2023 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