Can a Long Island town or county condemn part of the LILCO/LIPA electric grid and use it to run its own municipal utility?

Plain-English summary

Suffolk County's Attorney asked whether a municipality in the LILCO (Long Island Lighting Company) or LIPA (Long Island Power Authority) service area could condemn the transmission and distribution grid and use it to run a municipal electric utility.

The AG said no.

The Legislature created LIPA in the late 1980s with one central purpose: to deal with the economic crisis on Long Island caused by LILCO's electric rates (driven up by the Shoreham Nuclear Power Plant investment). Title 1-A of Article 5 of the Public Authorities Law is the LIPA enabling act. Section 1020-a contains the Legislature's findings:

• "Constantly escalating and excessive cost of electricity" in the LILCO service area "pose[s] a serious threat to the economic well-being, health and safety of the residents."
• A "lack of confidence" exists that LILCO can supply electricity "in a reliable, efficient and economic manner."
• The Shoreham investment was imprudent.
• The remedy is "replacing such investor owned utility with a publicly owned power authority."
• The situation is "a matter[] of state concern within the meaning of paragraph three of subdivision (a) of section three of article nine of the state constitution."

That last bullet is the key. By formally declaring the situation a matter of state concern under Article IX § 3(a)(3) of the State Constitution, the Legislature triggered the doctrine (from Adler v Deegan and Kelley v McGee) that places the subject beyond local home-rule reach. Local laws and other local actions must be consistent with State law on matters of state concern.

The LIPA framework gives LIPA the exclusive authority to acquire LILCO (by purchase or condemnation, whichever is less expensive for ratepayers) and to provide power in the service area thereafter. § 1020-h(1)(a) and (2) require LIPA to negotiate purchase or condemnation; § 1020-h(1)(b) requires that the terms result in lower rates than continued LILCO operation; § 1020-h(1)(n) declares the acquisition serves state-concern public purposes. Once LIPA has acquired LILCO assets, only LIPA decides whether to transfer those assets to municipal utilities (§ 1020-f(t)) and only LIPA may contract with municipalities for power services (§ 1020-g(k)). § 1020-ff requires liberal construction of the title; § 1020-gg makes the title controlling over inconsistent law.

A municipal condemnation of LILCO or LIPA assets, the AG concluded, was inconsistent with this scheme at every level. The Legislature reserved acquisition authority to LIPA. The Legislature reserved subsequent transfer authority to LIPA. Municipal condemnation would interrupt both.

Three independent doctrines reinforced the conclusion:

1. Field preemption. The Court of Appeals applies field-preemption analysis when a State law occupies a regulatory field by declaration of state policy or by comprehensive scheme. The LIPA framework does both. See Albany Area Builders Assn. v Town of Guilderland, Consolidated Edison Co. v Town of Red Hook, People v DeJesus, and Wholesale Laundry Bd. v City of NY. As the Second Department held in Long Island Lighting Co. v Suffolk Co. (a case the AG cited as squarely on point), "the State Legislature intended to confer upon LIPA the exclusive authority to acquire LILCO and that Public Authorities Law article 5, title 1-A, necessarily occupies the field in connection with such acquisition."

2. Specific over general. General Municipal Law Article 14-A authorizes municipalities to establish municipal utilities. The LIPA framework is a specific, targeted statutory scheme; the General Municipal Law authority is a general grant. Under People v Mobil Oil Corp., specific statutes prevail over general statutes. Article 14-A cannot be used to invade the LIPA field.

3. Prior public use doctrine. Property already in public use cannot be condemned for another public use absent express statutory authorization. The Long Island Rail Road Company v Long Island Lighting Company applied this doctrine to LILCO assets. Section 1020-h(1)(a) declares LIPA's public use of LILCO-acquired property "superior to the public use of such property by any other person, association, or corporation." Municipalities lack the express statutory authorization required to overcome the doctrine.

The conclusion: a municipality in the LILCO/LIPA service area cannot condemn LILCO or LIPA transmission and distribution assets to operate a municipal utility. The Legislature has made that path legally impossible.

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

LIPA in fact acquired LILCO in 1998, immediately after this opinion was issued. The post-acquisition LIPA structure has evolved significantly. LIPA contracted operational responsibility for the electric grid to several private operators over the years, with the most recent restructuring substantially modifying the LIPA-grid-operator relationship. Anyone considering municipal authority over Long Island electric supply needs current legal advice.

Common questions

Could a Long Island municipality run its own electric utility today?

