Opinion ID: 2590048
Heading Depth: 2
Heading Rank: 2

Heading: The Legislative Solution

Text: The statutory policy of section 1020-a is fulfilled by the mandates in the subsequent sections of the statute. Under section 1020-c, the newly created LIPA is a public corporation created under the Public Authorities Law to be operated only on a not-for-profit basis in the area previously serviced by LILCO ( see , §§ 1020-c, 1020-b [17]). LIPA is granted powers by section 1020-g necessary to fulfill its corporate purpose, the generation and transmission of electricity. Upon LIPA's commencing operation, section 1020-g (n) provides that LIPA shall acquire from LILCO all franchise and utility service responsibilities for all ultimate consumers (emphasis added). LIPA is empowered to acquire LILCO stock and assets pursuant to section 1020-h. Of central importance to the acquisition and replacement of LILCO by LIPA is section 1020-h (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    that the rates projected to be charged after such acquisition    will not be higher than the rates projected to be charged by LILCO during such period if such acquisition had not occurred (emphasis added). Although this section vests LIPA with discretion to acquire all or any part of LILCO, the exercise of that discretion is expressly contingent and qualified as set forth in the following significant provisions. Any exercise of discretion under section 1020-h (2) in acquiring any part of LILCO must be [i]n furtherance of the legislative findings and determinations set forth in section 1020-h (1) (emphasis added). Under section 1020-h (1), the Legislature expressly finds and determines that: (a) The acquisition by the authority    of either the securities or assets of LILCO    is the most appropriate means of dealing with the emergency    in the service area; and, (b) The authority, prior to exercising its power of eminent domain to acquire 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. Thus, in the foregoing provisions it is unequivocally specified that the only purpose for which LIPA may exercise its acquisition authority (§ 1020-h [2]) is one which furthers the replacement of LILCO by LIPA and results in utility rates equal to or less than the rates which would result if LILCO were to continue in operation. Moreover, the language following the phrase provided, however, makes any acquisition of LILCO property contingent upon the LIPA Board's first determining that after the acquisition , the projected rates will not be higher than the rates projected to be charged by LILCO during such period if such acquisition had not occurred (emphasis added). If there can be any doubt remaining that the statute makes LIPA's discretion to acquire any part of LILCO's property conditional on LIPA's replacing LILCO it is removed by section 1020-h (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 (emphasis added). If the cost to LIPA of exercising its acquisition discretion would subsequently prohibit LIPA from charging lower rates, then LIPA must abandon its acquisition plans (§ 1020-h [10]). It must be emphasized that the majority does not attempt to support its assertions that the statute somehow envisions LILCO (not LIPA) as the power provider after acquisition ( see, e.g. , majority opn, at 407, 409, 411) by reference to or analysis of any statutory provision. The reason is clear. The statute (§ 1020-h [1] [b]; [2], [4], [10]) rules out any possibility that LILCO and not LIPA could have been envisioned as the power provider after acquisition . That this is so is not a conclusion based on negative inference (majority opn, at 412), but the unequivocal mandate of express statutory provisions. Only LIPA was intended to be the power provider. Both section 1020-h (1) (b) and (10) refer to the effect that cost of acquisition (i.e., of LILCO by LIPA) will have on rates to be charged after acquisition by LIPA . Section 1020-h (1) (b) and (10) provide that if the terms of acquisition will result in rates in excess of the rates which would result if LILCO were to continue in operation (§ 1020-h [1] [b] [emphasis added]), then the acquisition is not to go forward. The cost of acquisition (§ 1020-h [10]) and of acquiring (§ 1020-h [1] [b]) could only be a cost borne by LIPA, the acquiring entity . The effect of such cost on rates could only refer to the rates to be charged by LIPA as power provider after acquisition. Indeed, any construction of the statute linking cost of acquisition to rates to be charged after acquisition by LILCO, the acquired entity , would render the statute absurd and must be rejected (McKinney's Cons Laws of NY, Book 1, Statutes § 145). [2] It is significant that, in previous Federal litigation construing the LIPA statute, LIPA itself argued that the acquisition and decommission of Shoreham is preconditioned on its replacement of LILCO as the power provider ( see , Long Is. Light. Co. v Cuomo , 666 F Supp 370 [ND NY 1987, Munson, Ch. J.], appeal dismissed and judgment vacated 888 F.2d 230 [2d Cir 1989]). LIPA argued to the District Court [3] that: Finally, LILCO challenges § 1020-h(9) which provides that LIPA shall close Shoreham `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'    LILCO's allegation that § 1020-h(9) would unconstitutionally deprive it of its property ignores the fact that the subsection has no effect unless and until LIPA either owns all of LILCO's property or is the controlling shareholder of LILCO (emphasis added) and to the Second Circuit that: In short, § 1020-h(3)(b) rationally advances the Legislature's objective of establishing a public authority to replace LILCO by insuring that LIPA can promptly merge with LILCO if two-thirds of the outstanding LILCO common shares  the percentage required to approve any BCL merger  are tendered (emphasis added).