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LLC v. Providence Water Supply Board and Rhode Island Public Utilities Commission

Superior Court of Rhode Island

May 3, 2018

421 PINE STREET REALTY, LLC. Plaintiff/Appellant,
v.
PROVIDENCE WATER SUPPLY BOARD AND THE RHODE ISLAND PUBLIC UTILITIES COMMISSION Defendants/Appellees.

         Providence County Superior Court

          For Plaintiff: John M. Verdecchia, Esq.

          For Defendant: Leo J. Wold, Esq. Michael R. McElroy, Esq. Leah J. Donaldson, Esq.

          DECISION

          STERN, J.

          Before the Court is the Plaintiff-Appellant's-421 Pine Street Realty, LLC. (Pine Street Realty), a single-member entity managed by John Verdecchia (Verdecchia) (collectively, Appellant)-administrative appeal request to reverse and vacate Report and Order No. 21401 (Order) issued by the Division of Public Utilities and Carriers (Division) dismissing the September 5, 2013 complaint filed by Verdecchia. Order at 17. The Division concluded the "Providence Water [Supply Board] is not barred from the provisions of [G.L. 1956] § 46-13-22 from requiring the installation of back-flow prevention devices on all of the water service connections to its distribution system, " including Verdecchia's six-unit property located at 421 Pine Street in Providence (the Property). Id. at 14. Defendants-Appellees-Providence Water Supply Board (PWSB or Providence Water) and the Rhode Island Public Utilities Commission (Commission) (collectively, Appellees)-separately object to the within administrative appeal. Jurisdiction is pursuant to G.L. 1956 § 42-35-15.

          I

         Facts and Travel

         In 2008, Verdecchia received a written notification from the PWSB regarding PWSB's Cross-Connection Control Program that, among other directives, mandates the installation of a backflow preventer valve on the Property. Verdecchia contacted the PWSB and was further informed by the PWSB that the Property was required to purchase and hire a plumber to install a backflow preventer device at the Property. Following the installation of a backflow preventer device at the Property, Verdecchia would also be required to inspect and generate a report of the backflow preventer valve annually.

         Throughout the next several years, [1] Verdecchia received a series of written notices from the PWSB that mandated "immediate" participation in the Cross-Connection Control Program that "requires the installation of reduced-pressure-zone types of devices in commercial and industrial settings" for "[m]ulti-family housing[] consisting of (4) four or more dwelling[] units . . . ." See Appellees' Ex. 25. In a letter dated July 13, 2011, PWSB issued a notice to Verdecchia and directed him to install a reduced-pressure-zone (RPZ) backflow preventer within forty-five days of the notice. Id. On October 4, 2011, PWSB issued another notice to Verdecchia and directed him to install a RPZ backflow preventer on the Property and provided him with thirty days to comply with the notice. Id. On November 28, 2011, PWSB sent another notice to Verdecchia directing him to install a RPZ backflow device on the Property and provided him with ten days to comply with the notice. Id. Verdecchia failed to comply with all of the aforementioned notices sent by the PWSB.

         On October 4, 2012, PWSB issued a "Notice of Violation and Order of Penalty" to Verdecchia informing him that "421 Pine Street is in violation of the 'Public Drinking Water Protection' Act, Chapter 46-13-22 of the Rhode Island General Laws as amended, and the Rules and Regulations of the Providence Water Supply Board Cross Connection Program." See id. Specified in this notice was a directive by the PWSB to allow Verdecchia until October 18, 2012 to install the required backflow device at the Property or face "appropriate action up to AND including termination of water service" at the Property. Id. After receiving the October 4, 2012 Notice of Violation, Verdecchia requested an exemption for the Property's participation in PWSB's Cross-Connection Control Program. Following Verdecchia's exemption request for the Property, in a letter dated February 28, 2013, the PWSB denied Verdecchia's exemption request and further mandated that he comply with § 46-13-22 and PWSB's rules and regulations for backflow protection. See Appellees' Ex. 26.

         Nearly six months after Verdecchia's exemption request was denied, in a letter dated September 5, 2013, Verdecchia filed a complaint to the Division appealing the notices he had received from the PWSB. See Appellees' Ex. 10. Specifically, Verdecchia appealed to the Division and argued that the Legislature repealed § 46-13-22 that afforded the PWSB the right to require the installation of a backflow device on the Property. In addition, Verdecchia argued the PWSB did not possess legal authority to require him to install the device as PWSB claimed. Id.