The 1998 opinion focuses on condemning LILCO/LIPA assets. The Legislature reserved acquisition authority to LIPA. Whether a municipality could establish a new utility from scratch (running its own transmission lines, generating its own power, contracting only for needed services) is a different question that the opinion did not fully address. The opinion noted that Article 14-A's general authority cannot be used to invade the LIPA-specific field, but the precise scope of remaining municipal-utility authority is more nuanced.

What is "field preemption"?

A doctrine that prevents local laws on a subject where the State has occupied the entire regulatory field. Field preemption can be established by an explicit legislative declaration (as in § 1020-a) or by a comprehensive regulatory scheme (as in the LIPA framework). Once field preemption applies, even non-conflicting local rules are invalid because the State has reserved the entire subject. The doctrine is older than the LIPA case (Robin v Hempstead on abortion regulation, Consolidated Edison v Red Hook on nuclear plants), but the LIPA case is the most stark Long Island example.

What is the prior-public-use doctrine?

A common-law rule that property already devoted to a public use cannot be condemned for another public use without express statutory authorization. The rule prevents one public agency from disrupting another agency's public use. Section 1020-h(1)(a) explicitly invokes the doctrine by declaring LIPA's public use "superior" to any other person's or corporation's public use of LILCO-acquired property.

Does this opinion mean Long Island municipalities have no role in electric supply?

No. Section 1020-f(t) authorizes LIPA to transfer assets to municipal utilities, and § 1020-g(k) authorizes LIPA to contract with municipalities. The opinion reserves those authorities to LIPA's discretion. A municipality can ask LIPA to transfer assets or contract for service; LIPA decides.

Why was the Shoreham Nuclear Power Plant such a big deal?

Shoreham was a $5 billion nuclear plant LILCO built starting in the 1970s. The plant was substantially complete by 1984 but never went into commercial operation because of intense local opposition tied to evacuation-plan concerns. LILCO and its ratepayers were stuck with the cost of an unused plant. The economic crisis the Legislature identified in § 1020-a was a direct consequence. LIPA's acquisition of LILCO included a write-down of the Shoreham investment and was structured to deliver lower rates than LILCO's continued operation could have provided.

Could the Legislature have written this differently?

In theory, yes. The Legislature could have permitted municipal condemnation of LILCO assets, or shared authority between LIPA and willing municipalities. It chose not to. The 1998 opinion reads the statutory choices as deliberate, and points to the explicit "state concern" declaration as the gate-closing language.

Background and statutory framework

Title 1-A of Article 5 of the Public Authorities Law (§§ 1020-a through 1020-x) is the LIPA enabling act, originally enacted in 1986 and amended several times before the 1998 opinion.

§ 1020-a contains the legislative findings and the state-concern declaration. § 1020-b contains definitions, including "service area" (defined as LILCO's franchise area, § 1020-b(17)). § 1020-c creates LIPA as a body corporate and politic and a State political subdivision (§ 1020-c(1)). § 1020-f lists LIPA's general powers, including § 1020-f(t) (transfer of LILCO-acquired assets to municipal gas and electric agencies). § 1020-g lists additional powers, including § 1020-g(k) (cooperation and contracts with municipalities) and § 1020-g(n) (LIPA acquires all LILCO franchise and utility service responsibilities). § 1020-h is the acquisition statute, with § 1020-h(1)(a) (acquisition methodology and superiority of public use), § 1020-h(1)(b) (negotiation for rate-favorable terms), § 1020-h(1)(n) (public-purpose findings), and § 1020-h(2) (less-expensive-method standard). § 1020-ff requires liberal construction. § 1020-gg makes the title controlling over inconsistent law. § 1020-q and § 1020-s address related procedural and administrative matters.

General Municipal Law Article 14-A is the general municipal-utility statute. The opinion treats it as displaced by LIPA in the Long Island service area.

The Second Department's decision in Long Island Lighting Co. v Suffolk Co., 119 AD2d 128 (1986), is the closest precedent. Suffolk County had earlier attempted a similar municipal-utility maneuver under General Municipal Law Art 14-A. The Second Department held that the LIPA framework necessarily occupied the field. The Court of Appeals denied leave and dismissed for lack of substantial constitutional question. The 1998 AG opinion treats LILCO v Suffolk Co. as squarely controlling.

