Recent and fatal gas explosions have focused increased scrutiny on gas safety by New York City legislators and Con Edison. This, coupled with the aging and deterioration of the gas-piping infrastructure of older co-op and condominium buildings, exacerbated by poor maintenance, creates fertile ground for a gas leak and building-wide gas shutdown to occur. Further compounding this vulnerability is the advanced age of New York City's gas mains—on average, 56 years old, making New York the fourth-ranked American city in number of gas leaks since 1984. See Pipeline & Hazardous Materials Safety Commission.

This column discusses New York City's 2019 gas line inspection requirements, the challenges posed by a building-wide gas shutdown, and managing what can be a costly and lengthy gas service restoration process. This column also discusses insurance issues and steps which boards and managers can take to prevent and minimize the cost and inconvenience of a gas shutdown and restoration.

Inspections Required

Local Law 152 was signed by Mayor Bill de Blasio on Dec. 6, 2016—effective January 2019—and requires building owners (including co-ops and condominiums) to inspect gas lines every five years. A licensed plumber must visually inspect the building's exposed piping for corrosion or rust, and verify whether such piping is in good condition; a gas-detection meter must be used in public areas (i.e., hallways and lobbies). If the plumber detects a gas leak, Con Edison and the City must be notified. Interestingly, notwithstanding a myriad of City inspection requirements (for boilers, elevators, water tanks and sprinklers), until now, no inspection of gas piping systems has been required.

Gas Shutdown

Whether the result of a required inspection or otherwise, if a gas leak is detected it will trigger an immediate gas service shutdown of the entire building—no heat, hot water or cooking gas can be provided by the building to apartments or common areas. NYC Building Code §27-922(d); Simkowitz v. Fireman's Fund Insurance Co., 5 A.D.3d 283, 284 (1st Dep't 2004). This shutdown will continue until the building makes repairs and the building-wide gas piping system passes a mandatory integrity test. Now is when the building's nightmare begins.

Restoring (or Replacing) Gas Service

The most challenging aspect of restoring gas service is the legal requirement that after repairs are made, the entire system must pass a pressurization test, which is conducted at a considerably higher pressure than that at which the system operates under normal use. Three pounds of pressure are blown through the lines—12 times normal-use pressure. See Schaefer, Thinking Outside the Building After a Gas Leak, Habitat Magazine, March 21, 2019. The primary reason for pressure test failure is that the building's pipes cannot hold this increased pressure. If the source of the leak(s) cannot be isolated and repaired, or the system generally is old and deteriorated, such a test failure may require the re-piping of the entire building, which may require opening up walls and/or floors in apartments; this can cost hundreds of thousands and even millions of dollars. Additional reasons for test failure may be that unapproved materials were used, piping or gas meters were installed in prohibited locations (such as public areas or hallways), or the work performed does not match the work on the approved work permit. Test failures may be prevented by requesting a “milestone” inspection by the Department of Buildings when work is in progress, instead of waiting for all work to be “completed.”

In lieu of repairing a severely deteriorated gas system, a board may wish to consider converting a central heating system to electric heat or to individual gas powered heating units. Similarly, gas cooking can be converted to electric cooking. All such conversions should first be evaluated under the building's proprietary lease/bylaws, to confirm that the same are permitted, and then evaluated by the building's engineer or architect for feasibility and cost efficiency. Before conversions can be implemented, all Building Code filings, approvals and permit requirements must be complied with. Licensed plumbers and electricians must do the work.

NYC law requires property owners to act immediately to restore gas for heat, hot water and cooking gas if the same are disrupted. See NYC HPD Maintenance Requirements: Gas. If “immediate” gas restoration is not possible, alternatives should be implemented. For buildings with gas-fueled heat and hot water, sidewalk “trucks” may be a solution. See Schaefer, A Way To Avoid Seeing A Red Tag, Habitat Magazine, May 8, 2019. For those buildings which use cooking gas, electric ovens, toaster ovens and microwave ovens may be used during gas service restoration. Most proprietary leases exculpate co-ops from liability for “any failure of heat, water supply [or] gas … to be supplied by the [co-op and] no abatement of rent or other compensation or claim … shall be made … because of … delay in making any repairs [to the same].” Our research has not disclosed any reported decisions awarding an apartment owner damages for a building's inability to provide cooking gas.

Insurance

There are several reported decisions holding that where an initiating event (such as the actions of a contractor or other direct physical damage) caused the shutdown of a building's gas system and, as a result, a code or ordinance required integrity testing of the system, the cost of repairing the system is covered. In 20 E. 35 Owners Corp v. Great Am. Ins. Co., 1996 WL 438172 (S.D.N.Y. Aug. 5, 1996), condominium owners sought a declaratory judgement that their insurers were obligated to indemnify them for losses resulting from a ruptured gas line. The court rejected the insurers' argument that the loss was excluded under a “wear and tear” provision, holding that where the initial gas leak (and therefore subsequent shutdown) was caused by the rupturing of a gas pipe, the “wear and tear” provision did not exclude coverage; the system (albeit in a deteriorated condition) was working at the time of the rupture, and its underlying condition was therefore inconsequential. See also Board of Managers of London Terrace v. Interstate Indemnity Company, No. 05-602241 (Sup. Ct. N.Y. Co. Aug. 19, 2005).

In 1996/1997, some insurance companies began to change their policy terms to preclude coverage for the cost of complying with “ordinance or law” and, specifically, for the cost of testing and repairing gas systems. Therefore, managers should carefully review building insurance policies to determine whether the building has insurance coverage for testing and repair. See, e.g., 1070 Park Avenue Corp., v. Fireman's Fund Insurance Co., 313 F.Supp. 3d 528, 542 (S.D.N.Y. 2018) (“Fireman's Fund cannot rely on the exclusion for faulty, inadequate or defective maintenance of the system to deny coverage… . Here, the repairs to the system were occasioned by the need for the system to pass a high pressure inspection test.”)

Recommendations

As a proactive precaution, if a building's gas system is aged/deteriorated, managers may wish not only to perform the 2019 required/statutory inspection, but also to have all valves and fittings inspected. Leaks are often found in those specific areas, not in the building's risers or branch piping. If these connections are loose or in need of replacement, a gas leak and resulting building-wide gas system shutdown may be preventable.

If a gas leak is detected, building managers should promptly seek to determine the cause and if a building-wide shutdown is required, notify all owners and occupants of the same. Insurers should also be promptly notified, and the building's architect or engineer should promptly develop a restoration (or replacement plan), so that service can be restored as soon as possible. And temporary arrangements (which may be required for many months) to provide heat, hot water, and replacement for cooking gas should promptly be made.

Eva Talel is a senior counsel at Stroock & Stroock & Lavan and an adjunct professor at New York Law School. Margaret Jones, a legal analyst at Stroock, assisted in the preparation of this column. Stroock is counsel to the Real Estate Board of New York.