New York Laws
Title 1-A - Long Island Power Authority
1020-H - Acquisition of Property, Including the Exercise of the Power of Eminent Domain.

(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