- Court
- New York Supreme Court, Appellate Division, Third Department
- Case
- Matter of Clean Air Coalition of Western New York, Inc. v. New York State Public Service Commission
- Date
- May 28, 2026
- Slip Op. No.
- 2026 NY Slip Op 03344
Background
In 2021, Digihost International Inc. contracted to acquire Fortistar North Tonawanda, LLC, which owned a natural gas-fired electric generating facility in North Tonawanda, Niagara County. The acquisition required approval from the New York State Public Service Commission (PSC). Clean Air Coalition of Western New York, Inc. and other environmental organizations challenged the PSC’s approval of the ownership transfer. The case had already been before the Third Department, which previously reversed the dismissal of the petition as against the PSC. On remand, the Supreme Court, Albany County, partially granted the petitioners’ applications in combined CPLR article 78 proceedings and actions for declaratory judgment, reviewing the PSC’s determination approving the transfer and denying petitioners’ request for a rehearing. The respondent companies appealed.
Holding
The Appellate Division addressed the challenge to the PSC’s determination approving the ownership transfer of the natural gas facility. The Court examined whether the PSC’s review of the transaction adequately considered environmental and public interest factors, including the facility’s impact on local air quality and its consistency with New York’s clean energy goals. The Court analyzed the scope of the PSC’s review authority over ownership transfers of generating facilities and whether the PSC was required to conduct a more comprehensive environmental review before approving the transaction. The decision addressed the intersection of Public Service Law provisions governing utility ownership transfers and the state’s environmental and clean energy policies.
Takeaways
Ownership transfers of natural gas-fired generating facilities are subject to PSC review, and environmental organizations have standing to challenge the adequacy of that review. The PSC’s determination must account for relevant environmental and public interest factors, and a failure to adequately consider those factors may render the determination arbitrary and capricious. The case highlights the growing tension between the continued operation of fossil fuel facilities and New York’s climate and clean energy objectives, which courts and agencies must navigate in evaluating ownership transfers.
Why It Matters
This decision is significant for energy and environmental law practitioners because it addresses the PSC’s obligations when reviewing ownership transfers of fossil fuel generating facilities in the context of New York’s evolving clean energy landscape. As the state pursues ambitious climate goals, the PSC’s approval of transactions involving natural gas facilities will face increased scrutiny from environmental organizations. The decision provides guidance on the scope of the PSC’s review authority and the extent to which environmental considerations must inform its decision-making in ownership transfer proceedings. Energy companies contemplating acquisitions of fossil fuel facilities in New York should anticipate potential challenges to PSC approvals on environmental grounds.