§ 1020-H — Acquisition of property, including the exercise of the power of eminent domain

* § 1020-h. Acquisition of property, including the exercise of the\npower of eminent domain. 1. The legislature hereby expressly finds and\ndetermines:\n (a) The acquisition by the authority, through purchase or the exercise\nof the power of eminent domain, of either the securities or assets of\nLILCO whichever is less expensive for the ratepayers, as the authority\nmay determine will be just to the ratepayers in the service area, is the\nmost appropriate means of dealing with the emergency involving the\neconomy, health and safety of the residents and the industry and\ncommerce in the service area, notwithstanding the fact that LILCO\npresently may be devoted to a public use, since the public use of such\nproperty by the authority is hereby deemed to be superior to the public\nuse of such property by any other person, association, or corporation.\n (b) The authority, prior to exercising its power of eminent domain to\nacquire the stock or assets of LILCO, shall enter into negotiations with\nLILCO for the purpose of acquiring such stock or assets upon such terms\nas the authority, in its sole discretion, determines will result in\nrates equal to or less than the rates which would result if LILCO were\nto continue in operation.\n (c) The situs of all stock issued by LILCO, a New York corporation, is\nthe state of New York.\n (d) The compensation paid by the authority to LILCO shall be just to\nthe ratepayers in the service area who must pay such compensation.\n (e) If the authority determines that it is the stock of LILCO that\nshould be taken, the proper measure of damages shall be the fair market\nvalue thereof as evidenced by the price of such stock on the exchange on\nwhich they are traded on the valuation date since there is an\nestablished market for such stock that is reflective of its value. In no\nevent, however, shall consequential or severance damages be awarded if\ncontrol of LILCO shall have been taken by the authority.\n (f) If the authority determines that it is the assets of LILCO that\nshould be taken, fair market value would not constitute just\ncompensation to LILCO since there is an insufficient market in the usual\nsense for its assets to ascertain the value thereof from the market. In\ndetermining the compensation payable for such assets, there shall be\ntaken into consideration the capitalization of LILCO's expected future\nearnings.\n (g) LILCO has no reasonable expectation of realizing actual earnings\nfrom the Shoreham plant or of giving effect to any earnings or returns\nwhich may have been reflected on the books of LILCO for accounting\npurposes. Moreover, it would not be reasonable, under current and\nreasonably foreseeable circumstances, to expect that the Shoreham plant\nwould be reproduced by a public or private utility in LILCO's present\nposition.\n (h) LILCO would have to phase in over a long period of time any rate\nincreases based on the costs of the Shoreham plant.\n (i) The public service commission has imposed a limitation on the\nearnings which LILCO may realize on its interest in the Nine Mile Point\nnuclear power facility.\n (j) The public service commission has imposed on LILCO imprudence\npenalties with respect to the Shoreham plant.\n (k) In determining just compensation, the following factors shall be\nevaluated in deciding whether OCLD or RCNLD or neither constitutes the\nproper basis:\n (i) LILCO is a regulated utility. Under the laws of the state\nproviding for the regulation of utilities, LILCO's future earnings are\nrestricted to the permitted rate of return times LILCO's OCLD.\n (ii) LILCO presently is being operated as an enterprise the economic\nviability of which is dependent upon extraordinary financial stability\nadjustments by the public service commission. Such extraordinary and\nunprecedented rate relief was granted by the public service commission\nin order to provide cash flow relief to prevent LILCO's bankruptcy with\nthe expectation that ratepayers would receive the full credit of such in\nlower rates, and that the public service commission required such\nextraordinary rate relief to be discontinued in the event that LILCO\nfiled a petition for relief in a voluntary case under the Bankruptcy Act\nor if a final order for relief was entered involuntarily under such act.\nLILCO's lack of profitability results not from any repressive or other\nimproper action taken by any governmental entity but from such factors\nas mismanagement, imprudent decisions regarding the Shoreham plant and\ngeneral inefficiency.\n (iii) There is no reasonable probability that, after condemnation of\nits assets, LILCO will reproduce them.\n (iv) Use of RCNLD may result in an unwarranted windfall to LILCO and\nan unjustifiable penalty to the ratepayers who would have to pay it,\nsince to the extent an award based on RCNLD would exceed an award based\non OCLD, it would reflect to a large extent the effects of inflation\nwhich would not increase the value of the property to LILCO or its rate\nbase for ratemaking purposes or to the authority for the purpose of\ncontinuing to generate and transmit electric power within the service\narea.