Interstate Navigation Co. v. R.I. Fast Ferry
| Decision Date | 11 April 2023 |
| Docket Number | C.A. PC-2016-4804,PC-2017-3409,PC-2018-5806,PC-2018-7658,PC-2016-4758,PC-2017-3405,PC-2018-5679,PC-2018-7687 |
| Parties | INTERSTATE NAVIGATION COMPANY d/b/a THE BLOCK ISLAND FERRY, Petitioner, v. RHODE ISLAND FAST FERRY, INC.; RHODE ISLAND DIVISION OF PUBLIC UTILITIES AND CARRIERS; and MACKY MCCLEARY, Administrator, Respondents. TOWN OF NEW SHOREHAM, Petitioner, v. RHODE ISLAND FAST FERRY, INC.; RHODE ISLAND DIVISION OF PUBLIC UTILITIES AND CARRIERS; and MACKY MCCLEARY, Administrator, Respondents. |
| Court | Rhode Island Superior Court |
ATTORNEYS:
For Plaintiff: Michael R. McElroy, Esq. James M. Callaghan, Esq.
For Defendant: Joshua S. Parks, Esq. Casey Lee, Esq.
Interested Party: Katherine A. Merolla, Esq.
Before this Court for decision is the consolidated administrative appeal of the Town of New Shoreham (Town) and Interstate Navigation Company d/b/a The Block Island Ferry (Interstate) (collectively Petitioners) from various orders of the Rhode Island Division of Public Utilities and Carriers (Division) most notably, a September 22, 2016 Report and Order No. 22548, conditionally approving Rhode Island Fast Ferry, Inc's (RIFF) application for authority to operate a seasonal, passenger-only fast-ferry service between Quonset Point in North Kingstown and Old Harbor in New Shoreham (Block Island). See generally R. nos. 2, 71.[1]
This Decision also resolves Petitioners' various appeals from the Division's: (1) September 24, 2013 Order No. 21170, issued in response to Petitioners' Motions to Intervene, id. no. 13; (2) June 23, 2017 Order No. 22823, finding insufficient cause to revisit issues related to a proposed docking facility, id. no. 185; (3) July 16, 2018 Report and Order No. 23217, declining to revisit the Division's prior denial of the Town's Motion for Summary Disposition, again relating to the docking issue, id. no. 223; and (4) September 26, 2018 Order No. 23283, granting RIFF a one-year continuance to satisfy certain conditions imposed in Order No. 22548, specifically-again- the docking issue. Id. no. 239.
Jurisdiction is pursuant to G.L. 1956 §§ 39-3-6 and 42-35-15.
Facts & Travel
The proceedings before the Division addressed in detail the legal standard for obtaining authorization to operate as a water carrier in Rhode Island; therefore, the Court will outline a brief summary of the applicable legal framework as background. The General Assembly established the Public Utilities Commission and the Division "to provide fair regulation of public utilities and carriers in the interest of the public, [and] to promote availability of adequate, efficient, and economical . . . transportation services and water supplies to the inhabitants of the state[.]" See G.L. 1956 § 39-1-1(b); see also § 39-1-3(a).
Pursuant to the Division's authority to "supervise, regulate, and make orders governing the conduct of companies offering" public transportation services, a common carrier operating "upon water" is required to obtain a certificate from the Division certifying that "public convenience and necessity" require the services. See §§ 39-1-1(c), 39-3-3(a). "That certificate sets out the scope and termini of the carrier's operations." Interstate Navigation Co. v. Division of Public Utilities & Carriers, 824 A.2d 1282, 1287 (R.I. 2003).
In addition, an applicant seeking authority to operate as a water carrier must demonstrate that it is "fit, willing, and able" to provide the service proposed in its application. Interstate Navigation Co. v. Division of Public Utilities & Carriers, Nos. 98-4804, 98-4766, 1999 WL 813603, at *7-8 (R.I. Super. Aug. 31, 1999).
Proceedings Before the Division
On July 2, 2013, RIFF filed a "Request for Authority to Operate as Jitney and/or Water Carrier" (Application), seeking to operate a passenger-only, seasonal fast-ferry service from Quonset Point to Old Harbor. See generally R. no 71. Petitioners opposed the Application and sought to intervene in the proceedings. Id. nos. 68, 70. Interstate operates an existing year-round ferry service to Block Island, carrying passengers, cars, and freight which departs from Point Judith in Narragansett. (Compl. No. PC-2018-7658, ¶ 1.) The Division granted full intervenor status to the Town but limited Interstate's intervention to the issue of "public convenience and necessity." (R. no. 13, at 19-20.)
