INTERSTATE NAV. v. DIV. OF PUBLIC UTILITIES

• Decision Date: 13 June 2003
• Docket Number: No. 2002-86-M.P., No. 2002-83-M.P.
• Citation: 824 A.2d 1282
• Parties: INTERSTATE NAVIGATION CO. dfa/a. The Block Island Ferry et all. v. DIVISION OF PUBLIC UTILITIES AND CARRIERS OF THE STATE OF HODE ISLAND et al.
• Court: Rhode Island Supreme Court

824 A.2d 1282

INTERSTATE NAVIGATION CO. dfa/a. The Block Island Ferry et all. v. DIVISION OF PUBLIC UTILITIES AND CARRIERS OF THE STATE OF HODE ISLAND et al.

Nos. 2002-83-M.P., 2002-86-M.P.

Supreme Court of Rhode Island.

June 13, 2003.

Lauren E. Jones, Providence, Merlyn P. O'Keefe, Peace Dale, Michael R. McElroy, for Plaintiff.

Mark Jay Hagopian, Providence, Paul Roberti, Jon G. Haopian, John Spirito, Jr., for Defendant.

Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, and FLAHERTY, JJ.

OPENEON

WILLIAMS, Chief Justice.

This case is the latest installment of the seemingly endless litigation involving Interstate Navigation Co. d/b/a The Block Island Ferry (Interstate) and Island Hi-Speed Ferry, LLC (Hi-Speed) concerning the two companies' entrance into the highspeed ferry market. See In re Hi-Speed Ferry, LLC, 746 A.2d 1240 (R.I.2000)

. In these petitions for certiorari, the Division of Public Utilities and Carriers of the State of Rhode Island (the Division) and Hi-Speed complain that a Superior Court trial justice erred by failing to affirm a Division report and order. Specifically, the report and order (1) fined Interstate $22,000 for its president's refusal to answer questions posed to her at a Division hearing, (2) required Interstate to apply for a Certificate of Public Convenience and Necessity (CPCN) if it wanted to enter the high-speed ferry market, and (3) prohibited Interstate from attempting to obtain that CPCN for three years. The pertinent facts are as follows.

I Facts and Travel

Interstate and Hi-Speed are two competing corporations that offer ferry services to the Town of New Shoreham (the town or Block Island). Interstate provides standard ferry services between Galilee and Block Island's "Old Harbor." Hi-Speed provides high-speed catamaran ferry services between Galilee and "New Harbor," also on Block Island. On February 20, 1998, Hi-Speed filed an application with the Division for a CPCN to provide a high-speed ferry service from Galilee to Block Island. The proposed service is claimed to substantially enhance the quality of the ferry ride. The ninety-two-foot aluminum catamaran travels at full capacity at a speed of twenty-eight knots and carries up to 149 passengers. The end result of this new service is a trip in which the travel time is not only cut in half, but also is a significantly smoother ride.

Interstate and the town successfully intervened in Hi-Speed's CPCN hearing. During that hearing, Interstate's President Susan Linda (Mrs. Linda) was asked several times whether Interstate planned to provide high-speed ferry services in the future. She repeatedly refused to answer, citing the privileges of confidentiality and the Fifth Amendment. The Division ultimately approved Hi-Speed's application for a water carrier CPCN to operate the proposed high-speed ferry. Pursuant to the contested case provision of the Administrative Procedures Act, codified at G.L. 1956 § 42-35-15, Interstate and the town appealed that decision to the Superior Court. A Superior Court trial justice affirmed the issuance of the CPCN, but remanded the case to the Division with instructions to modify it to be effective only for a reasonable period.

On April 2, 1999, while that appeal was pending, Hi-Speed requested that the Division summarily investigate the conduct of Interstate,¹ alleging that Interstate had acted deceptively when it denied its interest in entering the high-speed ferry market during Hi-Speed's initial CPCN hearing. The Division agreed to investigate Interstate. After that investigation, the Division determined that Mrs. Linda had no right to assert the Fifth Amendment, nor did the Division's inquiry into Interstate, as a public utility, cross into the realm of confidential information. Therefore, in its report and order the Division concluded that Mrs. Linda, as a representative of Interstate, had obstructed the regulatory process of the Division in violation of G.L 1956 § 39-2-8. Pursuant to its authority as promulgated by that statute, the Division required Interstate's shareholders to pay a civil penalty of $22,000; $1,000 for each unanswered question.

Furthermore, drawing negative inferences from Linda's refusal to answer the questions posed to her at the hearing, the Division determined that Interstate had engaged in the act of planning an entrance into the high-speed ferry market. As a result of this determination, the Division prohibited Interstate from engaging in high-speed ferry services for three years, and required that Interstate would have to apply for a CPCN if it desired to provide high-speed ferry services at the end of the three-year moratorium.

