On October 29, 2012, Hurricane Sandy roared through the New York metropolitan area, causing widespread flooding, property damage and electric service outages.  In Hurricane Sandy’s wake, Governor Andrew M. Cuomo repeatedly criticized the preparedness and response of the affected utilities — particularly the Long Island Power Authority (LIPA)¹— and vowed to investigate the need for change in the manner in which New York utilities and energy public authorities operate in the face of storm emergencies.  

On November 13, 2012, with power outages attributed to the storm still impacting portions of Long Island and other locations in the New York metropolitan area, Governor Cuomo signed an Executive Order convening a Moreland Commission (“Commission”) to conduct a far-reaching inquiry into the emergency preparedness and response of “utilities”² during emergency weather events, and to examine the adequacy of the existing regulatory framework for dealing with such emergencies. Less than 24 hours later, New York Attorney General Eric T. Schneiderman — acting independent of the Commission  — issued subpoenas to the Consolidated Edison Company of New York, Inc. (“Con Edison”) and LIPA, the transmission owners in New York City and Long Island, respectively.  

Based on the breadth of the powers granted to the Commission under the Moreland Act  — including the power to subpoena documents and compel testimony under oath — and Attorney General Schneiderman’s independent investigation, New York’s investor-owned utilities and energy public authorities, most certainly  — and, potentially, generators — may need to react and respond promptly to subpoenas or other information requests that may soon issue from the Commission and/or Attorney General’s Office.  

Importantly, the Moreland Act (“Act”) is limited to authorizing the governor “to examine and investigate the management and affairs of any department, board, bureau or commission of the state.”³ However, while the universe of entities that may be targeted by a Moreland Commission investigation is limited, the Act vests the governor and/or his appointees (i.e., the Commission here) with power to “subpoena and enforce the attendance of witnesses, to administer oaths and examine witnesses under oath and to require the production of books or papers deemed relevant or material” to such examination or investigation  — a standard that New York courts interpret broadly, in order to effectuate the Act’s broad investigatory purposes.⁴

Attorney General Schneiderman’s investigation is not restricted by the Moreland Act — the New York Attorney General has wide ranging jurisdiction to ensure faithful compliance with laws affecting the public interest, such as the N.Y.  Public Service Law’s mandate that electric corporations (which the New York Public Service Commission has held includes merchant generators) provide utility service that is “safe and adequate and in all respects just and reasonable.”⁵

Benjamin M. Lawsky, currently the Superintendent of the New York Department of Financial Services (and formerly Governor Cuomo’s Chief of Staff), and former New York Attorney General Robert Abrams, will co-chair the Commission.  Mr. Lawsky has a significant law enforcement background, including as an assistant U.S. Attorney in the Southern District of New York and as a special prosecutor for then Attorney General Andrew Cuomo in the aftermath of the 2008-2009 financial crisis.  Rounding out the Commission are:  Peter Bradford, former Chair of the Public Service Commission, Tony Collins, President of Clarkson University, John Dyson, former Chairman of the New York Power Authority, Rev. Floyd Flake, Senior Pastor of Greater Allen African Methodist Episcopal Cathedral, Mark Green, former New York City Public Advocate, Joanie Mahoney, Onondaga County Executive, Kathleen Rice, Nassau County District Attorney and Dan Tishman, Vice Chairman at AECOM Technology Corporation and Chairman and CEO of Tishman Construction Corporation.

The Governor’s Executive Order vests the Commission with the authority and obligation to:

1. study, examine, investigate and review:
   1. the emergency preparedness and  response of utilities during and following emergency weather events, including the performance of the utilities during and following emergency weather events;
   2. the adequacy of present laws, rules, regulations, practices and procedures with respect to utilities’ emergency preparedness and response;
   3. adequacy of existing oversight and enforcement mechanisms;
   4. the structure, organization, ownership, financing, control, management and practices of the utilities as they affect emergency preparedness and response; and
   5. the provision of utility services to New York State under the existing legal regulatory framework, including but not limited to the jurisdiction, responsibilities and missions of the New York Power Authority, the Long Island Power Authority, the New York State Energy Research Development Authority, as well as the Public Service Commission;
2. report and make recommendations for legislative, policy and regulatory changes, as well as reforms as deemed appropriate in utility structure, management and practices, to best protect and serve the public’s interest with respect to emergency preparedness and response, and the provision of safe, reliable, responsive utility services;⁶
3. review any other matters or activities which may affect the issues herein before specified.

Stated simply, Governor Cuomo has called for a comprehensive review of the agencies and authorities that regulate New York utilities and the legal framework within which they operate. It appears likely that the Moreland Commission investigation and/or Attorney General’s inquiry will probe deeply into the issues and will seek information from a variety of sources, including, potentially, from the generation sector.  

_{1  Michael Hervey, LIPA’s Chief Operating Officer, tendered his resignation on November 13, 2012, effective as of December 31, 2012.}  

_{2  The Executive Order defines the term “utilities” broadly to include “entities engaged in the provision of electric, gas and steam.”   Significantly, the Executive Order does not define the phrase “provision of electric, gas and steam,” which, broadly construed, could be interpreted in this context to include  -- or at least cannot at this juncture be construed to exclude  –wholesale generators of electricity.}  

_{3  N.Y. EXEC. LAW § 6 (MCKINNEY 2010).}

_{4   See,  e.g., Matter of Weil,  et al.  v. New York State Commission to Investigate State Agencies in Relation to Pari-Mutuel Harness Racing, 205 Misc. 614, 618-619 (Sup. Ct., Nassau Co.) (“True, there is no power in the Commission to investigate harness racing outside the State; nevertheless, petitioners are enjoying privileges granted under licenses issued by this State, and their personal connection with harness racing and tracks outside is a legitimate subject of inquiry under the broad powers granted to the Governor by the Moreland Act to deal with matters affecting the public interest”), mod. on other grounds, 283 A.D. 808 (2d Dep’t 1954).}  

_{5  N.Y. PUB. SERV. LAW § 65 (MCKINNEY 2000).}  

_{6  In this respect, the Commission’s charge may overlap with the work of the Governor’s “Energy Highway Task Force,” which recently issued its “Energy Highway Blueprint,” containing a series of “immediate actions and policy recommendations to modernize the power generation and transmission system to achieve vital safety, reliability, affordability and sustainability goals on behalf of all New Yorkers.”   See New York Energy Highway Blueprint, p. 10 (available at http://www.nyenergyhighway.com/Blueprint.html) (last visited November 15, 2012).}