\n (l) Neither consequential nor severance damages are proper if the\nauthority condemns all the assets of LILCO.\n (m) In determining whether LILCO has any going concern value, the\ncourt shall take into consideration the fact that LILCO's continued\noperations are dependent upon the extraordinary financial stability\nadjustments granted by the public service commission.\n (n) Such an acquisition by the authority of the securities or assets\nof LILCO serves the public purposes of assuring the provision of an\nadequate supply of gas and electricity in a reliable, efficient and\neconomic manner and retaining existing commerce and industry in and\nattracting new commerce and industry to the service area, all of which\nare matters of state-wide concern.\n 2. In furtherance of the legislative findings and determinations set\nforth in subdivision one of this section, the authority is hereby\nauthorized and empowered to acquire, through purchase or the exercise of\nthe power of eminent domain, all or any part of the securities or assets\nof LILCO, as the authority in its sole discretion may determine;\nprovided, however, that prior to proceeding with any such acquisition\nunder this title, the board shall determine, in its sole discretion\nbased upon such engineering, financial and legal data, studies and\nopinions as it may deem appropriate, that the rates projected to be\ncharged after such acquisition and for such reasonable period of time as\nthe board may determine will not be higher than the rates projected to\nbe charged by LILCO during such period if such acquisition had not\noccurred.\n 3. The authority also is authorized and empowered, in its discretion,\nto make a tender offer or tender offers for all or any portion of the\nsecurities of LILCO at such price or prices as the authority may\ndetermine to be appropriate; provided, however that such tender offer or\ntender offers, in the sole judgment of the authority, will result in\nrates less than the rates which would result from continued operation by\nLILCO.\n (a) The authority shall make such offer or offers or any adjustment\nthereof prior to acquiring any such securities or any assets of LILCO\nthrough the exercise of the power of eminent domain. The authority may\npay for such securities in cash or by exchanging therefor the\nauthority's bonds or a combination thereof.\n (b) In the case of a tender offer in which a subsidiary of the\nauthority acquires at least sixty-six and two-thirds percent of LILCO's\ncommon stock, such subsidiary may merge with LILCO and either continue\nin existence or dissolve, as it may determine.\n (c) The provisions of section five hundred thirteen and article\nsixteen of the business corporation law and any other provisions of law\nrelating to procedures in a corporate takeover, including without\nlimitation chapter nine hundred fifteen of the laws of nineteen hundred\neighty-five, shall not be applicable to the actions of the authority\npursuant to this title.\n (d) In determining whether acceptance of such a tender offer by the\nauthority is in the best interests of LILCO, the directors of LILCO\nshall consider not only the dollar amount of such offer but the\ninterests of employees, suppliers, ratepayers, creditors (including\nholders of LILCO's debt securities), and the economy of the service area\nand the state.\n 4. The authority, should it determine, in its sole discretion, to\nacquire the stock or assets of LILCO by the exercise of the power of\neminent domain, shall not take title to nor possession of such stock or\nassets prior to a final determination of the amount of compensation to\nbe paid for such stock or assets nor prior to a determination by the\nauthority, in its sole discretion that the taking of such stock or\nassets will result in rates less than the rates which would result from\ncontinued operation by LILCO. Notwithstanding the provisions of the\neminent domain procedure law, the provisions of subdivisions five and\nsix shall apply to the acquisition of the stock or property of LILCO by\nthe power of eminent domain, provided however, to the extent the\nprovisions herein do not supersede or conflict with the provisions of\nsuch law the provisions of such law shall apply.