Boston Gas Co. v. Department of Public Utilities

• Decision Date: 04 June 1975
• Citation: 329 N.E.2d 712,368 Mass. 51
• Parties: BOSTON GAS COMPANY v. DEPARTMENT OF PUBLIC UTILITIES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 712

329 N.E.2d 712

368 Mass. 51

BOSTON GAS COMPANY v. DEPARTMENT OF PUBLIC UTILITIES.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 7, 1975.

Decided June 4, 1975.

Hans F. Loeser, Boston (James K. Brown, Boston, with him), for Boston gas co.

Michael Eby, Asst. Atty. Gen., for the Department of Public Utilities.

Before TAURO, C.J., and REARDON, QUIRICO, KAPLAN and WILKINS, JJ.

WILKINS, Justice.

On January 14, 1975, the Boston Gas Company (the company) filed with the Department of Public Utilities (the department) schedules of interim and permanent rates to be effective February 1, 1975. The company assumed that the department would act under G.L. c. 164, § 94, to suspend the permanent rates in conformity with the department's customary practice. The interim rates were proposed to be effective during any suspension of the permanent rates, subject to refund with interest if later found to be excessive. The interim rates were intended to recognize only certain assertedly incontrovertible costs of operation not reflected in the company's rates then in effect. The company proposed an interim rate increase for its Northern Division of about $785,500, an amount considerably less than the revenue deficiency which the department had noted in the rates in effect for the Northern Division one month earlier, on December 13, 1974. The company also proposed interim rate schedules for its Boston Division, which were intended to reflect an asserted increase in annual expenses of $1,868,700, resulting from a new collective bargaining agreement for certain Boston Division employees, effective January 1, 1975.

The proposed permanent rates would add a considerably larger amount to the company's annual revenues than the amount of the interim increases requested. The company represented that the proposed permanent rates would increase its annual revenues by approximately $16,700,000.

Two days after the company made its rate filing, the department issued an order suspending the operation of the interim and permanent rates until December 1, 1975, unless it should order otherwise. This was the maximum period of suspension permitted by statute. G.L. c. 164, § 94. The department held no hearing concerning the suspension of the interim and permanent rates before suspending them, and it scheduled no hearing. It made no findings of fact and issued no statement of reasons for suspending the rates.

On February 6, 1975, the company filed an appeal in the county court from the department's suspension order. The company claimed that the department had failed to comply with its statutory obligations; that the procedures followed by the department denied the company procedural due process of law; and that the action of the department in suspending rates had confiscated the company's property unconstitutionally. The company sought an order (1) allowing it to collect the interim rates pending final decision and (2) directing the department to take prompt action on the permanent rates. The single justice reserved and reported the case to the full court for decision and denied a request for a stay of the department's order, without prejudice to the renewal of the application before the full court.

The department contends that the suspension of rates is committed to agency discretion and thus is beyond judicial review; that the suspension order is not a 'final decision, order or ruling' and therefore is not reviewable under G.L. c. 25, § 5; that it complied with the provisions of G.L. c. 164, § 94, in ordering the suspension; and that there has been no abuse of discretion or other violation of law in its suspension of the company's interim and permanent rates.

Section 94 of G.L. c. 164, as amended through St.1973, c. 816, § 3, provides that '(t)he department . . . may investigate the propriety of any proposed rate, price or charge and may, pending such investigation and decision thereon, . . . suspend the taking effect thereof, from time to time, but not for a period longer than ten months beyond the time when such rate, price or charge would otherwise become effective.' No hearing is required before the entry of any suspension order. The department is not obliged to make any findings of fact or to issue any statement of its reasons for suspending rates. Suspensions may be imposed from time to time, but collectively they may not delay the effectiveness of the rates for more than ten months. The Legislature has thus granted the department discretion to suspend rates without imposing any obligation on the department to create a record which could serve as a basis for judicial review. We conclude that the Legislature did not intend that this court have statutory jurisdiction to review the department's discretionary decision to suspend filed rates.

On the other hand, if the conduct of the department constitutes a violation of procedural due process or if a suspension order results in confiscation of the rate filer's property during the suspension period, a constitutional basis exists for invoking this court's jurisdiction. If the utility asserts that there has been confiscation of its property as a result of agency action, we have a duty to make an independent determination of the facts, and we may enter orders to protect the plaintiff's constitutional rights. See Lowell Gas Co. v. Department of Pub. Util., 324 Mass. 80, 86--88, 84 N.E.2d 811 (1949), cert. den. 338 U.S. 825, 70 S.Ct. 71, 94 L.Ed. 501 (1949); New England Tel. & Tel. Co. v. Department of Pub. Util., 327 Mass. 81, 85, 97 N.E.2d 509 (1951); Opinion of the Justices, 328 Mass. 679, 106 N.E.2d 259 (1952); Aetna Cas. & Sur. Co. v. Commissioner of Ins., 358 Mass. 272, 277--278, 263 N.E.2d 698 (1970). Here we need not determine whether the company has proved that the suspension of the interim rates resulted in confiscation because we have decided that the company was not accorded the procedural rights to which it was entitled constitutionally.

In the circumstances of this case, the department's failure to conduct a hearing or to state its reasons for suspending the interim rates was arbitrary and constituted a denial of procedural due process. See Milligan v. Board of Registration in Pharmacy, 348 Mass. 491, 496, 204 N.E.2d 504 (1965); Ohio Bell Tel. Co. v. Public Util. Commn. of Ohio, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093 (1937); Sniadach v. Family Fin. Corp. of Bay View, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Fuentes v. Shevin, 407 U.S. 67, 80--82, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Atchison, Topeka &...