Case Title: Pawtucket Power Assoc. Ltd. v. City of Pawtucket

Citation: 622 A.2d 452

Docket Number: 

State: rhode-island

Court: Rhode Island Supreme Court

Date: 1993-03-22T00:00:00Z

Document:
622 A.2d 452 (1993) PAWTUCKET POWER ASSOCIATES LIMITED PARTNERSHIP et al. v. CITY OF PAWTUCKET et al. No. 92-83-Appeal. Supreme Court of Rhode Island. March 22, 1993. *453 Dennis J. Duffy, James Purcell, Partridge, Snow & Hahn, Providence, for plaintiffs. Patrick J. Quinlan, Quinn, Shechtman & Teverow, Providence, for defendants. WEISBERGER, Justice. This case comes before us on appeal by Pawtucket Power Associates Limited Partnership and EMI/Pawtucket, Inc., its general partner and a Rhode Island corporation (PPA), from a judgment entered in the Superior Court denying PPA a tax exemption pursuant to the provisions of G.L. 1956 (1988 Reenactment) § 44-3-3(20)(a), as amended by P.L. 1992, ch. 449, § 1 and on a cross appeal by the defendant, the city of Pawtucket, its mayor, and its tax assessor (city), from a limitation of tax assessment pursuant to § 44-3-18(B). We reverse the judgment of the Superior Court insofar as it denies PPA a tax exemption. We therefore do not reach the question of the cross-appeal filed by the city. The facts of the case are set forth in a comprehensive stipulation as follows: The sole question presented to this court is whether PPA's machinery meets the definition of exemption set forth in § 44-3-3(22). This section reads as follows: Under the stipulation of facts there is no question that the machinery was purchased after December 31, 1974, as new items, and it was found by the trial justice that PPA's machinery and equipment is used exclusively for the purpose of transforming raw materials, that is, natural gas, oil, and air into a finished product, that is, steam and electricity. However, the trial justice determined that § 44-3-3(20) was conclusive in disqualifying PPA for this exemption since she held as a matter of law that it met the definition of a public utility pursuant to G.L. 1956 (1990 Reenactment) § 39-1-2(7), as amended by P.L. 1992, ch. 133, art. 34, § 2. This last section purports to define the term "public utility" as follows: It is interesting to note as set forth in paragraph 11 of the stipulation of facts that the Rhode Island Public Utilities Commission issued a declaratory judgment on February 3, 1989, holding that PPA's ownership and operation of the facility described in the stipulation of facts would not cause PPA to become a `public utility' under *456 Rhode Island law. The ruling of the Public Utility Commission (commission) was based upon substantially the same facts as have been stipulated for purposes of this controversy. The ruling was as follows: The trial justice took the position that the ruling of the commission was not binding upon the court since she was construing the statute for purposes of municipal taxation as opposed to looking at the question of supervision by the commission of the rates to be charged by PPA. It is true that the city did not participate in the proceedings held before the declaratory judgment was issued by the commission. Nevertheless, we find ourselves in the somewhat anomalous position of having to deal with a declaratory judgment issued by the commission that holds that PPA is not a public utility as that term is defined in § 39-1-2(7) and a diametrically opposed determination of the Superior Court that for the purpose of municipal taxation PPA is a public utility as that term is defined in § 39-1-2(7), the identical statute. In City of East Providence v. Public Utilities Commission, 566 A.2d 1305 (R.I. 1989), we affirmed a declaratory judgment by the commission that held that Newbay Corporation (also a cogenerating facility) was not a public utility or an electric utility as those terms were defined under title 39 of the General Laws. We recognized the commission as the appropriate agency to define the term "public utility," subject to our review, and stated that we have repeatedly held that we would show great deference to the factfinding of the commission. Id. at 1307; Town of New Shoreham v. Burke, 519 A.2d 1127 (R.I. 1987); New England Telephone & Telegraph Co. v. Public Utilities Commission, 446 A.2d 1376 (R.I. 1982). We further stated that we would review the commission's holding of law under a de novo standard. Applying these principles, we examined the various provisions of chapter 20 of title 39 and affirmed the holding of the commission. It is true that we emphasized the fact that Newbay was not yet an operating facility. However, it is also a well-recognized doctrine of administrative law that deference will be accorded to an administrative agency when it interprets a statute whose administration and enforcement have been entrusted to the agency. See, e.g., Young v. Community Nutrition Institute, 476 U.S. 974, 106 S. Ct. 2360, 90 L. Ed. 2d 959 (1986); Chemical Manufacturers Association v. Natural Resources Defense Council, Inc., 470 U.S. 116, 105 S. Ct. 1102, 84 L. Ed. 2d 90 (1985); Lawrence County v. Lead-Deadwood School District No. 40-1, 469 U.S. 256, 105 S. Ct. 695, 83 L. Ed. 2d 635 (1985); Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984); United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981). Deference is accorded even when the agency's interpretation is not the only permissible interpretation that *457 could be applied. Young, 476 U.S. at 981, 106 S. Ct. at 2365, 90 L. Ed. 2d at 967. Certainly the commission has been entrusted with the interpretation and implementation of title 39, which deals with all activities relating to public utilities and carriers. It is true that the commission is not an agency that has been entrusted with the enforcement and interpretation of matters relating to municipal taxation. However, when the General Assembly chose to give tax exemption to certain manufacturers subject to an exception that public utilities would not be entitled to such an exemption, reference was required to be made to § 39-1-2(7) for the definition of a public utility. Thus the Legislature referred to a body of statutory law administered by the commission for the purpose of defining the term "public utility." We are of the opinion that the Superior Court should have applied a more deferential standard in defining a term that had already been defined by the supervising administrative agency taking account of mixed questions of law and fact. Since the Legislature referred to the public utilities statute for the definition of an exception to an exemption, a declaratory judgment of the agency concerning whether PPA constituted a public utility was entitled to deference and has great persuasive force. We have examined the written decision of the trial justice as well as the written decision of the commission and are of the opinion that in all the circumstances of this case, in light of the stipulated facts, and the deferential standard of review, the declaratory judgment of the commission is more persuasive. We therefore hold as a matter of law that PPA is not a public utility as that term is defined under title 39 of the General Laws. Pawtucket Power Assoicates is entitled to the tax exemption provided by § 44-3-3, subsections (20) and (22). In view of this conclusion we do not reach the question raised by the cross-appeal concerning the valuation of cogeneration energy systems. For the reasons stated, the appeal of PPA is sustained. The cross appeal of the city is denied pro forma. The judgment of the Superior Court is reversed, and the papers in the case may be remanded to the Superior Court with directions to enter judgment in favor of PPA as entitled to a tax exemption and also to the refund of tax payments previously made, together with interest thereon. [1] See stipulation No. 10 for FERC ruling on "qualified facility," or QF.