Martorano v. Department of Public Utilities

• Decision Date: 14 December 1987
• Citation: 516 N.E.2d 131,401 Mass. 257
• Parties: Michael MARTORANO et al. 1 v. DEPARTMENT OF PUBLIC UTILITIES et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 131

516 N.E.2d 131

401 Mass. 257

Michael MARTORANO et al. ¹ v. DEPARTMENT OF PUBLIC UTILITIES et al. ²

Supreme Judicial Court of Massachusetts Suffolk.

Argued Sept. 10, 1987.

Decided Dec. 14, 1987.

Steven Ferrey, Boston, for plaintiffs.

Thomas A. Barnico, Asst. Atty. Gen., for Dept. of Public Utilities.

Harold W. Potter, Jr., Boston, for Tennessee Gas Pipeline Co., intervener.

Virginia A. McCarthy and L. William Law, Jr., Boston, for Boston Gas Co., intervener, were present but did not argue.

Before HENNESSEY, C.J., and LIACOS, NOLAN and LYNCH, JJ.

LYNCH, Justice.

The Tennessee Gas Pipeline Company (Tennessee), a supplier of natural gas, petitioned the Department of Public Utilities (department) for an exemption under G.L. c. 40A, § 3 (1986 ed.), from local zoning regulations in order to permit Tennessee to construct a natural gas meter station in Acton. The department thereupon conducted a public hearing to determine whether the zoning exemption should be allowed. At the hearing, the Boston Gas Company (Boston Gas), and the Acton-Concord Citizen Coalition (coalition), a citizen's group opposed to the exemption, participated as interveners. On September 24, 1986, the exemption was granted. On October 10, 1986, the coalition moved the department to reopen the proceedings and reconsider its decision, but the motion was denied. The coalition petitioned the Supreme Judicial Court for the county of Suffolk under G.L. c. 25, § 5 (1986 ed.), to set aside or modify the department's decision. A single justice reported the matter to the full court. There was no error committed by the department.

We summarize the facts found by the department. Wholesalers and retailers of natural gas deliver and receive their product through underground pipeline networks. Gas owned by one company may, by contract, be transported through another company's pipeline. Boston Gas stores natural gas in underground storage facilities in New York and Pennsylvania. Boston Gas and Tennessee have a contract, whereby Tennessee agrees to transport gas from the storage facilities through Tennessee's pipeline to delivery points in Massachusetts. A delivery point is a place where a buyer's and a seller's pipelines are physically connected. Gas meter stations similar to the one Tennessee plans to build in Acton are located at such delivery points.

Current levels of gas supplied to Boston Gas by Tennessee are insufficient to meet Boston Gas's needs during periods of peak demand. Tennessee presently supplies Boston Gas under a "best efforts" contract, i.e., Tennessee has agreed to transport gas when there is space available on its pipelines, but not when all capacity is filled by other customers who have "firm supply" commitments. Until recently, this arrangement has not posed a problem for Boston Gas, because it has been able to rely on Algonquin Gas Transmission Company, in periods of peak demand.

Algonquin has informed Boston Gas that it may no longer depend on this service. Therefore, Boston Gas sought to obtain gas transported by Tennessee on a "firm supply" basis. The two companies agreed that Tennessee would transport the extra gas on a firm supply basis (firm supply contract), but an additional delivery point would be needed to accommodate the extra gas. Boston Gas and Tennessee's pipeline networks would be connected at this delivery point and a gas meter station would be built above it. A site in Acton (Lawsbrook Road site) was ultimately chosen because (1) it is a location where the Tennessee and Boston pipelines already cross over one another (but are not yet physically connected), and (2) at that particular point on the pipeline, there is sufficient excess capacity to guarantee Boston Gas a firm supply of gas during periods of peak demand. ³

However, the Lawsbrook Road site is located in a residentially-zoned area. Therefore, in August, 1985, Tennessee petitioned the department for an exemption from the Acton zoning regulations in order to build the meter station on the chosen site. Notice was given to adjoining landowners and a public hearing was held. The coalition was granted permission to intervene in the case, and a formal adjudicatory proceeding was scheduled. During the adjudicatory proceeding, the coalition argued that the meter station could be built more inexpensively at any one of three alternative sites--the "Wayland site," the "Lincoln site," or the "Acton water district site." ⁴ After several days of evidentiary hearings, the department issued an order approving Tennessee's petition, finding therein that the facility was "reasonably necessary for the public convenience and welfare."

