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Public Service Electric & Gas Co. v. Newport Associates Development Co.

United States District Court, D. New Jersey

August 26, 2019




         THIS MATTER comes before the Court on a motion by Third-Party and Crossclaim Defendant and Counterclaim Plaintiff Consolidated Edison Company of New York, Inc. (“Con Edison”) for the entry of a protective order preventing Defendants and Third-Party Plaintiffs Newport Associates and Development Company and Newport Associates Phase I Developers Limited Partnership (collectively “Newport”) from obtaining certain discovery [Dkt. No. 145]. Newport opposes Con Edison's motion [Dkt. No. 157]. For the reasons set forth below, Con Edison's motion for a protective order is GRANTED in part and DENIED in part.

         I. BACKGROUND[1]

         A. The Cables

         Con Edison delivers electricity to approximately nine million people throughout a 604-square mile service area in New York. Dkt. No. 145-5, Declaration of Vernon Schaefer at ¶ 3. This electricity is transmitted and distributed, in part, through approximately 95, 000 miles of underground cable. Id. There are two main types of cables that are insulated and cooled with a non-toxic synthetic oil called dielectric fluid. Id. at ¶ 6. The first type of cable is a “self-contained, fluid filled feeder” in which the fluid is self-contained within the feeder cable and is cooled by heat transfer to the surrounding environment. Id. The second type is a “high-pressure, fluid filled feeder” (“HPFF”) which is highly pressurized and can be cooled with circulation through the pipe via an external cooling plant. Id. Con Edison owns 209 HPFF feeders that collectively span approximately 576 miles and collectively contain more than 8 million gallons of dielectric fluid. Id. at ¶ 6.

         At issue in this matter is a pair of high-voltage transmission feeders known as the B3402 (the “B Line”) and the C3403 (the “C Line”) (collectively “the Cables”). Id. at ¶ 8. Plaintiff Public Service Electric and Gas Company (“PSE&G”) and Con Edison (collectively “the Utilities”) jointly own and operate the Cables. Id. at ¶ 9. The Cables, which are each approximately 7 miles long, connect Con Edison's Farragut substation in Brooklyn, New York to PSE&G's Hudson and Marion switchyards in New Jersey.[2] Id. Beginning in New Jersey, the Cables run underground in PSE&G's service area from the Hudson and Marion switchyards east to the Jersey City waterfront at the Newport Marina, then continue east, buried directly in the riverbed, across the Hudson River to Manhattan. Id. at ¶ 11. Next, the Cables run underground across Manhattan to the East River, then continue east through a utility tunnel that crosses under the East River into Brooklyn where they again run underground and extend to the Farragut substation. Id.

         The Utilities were each responsible for constructing and maintaining the sections of the Cables in their respective service areas. Id. at ¶ 12. However, Con Edison was responsible for constructing the entire section of the Cables running underwater across the Hudson River (“the Hudson River Section”). Id. The steel pipes for the Cables were installed by Con Edison in a fifteen-foot deep trench dredged beneath the Hudson River in 1972. Id. at ¶¶ 13-14. The B Line was put into service in 1972 and the C Line was put into service in 1982. Id. at ¶ 13. The Hudson River Section is approximately 1 mile in length and extends from the Newport Marina in Jersey City to Pier 25 in Manhattan. Id. at ¶ 14. The sections of pipe which house the Cables as they cross the Hudson River Section in a S-shaped path are coated externally with coal tar wrap, encased in a one-inch-thick cement jacket, and joined by welded couplers. Id. at ¶ 15.

         Although the Cables also cross the East River (“the East River Section”), the design and construction of the Hudson River Section differs significantly from that of the East River Section. Id. at ¶ 20. Rather than being buried in the riverbed, when the Cables cross the East River Section, they pass through a utility tunnel that existed at the time the Cables were installed. Id. Because the pipes in the East River Section run through the utility tunnel, they are constructed and maintained differently than those in the Hudson River Section, which are exposed to a marine environment. Id. at ¶ 20-21.

         Newport owns the land in and around the Newport Marina in Jersey City, including the Sixth Street Pier (“the Pier”), and the underwater lands adjacent to the Pier. The Cables pass over Newport's portion of the riverbed. On January 1, 1987, Newport and PSE&G entered into an easement agreement (“the Easement”). The Easement runs parallel to the Pier and is approximately 30 feet wide.

         B. The Spill

         On October 3, 2016, a leak of dielectric fluid into the Hudson River by the Newport Marina was discovered. PSE&G and Con Edison dispatched structural engineers, electrical engineers, and divers to the Newport Marina to investigate and repair the leak and clean the site. In mid-October 2016, divers discovered “enormous concrete segments, rip-rap, and other debris (including boulders, brick, and asphalt) resting on the riverbed within PSE&G's 30 foot-wide Easement area.” Dkt. No. 40, PSE&G Amended Complaint at ¶ 6. According to PSE&G, the debris discovered by the divers on the riverbed resulted from prior collapses of the Pier, which was “crumbling and dangerous.” Id. at ¶¶ 1-2. On November 1, 2016, Newport informed the Utilities that it would not permit further work to investigate and repair the leak on the Pier or in the marina basin until engineers could agree to a pier stabilization plan. Id. at ¶ 26. On November 4, 2017, the United States Army Corp of Engineers issued a letter to Newport stating that it had been notified by the United States Coast Guard that portions of the Pier had eroded, which could result in further debris being discharged into the river, and ordering Newport to immediately carry out the removal of the debris and rehabilitate the stability of the Pier. Id. at ¶ 39. On November 10, 2016, the Coast Guard issued an order directing PSE&G to “utilize all necessary resources to locate and secure the source of the discharge, ” stop the leak, remove the fluid, and monitor the spill. Id. at Ex. 10.

