Utility Interference Costs: Written Agency Direction Can Preserve a Contractor’s Claim

A recent decision in P & T Contracting Corp. v. Consolidated Edison Company of New York, Inc. highlights the importance of documenting responsibility for utility interference work on public projects.

P & T Contracting was replacing lead water lines for the New York City Department of Environmental Protection. During the project, it encountered Con Edison infrastructure near its work area. Con Edison allegedly directed the contractor to excavate around the facilities by hand, increasing the contractor’s costs and reducing productivity.

The contractor sought payment from Con Edison for this additional work. Con Edison moved to dismiss, arguing that it had neither received a direct order from DEP nor entered into an interference agreement with the contractor.

The court denied Con Edison’s motion. The contractor alleged that DEP had directed Con Edison to protect its facilities and that DEP was copied on communications concerning the hand excavation. Because discovery had not yet occurred and the relevant communications were not before the court, the court found that the contractor had sufficiently alleged the possible existence of a direct agency order. The court also permitted the contractor to amend its complaint to provide additional details concerning that alleged order.

The decision does not establish that Con Edison must ultimately pay the contractor. It merely allows the contractor’s claims to proceed through discovery.

Practical Takeaways

A public contractor cannot ordinarily make a utility responsible for interference costs merely by notifying the utility of the project. Responsibility will generally depend upon a direct order from the public agency or an agreement allocating the interference work and its cost.

Before performing utility-related extra work, contractors should:

• Request a written agency directive identifying the utility’s obligations.
• Seek a written interference agreement among the contractor, agency, and utility.
• Give all required contractual notices and expressly reserve payment rights.
• Confirm who will pay before proceeding, whenever safety and project conditions permit.
• Separately track labor, equipment, materials, delays, and productivity impacts.
• Preserve all emails, meeting minutes, field directives, photographs, and daily reports.

The bottom line is straightforward: utility direction alone may not establish payment responsibility. A clear written agency directive or interference agreement remains the best protection against performing costly work without a confirmed source of payment.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440