New York Law Review

Tag: Utility Relocation

  • City of New York v. Verizon New York, Inc., 5 N.Y.3d 255 (2005): Interpreting Penal Statutes Narrowly

    5 N.Y.3d 255 (2005)

    A statute imposing a penalty must be strictly construed, and any ambiguity in its language should be resolved in favor of the party against whom the penalty is sought.

    Summary

    The City of New York sought to fine Verizon for its delay in relocating above-ground telephone poles and wires pursuant to an “order out” related to a sewer construction project. The City relied on a provision of the New York City Administrative Code that mandates timely relocation of utility facilities when public works projects are underway. Verizon argued that the relevant code section applied only to underground facilities, not above-ground poles and wires. The New York Court of Appeals held that because the Administrative Code provision operated as a penal statute, it must be narrowly construed, and its language did not clearly encompass above-ground facilities. Therefore, the City could not assess a penalty against Verizon under that provision.

    Facts

    The City of New York hired a contractor to construct sewers in Queens. As part of the project, Verizon was notified in December 2000 that certain above-ground telephone poles and wires needed to be relocated. After failing to reach an agreement regarding the relocation plan, the City issued an “order out” on February 5, 2001, directing Verizon to move its facilities. Verizon complied with the order 103 days late, after negotiating a price for the work. The City then assessed a penalty of $515,000 against Verizon, calculated at $5,000 per day of delay.

    Procedural History

    The City initiated an enforcement proceeding in the Supreme Court to collect the penalty. Verizon moved to dismiss the action, arguing that the Administrative Code provision did not apply to above-ground facilities. The Supreme Court denied the motion. The Appellate Division affirmed the Supreme Court’s decision, with one Justice dissenting. The Appellate Division certified the question of whether its order was properly made to the New York Court of Appeals.

    Issue(s)

    Whether New York City Administrative Code § 24-521, which requires utility companies to relocate their facilities when necessary for public works projects, applies to above-ground facilities such as telephone poles and wires, thereby allowing the City to impose a penalty for delays in relocating such facilities.

    Holding

    No, because section 24-521, in conjunction with section 19-150, is a penal provision that must be strictly construed, and its language does not unambiguously extend to above-ground facilities like telephone poles and wires.

    Court’s Reasoning

    The Court of Appeals acknowledged that utility companies have a common-law obligation to relocate their facilities when they interfere with municipal projects, citing Transit Commn. v Long Is. R.R. Co., 253 NY 345, 351 (1930). The court stated the issue was whether the City could assess a fine based on the Administrative Code, rather than pursuing actual damages under common law. The Court found the language of section 24-521 ambiguous, noting that while it refers to “pipes, mains and conduits, and all fixtures and appliances connected therewith or attached thereto,” it does not explicitly mention above-ground or below-ground facilities. Because the statute refers to facilities being laid “in any street,” and the terms “pipes” and “mains” generally refer to underground infrastructure, the court construed the term “conduits” to apply only to underground facilities.

    The Court emphasized that because section 24-521 operates as a penal provision, it must be strictly construed. Quoting Osborne v International Ry. Co., 226 NY 421, 426 (1919), the court stated, “[a] statute awarding a penalty is to be strictly construed, and before a recovery can be had a case must be brought clearly within its terms.” The Court further noted that any reasonable doubt in the interpretation of a statute should be resolved in favor of the party facing the penalty, citing Goodspeed v Ithaca St. Ry. Co., 184 NY 351, 354 (1906). Since the City did not argue that the penalties were remedial, and violating the Code provision could lead to jail time, the Court declined to extend the statute’s reach to Verizon’s conduct regarding above-ground facilities. The court emphasized it was for the City Council, not the court, to clarify the Code text if it intended to cover above-ground facilities.

  • Matter of Consolidated Edison Co. v. Lindsay, 24 N.Y.2d 309 (1969): Utility’s Duty to Relocate Facilities at Own Expense

    Matter of Consolidated Edison Co. v. Lindsay, 24 N.Y.2d 309 (1969)

    A utility company must relocate its facilities at its own expense when a municipality condemns land for a governmental function, such as urban renewal or building a public school, unless the legislature expressly directs otherwise.

    Summary

    Consolidated Edison (Con Ed) sought compensation from New York City for the costs of relocating its pipes and mains after the city condemned land for an urban renewal project and a public school. The Court of Appeals held that Con Ed was not entitled to compensation. The court reasoned that the common-law rule requires utility companies to relocate their facilities at their own expense when necessitated by governmental functions. The court distinguished this case from situations where the city acts in a proprietary capacity, reaffirming that slum clearance and school construction are governmental functions.

    Facts

    New York City condemned land in lower Manhattan for the Brooklyn Bridge Southwest Urban Renewal Plan and another parcel in the Bronx to build Public School 161. These condemnations required Con Ed to remove and relocate its subsurface infrastructure (pipes, mains, conduits) from the affected streets. The city did not offer compensation to Con Ed for these relocation expenses, citing the common-law rule that utilities bear the cost of relocating facilities in public rights-of-way when required for public projects.