\n 5. Procedure for acquisition of LILCO stock. (a) In the event the\nauthority determines to acquire the stock of LILCO by the exercise of\nthe power of eminent domain, having first entered into negotiations with\nLILCO for the purchase of such stock, the authority need not hold any\npublic hearing on its intention to condemn such stock or on the question\nof the public use of such action, such finding having been made by the\nlegislature herein. The authority shall commence such acquisition by\nserving upon LILCO and filing with the county clerk of the county in\nwhich the principal office of LILCO is located a notice describing the\nstock being acquired, the valuation date, as determined by the\nauthority, and such additional information as the authority may\nreasonably deem necessary to facilitate the process of condemnation and\npayment. The notice shall state that it is a notice of pendency of an\nacquisition proceeding and that the authority will elect whether or not\nto pay the amount of such award when it has been finally determined. The\nauthority also shall cause a copy of such notice (i) to be served upon\nthe stock transfer agent or agents designated by LILCO for the transfer\nand registration of its stock and (ii) to be published in at least five\nsuccessive issues of a daily newspaper of national circulation.\n (b) Upon receipt of such notice, the stock transfer agent or agents,\nat the expense of the authority, shall forthwith serve upon each of the\nregistered owners of such stock a copy of such notice. Service shall be\ndeemed sufficient if mailed by certified or registered mail to the\naddress of each such owner as shown on LILCO's stock transfer books.\nService of the notice upon the stock transfer agent or agents and its\npublication shall not be jurisdictional prerequisites to the validity of\nthe taking. Failure to notify any owner of stock to be taken will not\ninvalidate any proceedings brought hereunder or any title acquired by\nthe authority.\n (c) Upon filing of the notice described in paragraph (a) hereof, the\nauthority shall petition a special term of the supreme court in the\njudicial district in which LILCO has its principal office for the\nacquisition of the stock. Such petition shall be generally in the form\nprescribed by the eminent domain procedure law so far as consistent\nherewith.\n (d) The supreme court in the district in which LILCO has its principal\noffice shall have exclusive jurisdiction to hear and determine all\nclaims arising from the acquisition of stock by the exercise of the\npower of eminent domain and shall hear such claims without a jury and\nwithout referral to a referee or commissioners. Notwithstanding the\nprovisions of section nine hundred one of the civil practice law and\nrules, upon motion to the court by the authority, the condemnation\nproceeding for the acquisition of stock shall be maintained as a class\naction, pursuant to remaining provisions of article nine of the civil\npractice law and rules, and the owners of the stock shall be deemed a\ndefendant class on the basis of the following express legislative\nfindings:\n (i) the class of LILCO stock owners is so numerous that joinder of all\nmembers is impracticable;\n (ii) the issue of valuation of LILCO stock is common to all LILCO\nstock owners and there are questions of law or fact common to the\nmembers of such class which predominate over any questions affecting\nonly individual members;\n (iii) the claims or defenses, if any, of any representative owner of\nLILCO stock to acquisition thereof by the authority are typical of the\nclaims or defenses of the class;\n (iv) there are representative parties who will fairly and adequately\nprotect the interests of the class; and\n (v) the prosecution of separate actions by or against individual\nmembers of the class would create a risk of inconsistent or varying\nadjudications with respect to the issue of valuation and other issues\ncommon to the class.\n (e) The procedure for determining just compensation shall be in the\nmanner prescribed by the eminent domain procedure law, except to the\nextent such procedure is inconsistent with the provisions of this title,\nin which case the provisions of this title shall control.\n (f) Upon the entry of an award finally determining just compensation\nfor the stock, the authority shall have sixty days after receipt of\nnotice of entry of such award within which to elect to proceed with the\ntaking or to abandon such acquisition as provided in subdivision ten\nhereof. Notice of such election shall be served by the authority and by\nthe stock transfer agent in the manner described in paragraph (a)\nhereof. If the authority elects to proceed with the acquisition, it\nshall deposit with the supreme court in which the condemnation\nproceeding was held an amount equal to the award within one hundred\neighty days after receipt by the authority of notice of entry of such\naward. Upon the making of such deposit, the authority shall notify\nLILCO's stock transfer agent in writing of such deposit. The sum so\ndepositied shall be applied as provided in the eminent domain procedure\nlaw. Upon making such deposit and giving such notice to the stock\ntransfer agent, title to all stock described in the notice of taking\nshall immediately vest in the authority and the authority shall have the\nimmediate right thereto. In the event the authority elects to abandon\nthe acquisition, the provisions of subdivision ten hereof shall apply.