Interstate and the town appealed the Division's order to Superior Court pursuant to § 42-35-15. On appeal, the trial justice reversed the Division's order. Specifically, the trial justice concluded that the Division exceeded its statutory authority when it imposed the three-year moratorium on Interstate's potential high-speed ferry activities and required that Interstate would have to apply for a CPCN if it intended to provide high-speed services in the future. Furthermore, the trial justice found that the $22,000 fine also was beyond the scope of the Division's authority because the fines provided in § 39-2-8 are limited to $1,000 per offense. Thus, the trial justice reduced the $22,000 fine to $1,000. The Division and Hi-Speed timely filed separate petitions for writs of certiorari. This Court granted both petitions on April 19, 2002. Thereafter, Interstate agreed to a self-imposed stay of the trial justice's decision pending the final resolution of both petitions for certiorari. Additionally, Interstate agreed to wait until this Court decided the case before seeking a $21,000 refund from the state.

The Division now contends that the imposition of the $22,000 fine on Interstate was authorized by law. The Division and Hi-Speed together argue that the trial justice's interpretation of G.L.1956 § 39-3-4 is incorrect and provides unfair advantages to certain water carriers, and that G.L.1956 § 39-4-10 empowers the Division to curtail Interstate's participation in the high-speed ferry market. We address each issue seriatim.

II Standard off Review

Pursuant to § 42-35-15, the Superior Court has appellate jurisdiction to review final orders of state administrative agencies. Rocha v. State Public Utilities Commission, 694 A.2d 722, 725 (R.I.1997). When reviewing the agency decision, the Superior Court trial justice "shall not substitute [his or her] judgment for that of the agency as to the weight of the evidence on questions of fact." Id. (quoting § 42-35-15(g)). Rather, the trial justice must uphold the agency's conclusions when they are supported by legally competent evidence on the record. Id. The trial justice may, however, reverse or modify the agency's decision if it is: "(1) [i]n violation of constitutional or statutory provisions; (2)[i]n excess of the statutory authority of the agency; (3)[m]ade upon unlawful procedure; (4)[a]ffected by other error or law; (5)[c]learly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6)[a]rbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." Section 42-35-15(g).

When this Court reviews the trial justice's decision via certiorari, "we apply the `some' or `any' evidence test and review the record to determine if there is some or any legally competent evidence in the record to support his findings." Rocha, 694 A.2d at 726 (quoting Sartor v. Coastal Resources Management Council, 542 A.2d 1077, 1083 (R.I.1988)). Therefore, we do not weigh the evidence, but rather determine whether the trial justice was legally justified in modifying or reversing the agency's order. Id.

III Civil Penalty

The trial justice reversed the Division's order that Interstate pay $22,000 in fines because of Mrs. Linda's refusal to answer twenty-two questions at Hi-Speed's public hearing. Although the trial justice correctly determined that Mrs. Linda did not have the right to assert either the confidentiality privilege² or the Fifth Amendment privilege against self-incrimination,³ he concluded that the Division exceeded its statutory authority under § 39-2-8. That statute permits the Division to levy a fine of up to $1,000 for failure to perform a legal duty. Mrs. Linda had a legal duty to answer the questions posed to her at the hearing. Although we concur with the Division that Mrs. Linda's failure to candidly answer the questions posed to her constituted chicanery of the most deceptive sort, we agree with the trial justice that the Division overstepped its statutory authority in imposing a $1,000 fine for each question that Mrs. Linda did not answer.

The Division contends that each question that Mrs. Linda refused to answer is a separate offense, thereby authorizing it to fine Interstate the maximum for each question that Mrs. Linda refused to answer. All twenty-two questions, however, essentially were asking the same thing: Does Interstate plan to enter the highspeed ferry market in the future?⁴ We refuse to read slight variations of the same basic question to permit the Division to fine Interstate $1,000 for each variation of that question that the Division can construct. Accordingly, the trial justice's decision reducing the Division's fine of Interstate to $1,000 is affirmed.

IV Certificate of Public Convenience and Necessity

The Division and Hi-Speed also assign error to the trial justice's interpretation of § 39-3-4, permitting Interstate to enter the high-speed ferry market without demonstrating that its entrance would serve the public convenience and necessity. We agree with the Division and Hi-Speed.

We review de novo questions of statutory interpretation. Stebbins v. Wells, 818 A.2d 711, 715 (R.I.2003). "When construing a statute `our ultimate goal is to give effect to the purpose of the...