    Procedural History

    In the urban renewal case (Matter of Consolidated Edison Co. v. Lindsay), Con Ed initiated an Article 78 proceeding to compel the city to compensate it for relocation costs; Special Term granted Con Ed’s petition, which the Appellate Division affirmed. In the school construction case (Matter of City of New York [Public School 161]), the city sought an order compelling Con Ed to relocate its facilities at its own expense, which Special Term granted; the Appellate Division reversed. Both cases were appealed to the New York Court of Appeals and were consolidated for review.

    Issue(s)

    1. Whether a utility company is entitled to compensation from a municipality when the municipality condemns land for a governmental function, thereby requiring the utility to relocate its facilities.

    Holding

    1. No, because the common-law rule dictates that utility companies must bear the cost of relocating their facilities when required by governmental functions, such as urban renewal and school construction, unless the legislature expressly directs otherwise.

    Court’s Reasoning

    The Court of Appeals reaffirmed the common-law rule, stating, “utility companies, which have been granted the ‘privilege’ of laying their pipes and mains in the public streets…must relocate them at their own expense ‘whenever the public health, safety or convenience requires the change to be made.’” The Court emphasized that departures from this rule are recognized “only ‘when the change is required in behalf of other public service corporations or in behalf of municipalities exercising a proprietary instead of a governmental function.’” The court determined that urban renewal and the construction of public schools constitute governmental functions. Distinguishing Matter of City of New York (Gillen Place), 304 N.Y. 215, the court clarified that Gillen Place applied only when the city acted in a proprietary capacity. The court noted that the city was not attempting to appropriate Con Ed’s pipes for its own use, but simply compelling relocation. The court stated that statutory definitions of “real property” do not override the common-law rule. “The burden and expense traditionally imposed on the public utility to remove and relocate its property may not be transferred to the taxpayer absent ‘express direction of the Legislature.’”

  • New York Telephone Co. v. City of Binghamton, 18 N.Y.2d 152 (1966): Utility’s Duty to Relocate Facilities at Own Expense

    New York Telephone Co. v. City of Binghamton, 18 N.Y.2d 152 (1966)

    A utility company must bear the cost of relocating its facilities in public streets when changes are required by public necessity, and slum clearance qualifies as such a necessity even if the land is ultimately redeveloped by private entities.

    Summary

    New York Telephone Company sought reimbursement from the City of Binghamton for relocating its telephone lines due to the city’s street closure for a middle-income housing project. The city conveyed the land to a private corporation for development. The Court of Appeals reversed the Appellate Division’s decision, holding that the telephone company was not entitled to reimbursement. The court reasoned that slum clearance is a governmental function, and utility companies must bear the cost of relocation when required by public necessity, a common-law principle the court was unwilling to overturn.

    Facts

    The City of Binghamton undertook studies and determined an area to be substandard, insanitary, and blighted. The city closed part of a public street as part of an urban renewal project under the General Municipal Law and the National Housing Act of 1949. The city acquired about 29 acres of land, including the street and adjacent properties, and conveyed them to Chenango Court, Inc., a limited dividend corporation, for development as a middle-income housing project. New York Telephone Company had telephone lines and facilities in the closed street and incurred expenses to relocate them.

    Procedural History

    The case was submitted to the Appellate Division on an agreed statement of facts. The Appellate Division ruled in favor of the telephone company, finding the city acted in a proprietary capacity. The City of Binghamton appealed to the New York Court of Appeals.

    Issue(s)

    Whether the telephone company is entitled to reimbursement from the city for the expense of relocating its facilities, necessitated by the city’s closing of a street for an urban renewal project that involved conveying the land to a private corporation for development?

    Holding

    No, because the city’s actions constituted a governmental function of slum clearance, and utility companies must bear the cost of relocation when required by public necessity under the common law.

    Court’s Reasoning

    The court emphasized the common-law rule that utility companies must relocate their facilities at their own expense when public necessity requires it. The court stated, “The ‘fundamental common law right applicable to franchises in streets’ is that a utility company must relocate its facilities in the public streets when changes are required by public necessity.” Citing New Rochelle Water Co. v. State of New York, the court reiterated that there was no common law obligation for the state to pay for relocation. The court found slum clearance to be a governmental function, even if the cleared land is ultimately redeveloped by private developers. It cited Matter of Murray v. La Guardia, Kaskel v. Impellitteri, and Cannata v. City of New York to support the notion that taking substandard real estate for redevelopment is a public use. The court distinguished cases where the city operated as a “public utility” business, noting that the city was not “going into business” for itself here. The court dismissed the argument that the cost of relocation would become part of the slum clearance cost, of which the city only paid a fraction, and that other landowners received full compensation, noting the telephone company only possessed a privilege or permit to use the street, subject to the common-law rule.