\n (g) It shall be a condition precedent to the payment of compensation\nfor any such securities that such securities be surrendered to the\nsupreme court or to such other entity, including the issuer's stock\ntransfer agent, as the supreme court may direct.\n 6. Procedure for acquisition of LILCO assets. (a) If the authority\nshall find it necessary or convenient to acquire any real or personal\nproperty of LILCO, (other than securities), whether for immediate or\nfuture use, then the authority need not determine that such property is\nrequired for public use, since the legislature already has made such\ndetermination in this title which determination shall be binding for all\npurposes. The authority need not publish any notice of its intention to\nacquire such property or hold any public hearing with respect thereto or\nto the public use of such action.\n (b) When any real property of LILCO within this state is sought to be\nacquired by the exercise of the power of eminent domain, and after the\nauthority shall have entered into negotiations with LILCO for the\npurchase of such property, the authority shall cause a survey and map to\nbe made thereof and shall cause such survey and map to be filed in its\noffice and in the office of the county clerk in which such property is\nlocated. There shall be annexed to such survey and map a certificate\nexecuted by the chief engineer of the authority, or by such other\nofficer or employee as may be designated by the board, stating that the\nproperty or interest therein described in such survey and map is\nnecessary for its purposes.\n (c) Upon filing such survey and map, the authority shall petition a\nspecial term of the supreme court in the judicial district in which the\nproperty is located for the acquisition of such property or interest\ntherein. Such petition shall describe the property being acquired, the\nvaluation date, as determined by the authority, and such additional\ninformation as the authority may reasonably deem necessary to facilitate\nthe process of condemnation and payment. The petition shall state that\nthe authority will elect whether or not to pay the amount of such award\nwhen it has been finally determined. In all other respects, such\npetition shall be generally in the form prescribed by the eminent domain\nprocedure law, so far as consistent herewith. Such petition, together\nwith a notice of pendency of the proceeding, shall be filed in the\noffice of the county clerk of the county in which the property is\nlocated and shall be indexed and recorded as provided by law. A copy of\nsuch petition, together with a notice of the presentation thereof to\nsuch special term of the supreme court, shall be served upon the owners\nof such property as provided in the eminent domain procedure law. The\nauthority may cause a duplicate original affidavit of the service\nthereof to be recorded in the books used for recording deeds in the\noffice of the county clerk of the county in which the property described\nin such notice is located, and the recording of such affidavit shall be\nprima facie evidence of due service thereof.\n (d) Subsequent proceedings shall be conducted generally in the manner\nprescribed by the eminent domain procedure law except to the extent the\nprovisions thereof are inconsistent with the provisions of this title,\nin which case the provisions of this title shall control.\n (e) In any proceeding involving the valuation of LILCO property taken\nby the authority the supreme court shall ascertain and determine just\ncompensation for the property taken as of the valuation date, giving due\nconsideration to the applicable findings and determinations of the\nlegislature set forth in subdivision one hereof.\n (f) Should LILCO's property be taken by the exercise of the power of\neminent domain and if LILCO shall have agreed upon the compensation to\nbe paid therefor in settlement of the proceeding, if, LILCO shall be\nentitled to payment of the agreed or awarded compensation within one\nhundred eighty days after the date of the agreement upon the amount of\nthe compensation or of the entry of the award, together with interest\nupon the amount of such compensation from the time of acquisition\nthereof by the authority to the date of payment of such compensation;\nbut such interest shall cease upon the service by the authority, upon\nthe person or corporation entitled thereto, of a fifteen days' notice\nthat the authority is ready and willing to pay the amount of such\ncompensation upon the presentation of proper proofs and vouchers. Such\nnotice shall be served personally or by registered mail and publication\nthereof shall be made at least once a week for three successive weeks in\na daily newspaper of general circulation in the county in which such\nproperty or any part thereof is located.