NY Pub Auth L § 1020-H (2021)
2021 New York Laws PBA - Public Authorities Article 5 - Public Utility Authorities Title 1-A - Long Island Power Authority 1020-H - Acquisition of Property, Including the Exercise of the Power of Eminent Domain.

* §  1020-h.  Acquisition  of  property, including the exercise of the power of eminent domain. 1. The legislature hereby expressly  finds  and determines:  (a) The acquisition by the authority, through purchase or the exercise of  the  power  of eminent domain, of either the securities or assets of LILCO whichever is less expensive for the ratepayers, as  the  authority may determine will be just to the ratepayers in the service area, is the most  appropriate  means  of  dealing  with  the emergency involving the economy, health and  safety  of  the  residents  and  the  industry  and commerce  in  the  service  area,  notwithstanding  the  fact that LILCO presently may be devoted to a public use, since the public use  of  such property  by the authority is hereby deemed to be superior to the public use of such property by any other person, association, or corporation.  (b) The authority, prior to exercising its power of eminent domain  to acquire the stock or assets of LILCO, shall enter into negotiations with LILCO  for the purpose of acquiring such stock or assets upon such terms as the authority, in its sole  discretion,  determines  will  result  in rates  equal  to or less than the rates which would result if LILCO were to continue in operation.  (c) The situs of all stock issued by LILCO, a New York corporation, is the state of New York.  (d) The compensation paid by the authority to LILCO shall be  just  to the ratepayers in the service area who must pay such compensation.  (e)  If  the  authority  determines that it is the stock of LILCO that should be taken, the proper measure of damages shall be the fair  market value thereof as evidenced by the price of such stock on the exchange on which  they  are  traded  on  the  valuation  date  since  there  is  an established market for such stock that is reflective of its value. In no event, however, shall consequential or severance damages be  awarded  if control of LILCO shall have been taken by the authority.  (f)  If  the  authority determines that it is the assets of LILCO that should  be  taken,  fair  market  value  would   not   constitute   just compensation to LILCO since there is an insufficient market in the usual sense  for its assets to ascertain the value thereof from the market. In determining the compensation payable for such  assets,  there  shall  be taken  into  consideration the capitalization of LILCO's expected future earnings.  (g) LILCO has no reasonable expectation of realizing  actual  earnings from  the  Shoreham plant or of giving effect to any earnings or returns which may have been reflected on  the  books  of  LILCO  for  accounting purposes.  Moreover,  it  would  not  be  reasonable,  under current and reasonably foreseeable circumstances, to expect that the Shoreham  plant would  be  reproduced  by a public or private utility in LILCO's present position.  (h) LILCO would have to phase in over a long period of time  any  rate increases based on the costs of the Shoreham plant.  (i)  The  public  service  commission  has imposed a limitation on the earnings which LILCO may realize on its interest in the Nine Mile  Point nuclear power facility.  (j)  The  public  service  commission  has imposed on LILCO imprudence penalties with respect to the Shoreham plant.  (k) In determining just compensation, the following factors  shall  be evaluated  in  deciding whether OCLD or RCNLD or neither constitutes the proper basis:  (i) LILCO is  a  regulated  utility.  Under  the  laws  of  the  state providing  for  the regulation of utilities, LILCO's future earnings are restricted to the permitted rate of return times LILCO's OCLD.  (ii) LILCO presently is being operated as an enterprise  the  economic viability  of  which is dependent upon extraordinary financial stability adjustments by the public service  commission.  Such  extraordinary  and unprecedented  rate  relief was granted by the public service commission in  order to provide cash flow relief to prevent LILCO's bankruptcy with the expectation that ratepayers would receive the full credit of such in lower rates, and  that  the  public  service  commission  required  such extraordinary  rate  relief  to  be discontinued in the event that LILCO filed a petition for relief in a voluntary case under the Bankruptcy Act or if a final order for relief was entered involuntarily under such act. LILCO's lack of profitability results not from any repressive  or  other improper  action  taken by any governmental entity but from such factors as mismanagement, imprudent decisions regarding the Shoreham  plant  and general inefficiency.  (iii)  There  is no reasonable probability that, after condemnation of its assets, LILCO will reproduce them.  (iv) Use of RCNLD may result in an unwarranted windfall to  LILCO  and an  unjustifiable  penalty  to  the ratepayers who would have to pay it, since to the extent an award based on RCNLD would exceed an award  based on  OCLD,  it  would  reflect to a large extent the effects of inflation which would not increase the value of the property to LILCO or its  rate base  for  ratemaking  purposes  or  to the authority for the purpose of continuing to generate and transmit electric power  within  the  service area.  (l)  Neither  consequential  nor  severance  damages are proper if the authority condemns all the assets of LILCO.  (m) In determining whether LILCO has  any  going  concern  value,  the court  shall  take  into  consideration  the fact that LILCO's continued operations are dependent  upon  the  extraordinary  financial  stability adjustments granted by the public service commission.  (n)  Such  an acquisition by the authority of the securities or assets of LILCO serves the public purposes of  assuring  the  provision  of  an adequate  supply  of  gas  and  electricity in a reliable, efficient and economic manner and retaining existing  commerce  and  industry  in  and attracting  new  commerce and industry to the service area, all of which are matters of state-wide concern.   2. In furtherance of the legislative findings and  determinations  set forth  in  subdivision  one  of  this  section,  the authority is hereby authorized and empowered to acquire, through purchase or the exercise of the power of eminent domain, all or any part of the securities or assets of LILCO, as  the  authority  in  its  sole  discretion  may  determine; provided,  however,  that  prior to proceeding with any such acquisition under this title, the board shall  determine,  in  its  sole  discretion based  upon  such  engineering,  financial  and  legal data, studies and opinions as it may deem appropriate, that  the  rates  projected  to  be charged after such acquisition and for such reasonable period of time as the  board  may determine will not be higher than the rates projected to be charged by LILCO during such  period  if  such  acquisition  had  not occurred.   3.  The authority also is authorized and empowered, in its discretion, to make a tender offer or tender offers for all or any  portion  of  the securities  of  LILCO  at  such  price  or  prices  as the authority may determine to be appropriate; provided, however that such tender offer or tender offers, in the sole judgment of the  authority,  will  result  in rates less than the rates which would result from continued operation by LILCO.  (a)  The  authority  shall make such offer or offers or any adjustment thereof prior to acquiring any such securities or any  assets  of  LILCO  through  the  exercise of the power of eminent domain. The authority may pay  for  such  securities  in  cash  or  by  exchanging  therefor   the authority's bonds or a combination thereof.  (b)  In  the  case  of  a  tender  offer  in which a subsidiary of the authority acquires at least sixty-six and two-thirds percent of  LILCO's common  stock,  such subsidiary may merge with LILCO and either continue in existence or dissolve, as it may determine.  (c) The provisions  of  section  five  hundred  thirteen  and  article sixteen  of the business corporation law and any other provisions of law relating to  procedures  in  a  corporate  takeover,  including  without limitation  chapter nine hundred fifteen of the laws of nineteen hundred eighty-five, shall not be applicable to the  actions  of  the  authority pursuant to this title.  (d)  In  determining  whether acceptance of such a tender offer by the authority is in the best interests of  LILCO,  the  directors  of  LILCO shall  consider  not  only  the  dollar  amount  of  such  offer but the interests of  employees,  suppliers,  ratepayers,  creditors  (including holders of LILCO's debt securities), and the economy of the service area and the state.   4.  The  authority,  should  it  determine, in its sole discretion, to acquire the stock or assets of LILCO by the exercise  of  the  power  of eminent  domain, shall not take title to nor possession of such stock or assets prior to a final determination of the amount of  compensation  to be  paid  for  such  stock or assets nor prior to a determination by the authority, in its sole discretion that  the  taking  of  such  stock  or assets  will result in rates less than the rates which would result from continued operation by LILCO.  Notwithstanding  the  provisions  of  the eminent  domain  procedure  law, the provisions of subdivisions five and six shall apply to the acquisition of the stock or property of LILCO  by the  power  of  eminent  domain,  provided  however,  to  the extent the provisions herein do not supersede or conflict with  the  provisions  of such law the provisions of such law shall apply.   5.  Procedure  for  acquisition  of  LILCO stock. (a) In the event the authority determines to acquire the stock of LILCO by  the  exercise  of the power of eminent domain, having first entered into negotiations with LILCO  for  the  purchase of such stock, the authority need not hold any public hearing on its intention to condemn such stock or on the question of the public use of such action, such finding having been made  by  the legislature  herein.  