Citations

• N.Y. Const. art. IX, § 3 (state concern doctrine and home rule limits).
• General Municipal Law Art 14-A (general municipal utility authority).
• Public Authorities Law § 1020-a (LIPA legislative findings and state concern declaration).
• Public Authorities Law § 1020-b (LIPA definitions).
• Public Authorities Law § 1020-b(17) (definition of "service area" as LILCO franchise area).
• Public Authorities Law § 1020-c(1) (LIPA as body corporate and politic).
• Public Authorities Law § 1020-f (LIPA general powers).
• Public Authorities Law § 1020-f(t) (LIPA may transfer assets to municipal utilities).
• Public Authorities Law § 1020-ff (liberal construction).
• Public Authorities Law § 1020-g (additional LIPA powers).
• Public Authorities Law § 1020-g(k) (LIPA cooperation and contracts with municipalities).
• Public Authorities Law § 1020-g(n) (LIPA acquires all LILCO franchise responsibilities).
• Public Authorities Law § 1020-gg (title controls over inconsistent law).
• Public Authorities Law § 1020-h (LILCO acquisition statute).
• Public Authorities Law § 1020-h(1)(a) (acquisition methodology; superiority of public use).
• Public Authorities Law § 1020-h(1)(b) (rate-favorable negotiation).
• Public Authorities Law § 1020-h(1)(n) (public-purpose findings).
• Public Authorities Law § 1020-h(2) (less-expensive-method standard).
• Public Authorities Law § 1020-q (procedural).
• Public Authorities Law § 1020-s (procedural).
• Long Island Lighting Co. v Suffolk Co., 119 AD2d 128 (2d Dept), motion for leave to appeal denied, 68 NY2d 607, appeal as of right dismissed, 68 NY2d 802 (1986) (squarely controlling).
• Adler v Deegan, 251 NY 467 (1929) (state-concern doctrine).
• Kelley v McGee, 57 NY2d 522 (1982) (state-concern analysis).
• People v Mobil Oil Corp., 48 NY2d 192 (1979) (specific over general).
• The Long Island Rail Road Company v Long Island Lighting Company, 103 AD2d 156 (2d Dept 1984), aff'd, 64 NY2d 1088 (1985) (prior public use doctrine).
• Albany Area Builders Assn. v Town of Guilderland, 74 NY2d 372 (1989) (preemption test).
• Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99 (1983) (preemption test).
• People v DeJesus, 54 NY2d 465 (1981) (preemption test).
• Wholesale Laundry Bd. v City of NY, 17 AD2d 327 (1st Dept 1962), aff'd, 12 NY2d 998 (1963) (preemption test).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/I_98-13_pw.pdf

Original opinion text

NY CONST, ART IX, § 3; GENERAL MUNICIPAL LAW, ART 14-A; PUBLIC
AUTHORITIES LAW, ART 5, §§ 1020-a, 1020-b, 1020-c, 1020-f,
1020-ff, 1020-g, 1020-gg, 1020-h, 1020-q, 1020-s.
A municipality in the service area of the Long Island
Lighting Company (LILCO) or the Long Island Power Authority
(LIPA) may not condemn the transmission and distribution system,
facilities and other assets of LILCO and/or LIPA and use them to
operate a municipal utility.
March 30, 1998

Robert Cimino, Esq.
County Attorney
County of Suffolk
H. Lee Dennison Building
100 Veterans Memorial Highway
Hauppauge, NY 11788

Informal Opinion
No. 98-13

Dear Mr. Cimino:
You have asked whether a municipality in the service area of
the Long Island Lighting Company (LILCO) and/or the Long Island
Power Authority (LIPA) may condemn the transmission and
distribution system, facilities, and other assets of LILCO and/or
LIPA and use them to operate a municipal utility, or whether such
action is inconsistent with or preempted by State law governing
LIPA.
First, we conclude that condemnation by a municipality in
the service area of LILCO (defined as LILCO's franchise area
[Public Authorities Law § 1020-b (17)]) of any portion of the
transmission and distribution system, facilities and other assets
of LILCO is inconsistent with and preempted by Title 1-A of
Article 5 of the Public Authorities Law. We believe it is clear
that the Legislature has conferred upon LIPA exclusive authority
to acquire LILCO. Second, we conclude that condemnation by
municipalities in LIPA's service area of any LIPA assets is
inconsistent with and preempted by these same provisions. The
Legislature has authorized LIPA, subsequent to acquisition of
LILCO, to provide power to ratepayers in the service area.
Public Authorities Law § 1020-b(17). The existing legislative
scheme vests LIPA with the authority, in its sole discretion, to
transfer assets to municipal utilities or enter into agreements
with municipal utilities in the service area. Id., §§ 1020-f,
1020-g. These provisions are part of a specific statutory scheme
which preempts the field, and which cannot be overridden by

