto's decision and plans to appeal. 

"We don't think it reflects the requirements of New York state public bidding laws," Jacobs said. "We will undoubtedly be appealing this case." 

Gwitt said Hornblower's attorneys have 30 days to file an appeal. For now, Gwitt said, Panepinto's decision clears the way for work to continue on the Maid's storage facility, which is currently under construction. If all goes as planned, Gwitt said the company will have its facility completed in time to allow for Maid of the Mist boats to be removed from the water and placed into storage before winter. 

"Everything is expected to be in place before fall," Gwitt said. 

Completion of the project would allow Maid of the Mist boats, which have been ferrying passengers along the lower Niagara River since 1846, to continue offering trips from the American side next year, and beyond. Hornblower has acquired exclusive rights to storage facilities located on the Canadian side of the river under an agreement with the Niagara Parks Commission. The company will launch its fleet next year. 

At least one other legal challenge remains for Maid's endeavor on the American side. The Niagara Preservation Coalition, a local group that maintains state and federal agencies failed to protect the integrity of the historic Schoellkopf site during the storage facility's construction, has asked a federal judge to intervene on its behalf. The group filed its federal lawsuit after having several similar cases dismissed at the state level. The case is still pending. 

A temporary restraining order that temporarily halted the construction project was lifted on procedural grounds in state supreme court in April. The coalition also filed a request for a preliminary injunction in June after members of the group took pictures of steel girders from the site being loaded into bins destined for the scrap yard. A panel of judges in the state supreme court’s appellate division denied that request.