The Town then filed a Motion for Summary Disposition, pursuant to Rule 1.19(E) of the Division's Rules of Practice and Procedure,[2] in which it argued that RIFF would be unable "in the foreseeable future" to construct or utilize a dock in Old Harbor. Id. no. 45, at 6. Consequently, the Town urged the Division to find that RIFF was not "fit, willing[,] and able" to perform the requested water carrier services. Id. at 5-6. Notwithstanding the fact that it had not yet obtained Town approval, RIFF argued in response that it had entered into a lease option agreement with a private company, Bluewater LLC (Bluewater), through which RIFF would use docking facilities to be constructed by Bluewater in Old Harbor. See generally id. no. 23. The Division denied the Town's Motion, finding that RIFF, through Bluewater, had a "realistic expectation of having access to a future docking facility in Old Harbor[.]" Id. no. 4, at 22. The Division also stated, however, that it "reserve[d] the right to revisit this matter upon a showing by the Town that it has been successful in its efforts to prevent the construction of Bluewater's planned dock before [the United States Army Corps of Engineers (USACE)] or [the Rhode Island Coastal Resources Management Council (CRMC)]." Id. at 23.
Thereafter on March 2, 15, 22, and 24 of 2016, the Division conducted four evidentiary hearings in consideration of the Application. See generally id. nos. 168-71.
In addition to Charles Donadio and Lawrence Kunkel, whose testimonies are further described below, RIFF's witnesses also included: (1) Elizabeth Dolan, in her capacity as the President of the North Kingstown Town Council, id. no. 89; (2) Martha Pughe, Executive Director of the North Kingstown Chamber of Commerce, id. no. 87; (3) Myrna George, President of the South County Tourism Council id. no. 85; (4) Steven King, Managing Director of Quonset Development Corporation, id. no. 93; and (5) Robert Billington, President of the Blackstone Valley Tourism Council. Id. no. 91. All broadly focused on the inconvenience of the existing ferry departure location in Point Judith-due to distance, parking, and traffic congestion-as compared to the relative convenience of an alternative intermodal terminal in Quonset, which would be linked to the Rhode Island Public Transportation Authority (RIPTA) bus service, the Wickford Junction commuter rail station, and shuttle service to and from T.F. Green International Airport. See generally id. nos. 85, 87, 89, 91, 93, 95, 105. RIFF's witnesses further testified that an additional ferry option from Quonset would expand tourism to an untapped market of travelers, increasing revenues for North Kingstown and Block Island. See generally id. nos. 89, 95.
Various witnesses offered both anecdotal evidence and more technical analyses of the existing and potential demand and market conditions for ferry services in southern Rhode Island. For example, Charles Donadio, RIFF's president, testified that he had studied RIFF's potential market by population density and concluded that there existed an unsatisfied demand for ferry services outside of Point Judith. Id. no. 95, at 8-9. As further evidence of an untapped market, Mr. Donadio recounted that customers regularly called RIFF, asking whether it provided service between Quonset and Block Island. Id. at 9.
Lawrence Kunkel, an economist, testified as an expert in industrial organization and game theory-"the study of mathematical models of conflict and cooperation between intelligent and rational decision makers." See id. no. 105, at 2; see also id. no. 106; id. no. 170, at 238:12-17. Mr. Kunkel stated that there existed a "dormant, unserved[ ] market for additional high speed ferry service to Block Island[,]" specifically for residents of mid- and northern-Rhode Island. Id. no. 105, at 5-6. He also believed that RIFF's proposal aligned with public policy, as evidenced by state and federal investment of $660 million in infrastructure improvements in the Quonset Davisville Business Park (QDBP) and its nearby Route 403 exchange. Id. at 4-5. During cross-examination, he conceded, however, that there was no evidence that state legislators specifically expected that RIFF would commence seasonal high-speed ferry service to Block Island from Quonset Point when investing in the QDBP. Id. no. 170, at 227:20-228:14. Similarly, Mr. Kunkel conceded that he had no reason to believe that the Quonset Development Corporation (QDC) anticipated RIFF's commencement of Block Island services when it leased QDBP space to RIFF. Id. at 228:15-229:22.
As a matter of game theory, Mr. Kunkel had formed the opinion that Interstate opposed RIFF's Application to preserve a monopoly on ferry transportation between mainland Rhode Island and Block Island. Id. no. 105, at 7-8. Mr Kunkel believed, however, that competition would benefit the travelling public, as evidenced by service improvements initiated by Interstate in the wake of previous administrative proceedings dealing with new potential ferry service competition. Id. at 8. In any event, he expressed the opinion that RIFF would not be a direct competitor to Interstate because the companies would be serving different...
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