POTSDAM — The town has launched a lawsuit against engineering firm C2AE seeking more than $10 million over what it claims was overcharging, delays, breaches of contract and lost funding in connection with the Route 56 Sewer District Project.

The sewer district project has been all but scrapped in light of district residents voting last fall to kill the related Route 56 Water District project after years of ballooning costs and delays.  

The complaint was filed Sept. 25 in St. Lawrence County Supreme Court, and names Capital Consultants Inc., doing business as C2AE, and John Doe Incorporated as defendants. The firm maintains an office in Canton.

The town’s complaint alleges that C2AE breached its contract and was negligent in providing design, construction administration and construction observation services for the sewer district project.

“C2AE breached its contract with the Town of Potsdam in that C2AE failed and/or refused to perform its services, failed to perform its services in a proper fashion, in a timely fashion, in accordance with the requirements of agencies and the needs of the people in the Town of Potsdam,” the court documents state.

“As a result of numerous breaches as aforesaid and otherwise, the Town of Potsdam has been financially damaged. Such damages include, by example and not by way of limitation, overbilling and increased costs by C2AE, loss of the projects for the design and construction of a water treatment plant and wastewater treatment plant, skyrocketing construction costs as a result of the failures by C2AE, lost funding, lost opportunities, increased costs, assessments and taxes and has otherwise caused damage as a result of C2AE’s breaches of contract,” the complaint alleges.

The suit seeks as restitution, “an amount to be determined at trial, but which amount exceeds $10,000,000.00, together with attorneys’ fees, costs, disbursements and such other and further relief.”

According to the complaint, the town entered into a contract with C2AE under which the firm agreed to provide professional engineering and related services for the sewer project, as well as the related water district project which was voted down by district residents last year. The firm was to handle much of the front end logistical work for the projects, including design work, construction administration, environmental reviews, permitting, assistance with government approvals and applications for grants and loans, scheduling, cost planning and other services.

The town alleges the firm failed to provide the services in a proper or timely manner.

Potsdam accuses C2AE of negligence, alleging the company failed to exercise the level of care required of a design professional performing services in St. Lawrence County.

The lawsuit complaint consists of allegations which still need to go through the court process to be proven.

The engineering firm has 20 days to respond to the complaint.

No response from the firm had been uploaded to the court documents database at the time of this writing.

What came before

The Route 56 water and sewer district projects, first proposed as early as 2018, have been controversial for the town for years now.

The districts would have been a driver for development, and therefore tax base, in the town. At the time the districts were originally proposed, the electric motor company L.C. Drives had intentions to construct a factory in the district area, which would have lowered the cost and annual fees for both services for everyone in the district. However, L.C. Drives went out of business in 2021 due to what was called a lack of private investment.

Regardless, town officials opted to soldier on with both district projects and a vote by district residents to allow the projects was initially held in January 2021 and approved 19 to 10 out of about 80 potential votes. That vote was based on cost estimates for both projects at that time of $5.5 million total for the sewer district and $4.8 million for the water district, both cost estimates arrived at in 2020, before the dissolution of L.C. Drives.

Those costs continually ballooned over the course of several years while the engineering firm C2AE worked on permitting and design of the districts, leading many town residents to voice concerns and alarm at town meetings and in letters to the editor of North Country This Week. Calls for the projects to be scrapped outright were regularly leveled.

Eventually, the climb of costs forced the town to seek re-approval for the projects and district residents turned out for a vote in November 2025 on whether to continue forward with the water district and ultimately voted 36 to 9 to kill it and eat the cost of the design and permitting work accrued to that point.

This came after the most recent project bids came in higher than estimates for the project and higher than the town board’s set maximum project cost projection of $10,565,000.

The related, but separate, sewer district project has basically been scrapped in light of the water district vote defeat.

The board later voted in December 2025 to de-obligate millions in grant funds from USDA Rural Development, state Environmental Facilities Corporation and other sources for the now defunct Route 56 water district infrastructure project. About $6.1 million in grants were available for the project to help pay for miles of water lines and a reservoir.

Those grants were expected to cover the cost of the preliminary engineering and design work for the project, around $1 million, that the town financed up front.

Without the grants, that cost, by law, has fallen to district residents to pay, even though they have no water, or sewer, services to show for it. There are only about 80 residents residing in the district.

This has raised the ire of district residents over the situation, with many already vexed by the push for the project over the last several years. Many public comment periods at town meetings over that time have featured those residents voicing concerns and even demands and requests for the projects to be halted due to ever ballooning project costs since the proposals for the districts were initially floated years ago.

The situation has already led to one lawsuit being filed against the town by a district resident earlier this year, although the complaint was dismissed by the court due to timing issues of when it was filed.