\n (g) Upon the entry of an award finally determining just compensation\nfor the property of LILCO, the authority shall have sixty days after\nreceipt of notice of entry of such award within which to elect to\nproceed with the taking or to abandon such acquisition as provided in\nsubdivision ten hereof. Notice of such election shall be served by the\nauthority on the owners of such property in the manner described in\nparagraph (c) hereof. If the authority elects to proceed with the\nacquisition, it shall deposit with the supreme court in which the\ncondemnation proceeding was held an amount equal to the award within one\nhundred eighty days after receipt by the authority of notice of entry of\nsuch award. Upon the making of such deposit, the authority shall notify\nLILCO in writing of such deposit. The sum so deposited shall be applied\nas provided in the eminent domain procedure law. Upon making such\ndeposit and giving such notice to LILCO, title to all property described\nin the notice of taking shall immediately vest in the authority and the\nauthority shall have the immediate right thereto. The order setting\nforth the award, together with evidence from the clerk of the court of\nreceipt of the amount of the award, shall be filed in the office of the\ncounty clerk of the county in which the property is located and shall be\nindexed and recorded in the same manner as a notice of pendency under\nthe eminent domain procedure law. The owner or person in possession of\nsuch property shall deliver possession thereof to the authority upon\ndemand, and in case possession is not delivered when demanded or demand\nis not convenient because of absence of the owner or inability to locate\nor determine the owner, the authority may apply to the court without\nnotice for an order requiring the sheriff to put it into possession of\nsuch real property. Such an order shall be executed as if it were an\nexecution for the delivery of the possession of the property. In the\nevent the authority elects to abandon the acquisition, the provisions of\nsubdivision ten hereof shall apply.\n 7. At any time the authority and its duly authorized agents and\nemployees may, on reasonable notice and during business hours, (i) enter\nupon any real property proposed to be acquired for the purpose of making\nthe surveys or maps mentioned in this section, or of making such other\nsurveys, inspections or examinations of real and personal property and\n(ii) inspect and make copies of the books and records of the issuer of\nsuch securities, all as the authority may deem necessary or convenient\nfor the purposes of this title.\n 8. Upon the acquisition of all the outstanding shares of stock of a\ncorporate issuer representing all the voting rights and equity thereof,\nthe authority shall as soon as reasonably practicable take all steps\nnecessary to assure that the rights and claims of all the holders of any\nother stock and debt securities and all other creditors thereof are as\nsecure as they were immediately prior to the acquisition by the\nauthority. Nothing herein shall prohibit the authority from taking any\nappropriate and prudent action to renegotiate and restructure such debt\nor from purchasing the preferred stock and debt securities issued by\nsuch corporation at such prices as the authority may determine. The\nauthority may also exchange its bonds for any outstanding preferred\nstock or debt securities with the consent of the holders of such\npreferred stock or debt securities.\n 9. As soon as practicable after the authority has acquired sufficient\nshares of LILCO stock to do so or after it has acquired all the property\nof LILCO pursuant to this title, the authority shall forthwith close and\ndecommission the Shoreham plant and shall investigate and develop\nalternative uses, if any, for such plant.\n 10. If the authority determines, in its sole discretion, that the\ntotal cost of acquisition will result in rates in excess of the rates\nwhich would result from continued operation by LILCO, the authority\nshall abandon the acquisition. In such event, the authority shall serve\nnotice of such abandonment (i) in the case of a stock acquisition, by\ncausing to be mailed by certified or registered mail a copy of such\nnotice to each former owner of stock as shown on LILCO's stock transfer\nbooks immediately prior to such acquisition at the address shown on such\nstock transfer books and by causing to be published a copy of such\nnotice in at least five successive issues of a daily newspaper of\nnational circulation or (ii) in the case of an asset acquisition, in the\nsame manner as provided for the service of a petition for acquisition in\nparagraph (c) of subdivision six hereof. In addition, in the case of an\nasset acquisition the authority shall file a copy of the notice of\nabandonment with the county clerk of the county in which is located any\nreal property that was taken and with the clerk of the supreme court in\nwhich the proceeding was instituted.\n 11. The provisions with respect to the valuation of stock and property\nset forth in this section shall apply only to stock or property of\nLILCO, as the case may be, acquired by the authority by the exercise of\nthe power of eminent domain.\n * NB There are 2 § 1020-h's\n