2
inconsistent local legislation or other local action. We base
these conclusions on the following provisions of State law,
decisions of the courts and statutory analysis.
In its legislative findings which preface Title 1-A of
Article 5, the Legislature declared that "[c]onstantly escalating
and excessive cost of electricity" in the service area of LILCO
"pose[s] a serious threat to the economic well-being, health and
safety of the residents of and the commerce and industry in the
service area". Id., § 1020-a. Further, the Legislature
declared:
There is a lack of confidence that the
needs of the residents and of commerce and
industry in the service area for electricity
can be supplied in a reliable, efficient and
economic manner by the Long Island lighting
company. Id.
Also, the Legislature found that the decisions by LILCO to
commence construction of the Shoreham Nuclear Power Plant and to
continue construction of the plant were imprudent. Id.
Investment in the nuclear power plant has created significant
rate increases, straining economic capabilities of ratepayers in
the service area. Id. Further, the Legislature found that
additional rate increases would be necessary if the plant is
placed in service. Id. For all of these reasons, the
Legislature concluded that a situation exists which threatens the
economy, health and safety in the service area. Id.
Significantly, the Legislature stated that "[d]ealing with
such a situation in an effective manner, assuring the provision
of an adequate supply of electricity in a reliable, efficient and
economic manner . . . [to retain industry and commerce and
attract new industry and commerce] . . . are . . . matters of
state concern within the meaning of paragraph three of
subdivision (a) of section three of article nine of the state
constitution. Such matters of state concern best can be dealt
with by replacing such investor owned utility with a publicly
owned power authority". Id. (emphasis supplied).
To effectuate this policy, LIPA has been created as a body
corporate and politic and a political subdivision of the State to
exercise essential governmental and public powers. Id.,
§ 1020-c(1). The area of operation of LIPA is the "service
area", defined as LILCO's franchise area. Id., § 1020-b(17).
Specifically, the Legislature has directed that LIPA achieve the
legislative policy through purchase or condemnation of either the

3
securities or assets of LILCO, whichever is less expensive for
the ratepayers in the service area and is the most appropriate
means of dealing with the emergency involving the economy, health
and safety in the service area. Id., § 1020-h(1)(a), (2).
The Legislature has required that LIPA enter into
negotiations with LILCO for the purchase of such stocks or assets
upon terms that LIPA in its sole discretion determines will
result in rates equal to or less than rates payable under LILCO's
continued operation. Id., § 1020-h(1)(b). The Legislature found
that:
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. Id., § 1020-h(1)(n).
Once LIPA has acquired the securities or assets of LILCO, it
is authorized to transfer assets acquired from LILCO to municipal
gas or electric agencies "for such consideration and upon such
terms as the authority may determine to be in the best interests
of the gas and electric ratepayers in the service area". Id.,
§ 1020-f(t). Also, LIPA may cooperate and enter into contracts
with municipalities. Id., § 1020-g(k).
The Legislature has expressly stated that these provisions,
"being necessary for the prosperity of the state and its
inhabitants, shall be liberally construed to effect the purposes
hereof". Id., § 1020-ff. "Insofar as the provisions of this
title are inconsistent with the provisions of any other law or
any part thereof, the provisions of this title shall be
controlling". Id., § 1020-gg.
In our view, the Legislature has evidenced an unequivocal
legislative intent. As stated in an opinion of the Appellate
Division in Long Island Lighting Co. v Suffolk Co., 119 AD2d 128
(2d Dept), motion for leave to appeal denied, 68 NY2d 607, appeal
as of right dismissed, as no substantial constitutional question
directly involved, 68 NY2d 802 (1986), a case presenting facts
very similar to those at hand and in which the court relied upon
the same body of State law:

