Pursuant to New York City Administrative Code 24-521, whenever any sewer, culvert, water main or pipe is going to be constructed, altered or repaired in any street in which the pipes, mains or conduits of public service corporations are laid, the contractor must give notice of the construction or alteration to any corporations that own these pipes. In the event of a delay in the project caused by the refusal to cooperate by the utility owner, that entity may be held liable to the contractor for damages resulting from the project delay. Remedies for the failure to move its interfering utilities may include fines and damages to the contractor.
In City of New York v. Verizon New York, Inc., 4 N.Y.3d 255, 794 N.Y.S.2d 293 (2005), for example, Verizon was a public utility responsible for maintaining overhead telephone poles and wires in New York City. The City hired a contractor to build sewers in Queens County, and during this project, the city’s contractor notified Verizon that certain utilities had to be relocated to allow for the construction to be completed. These utilities consisted of aboveground telephone poles and wires. Because Verizon and the city could not agree on a plan for removing the utilities, the City’s Department of Design and Construction issued an order directing Verizon to remove or reconfigure the utilities immediately. Verizon did not comply until 103 days later, at which point the City assessed a penalty of $5,000.00 against Verizon for each day it failed to comply with the order. Verizon argued that the administrative code governing the removal of its utilities did not apply to aboveground utilities such as the telephone poles and wires in this case. The court agreed with Verizon and construed the statute narrowly, limiting its application only to underground facilities, and relieving Verizon of its liability to the City.
Further, if the contractor’s work is necessary for a governmental exercise of a proprietary function rather than a governmental function, the governmental agency carries the responsibility of the work and its cost. This was the case in Consolidated Edison Co. of New York v. Lindsay, 24 N.Y.2d 309, 300 N.Y.S.2d 321 (1969), where a utility owner sought compensation for damages resulting from its being required to remove and relocate its facilities from streets in areas condemned by the city for public school purposes. The court found that the maintenance of schools is a governmental (or public) use, as distinguished from a proprietary function, and therefore when an area for public school use was condemned, the city was not required to pay a utility for the cost of relocation of pipes, mains and conduit from beds of city streets which were closed pursuant to the project. The rationale was that utility companies which have been granted the privilege of laying pipes and mains in public streets must relocate them at their own expense whenever public health, safety or convenience requires such, and that departure from this rule may only occur when such a change is required on behalf of other public service corporations or on behalf of municipalities exercising a proprietary instead of a governmental function.