The coalition thereupon moved the department to reconsider its decision and reopen the proceedings on the grounds that (1) Tennessee's witnesses had made misrepresentations concerning both the carrying capacity of Tennessee's pipeline and the desirability of the alternative sites, and (2) the hearing examiner improperly relied on an unsworn letter of counsel as evidence in the case. The department denied the motion and this appeal followed.

1. Standard of review. Review of the department's decisions is governed generally by G.L. c. 25, § 5. The appropriate standards of review for the department's decisions are set out in G.L. c. 30A, § 14(7) (1986 ed.). Boston Edison Co. v. Department of Pub. Utils., 375 Mass. 1, 9, 375 N.E.2d 305, cert. denied, 439 U.S. 921, 99 S.Ct. 301, 58 L.Ed.2d 314 (1978). Newton v. Department of Pub. Utils., 339 Mass. 535, 543 & n. 2, 160 N.E.2d 108 (1959). Therefore, we review the department's decision both for errors of law and for the sufficiency of the evidence under the "substantial evidence" test. ⁵ G.L. c. 30A, § 14(7). We accord due weight to the "experience, technical competence, and specialized knowledge" of the department. Id. Costello v. Department of Pub. Utils., 391 Mass. 527, 539, 462 N.E.2d 301 (1984), and cases cited. Matters of credibility and factual dispute are for the agency, not this court, to resolve. School Comm. of Wellesley v. Labor Relations Comm'n, 376 Mass. 112, 120, 379 N.E.2d 1077 (1978). With these principles in mind, we proceed to the questions presented on this appeal.

2. The cost letter. At the conclusion of the adjudicatory proceeding, the hearing examiner requested that Boston Gas "estimate the additional cost to Boston Gas associated with the alternative water district site." In response, Boston Gas submitted a letter outlining costs for both the Acton water district site and the proposed Lawsbrook Road site (cost letter). The coalition complained to the department that the cost letter attempted post hoc to inflate cost estimates already on the record for the Acton water district site and to deflate cost estimates for the Lawsbrook Road site. In its order, the department found that, "[i]n fact, construction costs would be higher at the Water District site...." The only sworn testimony relative to cost presented at the hearing was that of the coalition's expert witness, Martin Smirlock, also a coalition member, who testified that costs at the Acton water district site would be lower than at the Lawsbrook Road site. The coalition therefore argues that the department erroneously relied on unsworn testimony to make its decision, in violation of 220 Code Mass.Regs. § 1.10 (1986), which provides in part: "All unsworn statements ... shall not be considered as evidence on which a decision may be based."

The department found that "construction costs would be higher at the Water District Site" than at the Lawsbrook Road site. Since the only sworn testimony concerning cost came to the opposite conclusion, we must infer that the department's finding was based on something other than sworn testimony.

Although the department must have relied to some extent on its finding as to the relative costs of the two sites, it would have been warranted in rejecting the Acton water district site even without the cost letter. The department also found the Acton water district site to be less desirable because Tennessee would have only been able to acquire a leasehold interest rather than owning the site. Moreover, the department found that there was no guarantee that Tennessee would be able to obtain regulatory approvals necessary to use the Acton water district site. Furthermore, there is no requirement that the department find the proposed site to be the least expensive one; the availability of alternative sites is pertinent only as a "matter[ ] of fact bearing up on the main question whether the proposed site ... is reasonably necessary for the convenience or welfare of the public." Wenham v. Department of Pub. Utils., 333 Mass. 15, 17, 127 N.E.2d 791 (1955). G.L. c. 40A, § 3 (1986 ed.). Thus there was sufficient evidence, other than cost, which supported the department's decision.

There must be some showing of prejudice before an agency's disregard of its rules may constitute reversible error. DaLomba's Case, 352 Mass. 598, 603-604, 227 N.E.2d 513 (1967). "Courts have generally recognized that, even when a regulation which is meant to protect a party is violated, the party should be unable to insist on a new proceeding when there is little possibility that the violation had any effect on the agency's action." Note, Violations By Agencies of Their Own Regulations, 87 Harv.L.Rev. 629, 634 n. 24 (1974). 1 F. Cooper, State Administrative Law 271 (1965), and cases cited. Cf. American Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 538, 90 S.Ct. 1288, 1292, 25 L.Ed.2d 547 (1970) (Interstate Commerce Commission entitled to "measure of discretion"); Massachusetts Dep't of Correction v. Law Enforcement Assistance Admin., 605 F.2d 21, 27 (1st Cir.1979) (any prejudice from agency's failure to follow internal guidelines minimal); NLRB v. Monsanto Chem. Co., 205 F.2d 763, 764 (8th Cir.1953) (agency's action in relaxing procedural rules "not reviewable except upon a showing of...