         On November 17, 2016, the Coast Guard issued an order to Newport directing it to “remove submerged debris on top of, and in the vicinity of, the [E]asement and adjacent pier structure to facilitate locating and securing the source of the discharge.” Id. at Ex. 11. In late November, Newport submitted its proposed plans to “shore up” the Pier to Unified Command.[3] Id. at ¶ 44. Although Newport's initial stabilization plan was rejected due to concerns that Newport's proposed stabilization method would not allow for the removal of enough debris to allow access to the Cables, the parties eventually reached an agreement on a stabilization plan, and on March 21, 2017, the Cables were de-energized to permit Newport's contractors to begin to clear a portion of the Easement area. Dkt. No. 101, Con Edison Amended Counterclaims at ¶ 19.

         In late May 2017, following Newport's partial clearing of the Easement area, the Cables were re-energized and the leak search and repair efforts were reinitiated. Id. at ¶ 22. The Cables were “systematically uncovered in the riverbed and exposed in 10-foot sections, and divers inspected each section looking for visual evidence of dielectric fluid emanating from [the Cables] or other damage.” Id. at ¶ 23. The divers were unable to see any visual evidence of the leak and therefore unable to discover its location or source. Id. at ¶ 24. Between July 12 and July 17, 2017, the Cables were again de-energized and further tests were performed. Id. Based on the results of the tests, the B Line was identified as the likely source of the leak. Id. No problems with the C Line were identified. Id. On or about July 19, 2017, divers located the leak in the B Line. Id. at ¶ 25. The leak was located in a section of the B Line owned and operated by PSE&G in the Easement area in the Newport Marina. Id. On August 13, 2017, a permanent clamp was placed on the B Line to prevent any further leakage. Id. On or about January 11, 2018, PSE&G notified Con Edison that it intended to unilaterally retire the B Line and C Line. Id. at ¶ 28. Both the B Line and C Line have been out of service since mid-January 2018, and despite Con Edison's wishes to the contrary, PSE&G has not re-energized the Cables. Id. at ¶¶ 32-34.

         The Utilities maintain that the leak was caused by Newport's failure to properly maintain the Pier. This failure, the Utilities allege, has resulted in “at least two catastrophic partial collapses” of the Pier in 2008 and 2009 and “caused over two hundred tons of concrete slabs and other debris to fall” onto the Cables. Dkt. No. 158, Con Edison Counterclaim at ¶ 3. The Utilities further claim that Newport improperly failed to disclose the “decrepit state” of the Pier which obstructed the Utilities' efforts to respond to the Spill, prolonging the discovery and repair of the leak, and resulting in an increased cost to the Utilities. Id.

         Conversely, Newport claims that the leak was caused by the Cables' flawed design and the Utilities' “reckless” failure to maintain, repair, and protect the Cables since their installation. Dkt. No. 98, Newport Counterclaim and Third-Party Complaint at ¶ 3. Specifically, Newport alleges that the leak was caused by a welding flaw, known as a lack-of-fusion defect. Id. at ¶ 46. The allegedly defective weld is located on an irregularly-spaced coupler. Id. at ¶ 47. According to Newport, when the pipes for the Cables were installed, pairs of 20-foot segments of pipe were welded together to form 40-foot segments, and as a result, the pipes have regularly-spaced welds every 20 feet. Id. The defective weld, however, is one of three irregularly-spaced couplers, which were not included in the written plans for the Cables and appear to have been installed after a piece of pipe was “cut out” and replaced. Id. at ¶¶ 47-48. In addition to the irregularly-spaced coupler, Newport alleges that the Cables have inadequate pressure sensors which can only identify “extraordinarily large” leaks and claims that the Utilities failed to consistently install the 6-foot protective layer of crushed stone as required by the permits allowing for the construction and installation of the Cables. Id. at ¶¶ 28-29. As to the maintenance of the Cables, Newport claims the Cables have “significantly deteriorated” and that the Utilities have failed to properly carry out any regular maintenance or repairs. Id. at ¶¶ 38, 42.

         Con Edison filed the present motion in response to what it claims are “wildly disproportionate” and irrelevant discovery requests served by Newport. Dkt. No. 145 at p. 1. Newport opposes Con Edison's motion and contends the “targeted discovery” it seeks is “highly relevant” to determining the cause of the leak. Dkt. No. 157 at p. 1.


         Federal Rule of Civil Procedure 26 governs the scope of discovery in federal litigation and provides that:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its ...

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