Vulnerability of New York Infrastructure

TransGas Development Systems developed a report for the Defense Science Board named Vulnerability of New York (VONY) to analyze and understand the susceptibility of energy and transportation infrastructure of New York City. The report enumerates potential risks affecting the city’s foundation and proposes alternatives to mitigate these risks.

Preemption of Condemnation Actions by the Public Service Law

The Public Service Commission has comprehensive regulatory authority over the siting of major public utility facilities and infrastructure, and municipalities are preempted from taking any local action intended to regulate the siting of such facilities, including condemnation, once certification proceedings have been commenced before the Siting Board. This ruling was made in the 2005 case Matter of City of New York, which involved the city’s attempt to prevent the construction of a generating facility on the Brooklyn waterfront by instituting condemnation proceedings to acquire the land for a park. Because the utility company, TransGas, had already commenced the process to obtain a certificate of environmental compatibility and public need from the Siting Board, however, the court held that the city’s condemnation was preempted, regardless of its public purpose or intended use of the property.

In response to New York City’s attempt to condemn the proposed site of its power plant, TransGas not only contested the validity of the city’s attempted acquisition, it also commenced its own proceedings to acquire the land, which it didn’t own in fee. However, in Matter of City of New York v. TransGas Energy Servs. Corp., the second decision issued in the litigation, the Second Department held that the Public Service Law also preempts any utility from commencing condemnation proceedings while its own application is pending before the Siting Board. This is because the Public Service Law provides that “no court of this state shall have jurisdiction to hear or determine any matter, case or controversy concerning any matter which was or could have been determined in a proceeding under this article … except to enforce compliance with this article or the terms and conditions issued thereunder.” As the court explained, the utility had to wait until it had received a certificate of environmental compatibility and public need before commencing condemnation proceedings under the EDPL.

In yet another stage of the same litigation, Matter of TransGas Energy Sys., LLC v. N.Y.S. Siting Board, the Second Department upheld the Siting Board’s decision denying TransGas’ application for a certificate of environmental compatibility and public need. TransGas, in an attempt to reach a compromise with the city, had developed an alternative plan that would have placed the entire power plant underground, allowing the property’s surface use as a city park. The compromise was never worked out though, and the underground plan required TransGas to lay its water and steam pipes under certain city streets and public waters. Because it refused to seek voluntary permissions from the city for these easements, the Siting Board denied its application. The board concluded, and the court agreed, that despite its broad control of siting decisions granted under the Public Service Law, it didn’t have any statutory authority to supersede the city’s authority and grant TransGas permission to lay its water and steam pipes under city streets and public waters.

The TransGas litigation highlights a few conflicts that can arise in eminent domain cases involving the Public Service Law, but it leaves a number of questions unresolved. None of the opinions explain, for example, whether the Public Service Law preempts municipalities from condemning the site of a proposed or completed utility project after it has received a certificate of environmental compatibility and public need. While the Public Service Law may prohibit attempts to interfere with siting decisions, its preemption, presumably, doesn’t last forever.