4
There can be little question that the State
Legislature intended to confer upon LIPA the
exclusive authority to acquire LILCO and that
Public Authorities Law article 5, title 1-A,
necessarily occupies the field in connection
with such acquisition. Long Island Lighting
Co. v Suffolk Co., 119 AD2d at 135.
The Legislature's intent is clearly stated in the statutory
directive that:
LIPA shall acquire from LILCO all franchise
and utility service responsibilities for all
ultimate consumers of gas and electricity
within LILCO's former service territory,
including the responsibility to provide safe
and adequate service. Public Authorities Law
§ 1020-g(n).
Equally unequivocally, the Legislature has characterized the
imperiled economic conditions in the service area caused by the
excessive and constantly escalating cost of electricity as
"matters of state concern". The remedy is the acquisition by
LIPA of LILCO assets and the provision of power by LIPA in the
service area on a more economical basis. The reference in
section 1020-a to "matters of state concern" within the meaning
of Article IX, § 3(a) of the State Constitution is particularly
significant. Under this provision of the State Constitution, as
to matters other than the property, affairs or government of a
local government, i.e., matters of State concern, the Legislature
is unrestricted by the home rule authority of local governments.
See, Adler v Deegan, 251 NY 467 (1929); Kelley v McGee, 57 NY2d
522 (1982). Concomitantly, local governments, in exercising
their home rule authority by enacting local legislation or in
taking other action, must be consistent with State laws dealing
with matters of State concern. Id.
Unquestionably, the Legislature has declared that the
provisions of the Public Authorities Law governing LIPA, the
acquisition of LILCO by LIPA and subsequent provision of power by
LIPA in the service area are matters of State concern.
Therefore, municipalities in the service area may not enact local
legislation or take other action inconsistent with these
provisions.
LIPA has in fact entered into agreements with LILCO to
acquire all outstanding common stock of LILCO, subject to
regulatory approval. The approval process has been almost

5
completed. The statute clearly establishes that LIPA, upon
exercising its right to purchase the assets or securities of
LILCO, in its sole discretion may transfer acquired assets to
municipal utilities or enter into cooperative or contractual
arrangements with municipalities in the service area. Clearly,
condemnation by a municipality of any LIPA assets is inconsistent
with these provisions. Only LIPA is authorized to determine
whether assets should be transferred and the terms and conditions
of transfer.
It is also clear that a local government may not condemn the
assets of LILCO or LIPA under Article 14-A of the General
Municipal Law. Article 14-A provides general authority to
establish municipal utilities. The exercise of such general
authority by a municipality clearly is inconsistent with the
specific statutory scheme applicable to the LILCO service area,
providing the exclusive means of dealing with economic conditions
in the service area through the purchase of LILCO by LIPA and
subsequent provision of power in the service area by LIPA. Under
established rules of statutory construction, specific statutes
prevail over general statutes. See, People v Mobil Oil Corp.,
48 NY2d 192, 200 (1979). Article 14-A may not be used for this
purpose.
Further, the public use of property acquired from LILCO by
LIPA "is . . . deemed to be superior to the public use of such
property by any other person, association, or corporation".
Public Authorities Law § 1020-h(1)(a). Moreover, the law in
New York is that without express State statutory authorization,
property that is being used for a public use may not be
condemned. The Long Island Rail Road Company v Long Island
Lighting Company, 103 AD2d 156, 165 (2d Dept 1984), affd, 64 NY2d
1088 (1985). This doctrine is referred to as the prior public
use rule. Id. Municipalities in the service area do not possess
express statutory authority to condemn assets of LIPA acquired
from LILCO. Rather, Article 14-A of the General Municipal Law
constitutes only general authority, and therefore is inadequate
to overcome the public use doctrine. Long Island Rail Road
Company, supra.
Finally, the authority to enact local legislation is denied
when the State Legislature has expressed an intent to preempt a
particular subject. Albany Area Builders Assn. v Town of
Guilderland, 74 NY2d 372 (1989); Consolidated Edison Co. v Town
of Red Hook, 60 NY2d 99 (1983); People v DeJesus, 54 NY2d 465
(1981); Wholesale Laundry Bd. v City of NY, 17 AD2d 327, 330
A legislative intent
(1st Dept 1962), affd, 12 NY2d 998 (1963).
to preempt local legislation is evident either from a declaration

6
of State policy by the Legislature or from a comprehensive and
detailed regulatory scheme covering a particular subject. Id.
In our view, the Legislature, both through a declaration of State
policy and a comprehensive and detailed regulatory scheme, has
preempted local legislation regarding acquisition of the
transmission and distribution system, facilities, and other
assets of LILCO and/or LIPA.
We conclude that a municipality in the service area may not
condemn the transmission and distribution system, facilities and
other assets of LILCO and/or LIPA and use them to operate a
municipal utility. Such action clearly is inconsistent with and
preempted by State law.
The Attorney General renders formal opinions only to
officers and departments of State government. This perforce is
an informal and unofficial expression of the views of this
office.
Very truly yours,

JAMES D. COLE
Assistant Attorney General
In Charge of Opinions