The  authority  shall commence such acquisition by serving upon LILCO and filing with the county clerk  of  the  county  in which  the  principal office of LILCO is located a notice describing the stock  being  acquired,  the  valuation  date,  as  determined  by   the authority,   and  such  additional  information  as  the  authority  may reasonably deem necessary to facilitate the process of condemnation  and payment.  The  notice  shall state that it is a notice of pendency of an acquisition proceeding and that the authority will elect whether or  not to pay the amount of such award when it has been finally determined. The authority  also  shall cause a copy of such notice (i) to be served upon the stock transfer agent or agents designated by LILCO for the  transfer and  registration of its stock and (ii) to be published in at least five successive issues of a daily newspaper of national circulation.  (b) Upon receipt of such notice, the stock transfer agent  or  agents, at  the expense of the authority, shall forthwith serve upon each of the registered owners of such stock a copy of such notice. Service shall  be deemed  sufficient  if  mailed  by  certified  or registered mail to the address of each such owner as shown on  LILCO's  stock  transfer  books. Service  of  the  notice upon the stock transfer agent or agents and its publication shall not be jurisdictional prerequisites to the validity of  the taking. Failure to notify any owner of stock to be  taken  will  not invalidate  any  proceedings  brought hereunder or any title acquired by the authority.  (c)  Upon  filing of the notice described in paragraph (a) hereof, the authority shall petition a special term of  the  supreme  court  in  the judicial  district  in  which  LILCO  has  its  principal office for the acquisition of the stock. Such petition shall be generally in  the  form prescribed  by  the  eminent  domain  procedure law so far as consistent herewith.  (d) The supreme court in the district in which LILCO has its principal office shall have exclusive  jurisdiction  to  hear  and  determine  all claims  arising  from  the  acquisition  of stock by the exercise of the power of eminent domain and shall hear such claims without  a  jury  and without  referral  to  a  referee  or commissioners. Notwithstanding the provisions of section nine hundred one of the  civil  practice  law  and rules,  upon  motion  to  the  court  by the authority, the condemnation proceeding for the acquisition of stock shall be maintained as  a  class action,  pursuant  to  remaining provisions of article nine of the civil practice law and rules, and the owners of the stock shall  be  deemed  a defendant  class  on  the  basis  of  the  following express legislative findings:  (i) the class of LILCO stock owners is so numerous that joinder of all members is impracticable;  (ii) the issue of valuation of LILCO stock  is  common  to  all  LILCO stock  owners  and  there  are  questions  of  law or fact common to the members of such class which predominate  over  any  questions  affecting only individual members;  (iii)  the  claims or defenses, if any, of any representative owner of LILCO stock to acquisition thereof by the authority are typical  of  the claims or defenses of the class;  (iv)  there  are representative parties who will fairly and adequately protect the interests of the class; and  (v) the prosecution of  separate  actions  by  or  against  individual members  of  the  class  would  create a risk of inconsistent or varying adjudications with respect to the issue of valuation  and  other  issues common to the class.  (e)  The  procedure  for determining just compensation shall be in the manner prescribed by the eminent domain procedure  law,  except  to  the extent such procedure is inconsistent with the provisions of this title, in which case the provisions of this title shall control.  (f)  Upon  the entry of an award finally determining just compensation for the stock, the authority shall have  sixty  days  after  receipt  of notice  of entry of such award within which to elect to proceed with the taking or to abandon such acquisition as  provided  in  subdivision  ten hereof.  Notice of such election shall be served by the authority and by the  stock  transfer  agent  in  the  manner  described in paragraph (a) hereof. If the authority elects to  proceed  with  the  acquisition,  it shall   deposit  with  the  supreme  court  in  which  the  condemnation proceeding was held an amount equal to  the  award  within  one  hundred eighty  days  after  receipt by the authority of notice of entry of such award. Upon the making of  such  deposit,  the  authority  shall  notify LILCO's  stock  transfer  agent  in  writing of such deposit. The sum so depositied shall be applied as provided in the eminent domain  procedure law.  Upon  making  such  deposit  and  giving  such notice to the stock transfer agent, title to all stock described in  the  notice  of  taking shall immediately vest in the authority and the authority shall have the immediate  right  thereto.  In the event the authority elects to abandon the acquisition, the provisions of subdivision ten hereof shall apply.  (g) It shall be a condition precedent to the payment  of  compensation for  any  such  securities  that  such  securities be surrendered to the supreme court or to such other  entity,  including  the  issuer's  stock transfer agent, as the supreme court may direct.   6.  Procedure  for  acquisition  of LILCO assets. (a) If the authority shall find it necessary or convenient to acquire any  real  or  personal property  of  LILCO,  (other  than securities), whether for immediate or future use, then the authority need not determine that such property  is required  for  public  use,  since the legislature already has made such determination in this title which determination shall be binding for all purposes. The authority need not publish any notice of its intention  to acquire such property or hold any public hearing with respect thereto or to the public use of such action.  (b)  When any real property of LILCO within this state is sought to be acquired by the exercise of the power of eminent domain, and  after  the authority  shall  have  entered  into  negotiations  with  LILCO for the purchase of such property, the authority shall cause a survey and map to be made thereof and shall cause such survey and map to be filed  in  its office  and  in the office of the county clerk in which such property is located. There shall be annexed to such survey  and  map  a  certificate executed  by  the  chief  engineer  of  the  authority, or by such other officer or employee as may be designated by the board, stating that  the property  or  interest  therein  described  in  such  survey  and map is necessary for its purposes.  (c) Upon filing such survey and map, the authority  shall  petition  a special  term of the supreme court in the judicial district in which the property is located for the acquisition of  such  property  or  interest therein.  Such  petition shall describe the property being acquired, the valuation date, as determined by  the  authority,  and  such  additional information as the authority may reasonably deem necessary to facilitate the  process  of condemnation and payment. The petition shall state that the authority will elect whether or not to pay the amount of such  award when  it  has  been  finally  determined.  In  all  other respects, such petition shall be generally in the form prescribed by the eminent domain procedure law, so far as consistent herewith.  Such  petition,  together with  a  notice  of  pendency  of  the proceeding, shall be filed in the office of the county clerk of  the  county  in  which  the  property  is located  and shall be indexed and recorded as provided by law. A copy of such petition, together with a notice of  the  presentation  thereof  to such  special term of the supreme court, shall be served upon the owners of such property as provided in the eminent domain  procedure  law.  The authority  may  cause  a  duplicate  original  affidavit  of the service thereof to be recorded in the books used  for  recording  deeds  in  the office of the county clerk of the county in which the property described in  such notice is located, and the recording of such affidavit shall be prima facie evidence of due service thereof.  (d) Subsequent proceedings shall be conducted generally in the  manner prescribed  by the eminent domain procedure law except to the extent the provisions thereof are inconsistent with the provisions of  this  title, in which case the provisions of this title shall control.  (e)  In any proceeding involving the valuation of LILCO property taken by the authority the supreme court shall ascertain  and  determine  just compensation for the property taken as of the valuation date, giving due consideration  to  the  applicable  findings  and  determinations of the legislature set forth in subdivision one hereof.  (f) Should LILCO's property be taken by the exercise of the  power  of eminent  domain  and if LILCO shall have agreed upon the compensation to be paid therefor in settlement of the proceeding,  if,  LILCO  shall  be  entitled  to  payment  of  the agreed or awarded compensation within one hundred eighty days after the date of the agreement upon the  amount  of the  compensation  or  of the entry of the award, together with interest upon  the  amount  of  such  compensation  from  the time of acquisition thereof by the authority to the date of payment  of  such  compensation; but  such  interest  shall cease upon the service by the authority, upon the person or corporation entitled thereto, of a  fifteen  days'  notice that  the  authority  is  ready  and  willing  to pay the amount of such compensation upon the presentation of proper proofs and  vouchers.  Such notice  shall be served personally or by registered mail and publication thereof shall be made at least once a week for three successive weeks in a daily newspaper of general circulation in the  county  in  which  such property or any part thereof is located.  (g)  Upon  the entry of an award finally determining just compensation for the property of LILCO, the authority shall  have  sixty  days  after receipt  of  notice  of  entry  of  such  award within which to elect to proceed with the taking or to abandon such acquisition  as  provided  in subdivision  ten  hereof. Notice of such election shall be served by the authority on the owners of such property  in  the  manner  described  in paragraph  (c)  hereof.    If  the  authority elects to proceed with the acquisition, it shall deposit  with  the  supreme  court  in  which  the condemnation proceeding was held an amount equal to the award within one hundred eighty days after receipt by the authority of notice of entry of such  award. Upon the making of such deposit, the authority shall notify LILCO in writing of such deposit. The sum so deposited shall be  applied as  provided  in  the  eminent  domain  procedure  law. Upon making such deposit and giving such notice to LILCO, title to all property described in the notice of taking shall immediately vest in the authority and  the authority  shall  have  the  immediate  right thereto. The order setting forth the award, together with evidence from the clerk of the  court  of receipt  of the amount of the award, shall be filed in the office of the county clerk of the county in which the property is located and shall be indexed and recorded in the same manner as a notice  of  pendency  under the  eminent  domain procedure law. The owner or person in possession of such property shall deliver possession thereof  to  the  authority  upon demand,  and in case possession is not delivered when demanded or demand is not convenient because of absence of the owner or inability to locate or determine the owner, the authority may apply  to  the  court  without notice  for  an order requiring the sheriff to put it into possession of such real property. Such an order shall be executed as  if  it  were  an execution  for  the  delivery  of the possession of the property. In the event the authority elects to abandon the acquisition, the provisions of subdivision ten hereof shall apply.   7. At any time the  authority  and  its  duly  authorized  agents  and employees may, on reasonable notice and during business hours, (i) enter upon any real property proposed to be acquired for the purpose of making the  surveys  or maps mentioned in this section, or of making such other surveys, inspections or examinations of real and personal  property  and (ii)  inspect  and make copies of the books and records of the issuer of such securities, all as the authority may deem necessary  or  convenient for the purposes of this title.   8.  Upon  the  acquisition of all the outstanding shares of stock of a corporate issuer representing all the voting rights and equity  thereof, the  authority  shall  as  soon as reasonably practicable take all steps necessary to assure that the rights and claims of all the holders of any other stock and debt securities and all other creditors thereof  are  as secure  as  they  were  immediately  prior  to  the  acquisition  by the authority. Nothing herein shall prohibit the authority from  taking  any  appropriate  and prudent action to renegotiate and restructure such debt or from purchasing the preferred stock and  debt  securities  issued  by such  corporation  at  such  prices  as the authority may determine. The authority  may  also  exchange  its  bonds for any outstanding preferred stock or debt securities  with  the  consent  of  the  holders  of  such preferred stock or debt securities.   9.  As soon as practicable after the authority has acquired sufficient shares of LILCO stock to do so or after it has acquired all the property of LILCO pursuant to this title, the authority shall forthwith close and decommission the  Shoreham  plant  and  shall  investigate  and  develop alternative uses, if any, for such plant.   10.  If  the  authority  determines,  in its sole discretion, that the total cost of acquisition will result in rates in excess  of  the  rates which  would  result  from  continued  operation by LILCO, the authority shall abandon the acquisition. In such event, the authority shall  serve notice  of  such  abandonment (i) in the case of a stock acquisition, by causing to be mailed by certified or registered  mail  a  copy  of  such notice  to each former owner of stock as shown on LILCO's stock transfer books immediately prior to such acquisition at the address shown on such stock transfer books and by causing to  be  published  a  copy  of  such notice  in  at  least  five  successive  issues  of a daily newspaper of national circulation or (ii) in the case of an asset acquisition, in the same manner as provided for the service of a petition for acquisition in paragraph (c) of subdivision six hereof. In addition, in the case of  an asset  acquisition  the  authority  shall  file  a copy of the notice of abandonment with the county clerk of the county in which is located  any real  property that was taken and with the clerk of the supreme court in which the proceeding was instituted.   11. The provisions with respect to the valuation of stock and property set forth in this section shall apply  only  to  stock  or  property  of LILCO,  as the case may be, acquired by the authority by the exercise of the power of eminent domain.   * NB There are 2 § 1020-h's