         On January 7, 2014, the Division conducted a duly noticed hearing on the Appellant's complaint pursuant to the Administrative Procedures Act of §§ 42-35-1, et seq. and the Division's authority under G.L. 1956 §§ 39-4-3 and 39-4-10. During the hearing, PWSB presented two witnesses: Mr. Peter McLaughlin (McLaughlin) and Mr. Jeffrey Lykins (Lykins). McLaughlin is a "[m]anager and engineer in customer service" for the PWSB. See Appellees' Ex. 3; Tr. at 67:2-5, Jan. 7, 2014. During McLaughlin's testimony, he explained the dynamics of a "cross-connection" and the importance of a backflow preventer as this device relates to a commercial property and identified the Property as "commercial." McLaughlin also testified that the PWSB's recent policy requires properties with four units or more to have backflow devices. Also, during his testimony, McLaughlin supported several of PWSBs exhibits, including Exhibit 13 (Section 608.1 of the commercial plumbing code, which requires the installation of backflow preventers on all commercial properties), and Exhibit 14, which included several notices, the first of which he expressed was sent on July 13, 2011 and the final notice, which was sent in October 2012 to the Appellant, regarding the backflow responsibilities of the Property. McLaughlin's testimony is based on his years of managing PWSB's cross-connection control program and his belief that the Property was required to have a backflow preventer.

         Lykins, the Director for the Department of Inspections and Standards for the City of Providence and a local and national registered architect for over thirty years, expressed that one and two-family buildings are residential and three or more family buildings are commercial buildings. During his testimony, Lykins further explained that although a building may seem residential inside, the building may be required to meet commercial standards, which calls for a backflow prevention device pursuant to the plumbing code. Based on his professional opinion, Lykins concluded that a backflow device is required for the six-unit Property.

         After a daylong hearing, the Division issued Order No. 21401 on May 5, 2014 denying and dismissing the Appellant's complaint. The Division found "abundant evidence on the record" to conclude that Providence Water is not barred from the provisions of § 46-13-22 from requiring the installation of backflow prevention devices on all the water service connections to its distribution system. Order at 14. Furthermore, the Division was "unable to accept [Verdecchia's] argument that . . . § 46-13-22 prohibits Providence Water from requiring the installation of a back-flow prevention device on his six-unit residential property by virtue of the property's residential nature." Id. at 15. The Division also found that "an assessment of the 'commercial' vs. 'residential' nature of the property is essentially unimportant" and "only relevant in terms of separating the so-called 'high hazard' properties for immediate enforcement." Id. at 15-16. However, the Division referred the issue of whether PWSB's cost-shift to the property owners constitutes an illegal tax or a constitutional violation to the Courts, which exclusively possess the authority to address such inquiries. Id. at 17.

         On July 7, 2014, following the Division's issuance of Order No. 21401, the Appellant filed a motion to stay the effect of Order No. 21401 with the Division. On July 17, 2014, the Division issued Order No. 21511, which denied the Appellant's motion for stay. On July 17, 2014, Appellant filed an administrative appeal for Order No. 21511 in Superior Court. On April 20, 2015, Appellant's motion for stay was heard and denied. Thereafter, on April 20, 2015, Appellant petitioned the Rhode Island Supreme Court for writ of certiorari and filed a Motion for Stay. Following Appellant's unsuccessful Motion for Stay, Appellant withdrew his petition, in part, because the denial of the Motion for Stay rendered the request for certiorari moot.

         Appellant appeals Order No. 21401 on grounds that the decision of the hearing officer should be reversed as it was clearly erroneous, against the weight of the evidence presented, and in violation of law. The Appellant makes two main contentions. First, the Appellant argues against the requirement of § 46-13-22(b) to install a backflow valve device, because he believes the Property is exempt based on the Legislature amending § 46-13-22(b) which removes the requirement that cross-connection control devices be installed at residential service connections. Second, the Appellant argues that the action of PWSB in only requiring those owners of properties of four units or more to install backflow prevention devices at their own expense constitutes an illegal tax and violation of the Equal Protection Clause under both the Rhode Island and Federal Constitutions.

         In response, Appellees argue that the Appellant's appeal should be dismissed on substantive and procedural grounds. The Appellees argue that § 46-13-22(b) mandates that PWSB's cross-connection control policy is legal and does not violate the Rhode Island Constitution. Specifically, Appellees argue the substantive evidence on the record supports the Division's finding that the Property is a commercial property and that section 9.4(a) of the Rhode Island Department of Health's (the DOH) Rules and Regulations Pertaining to Public Drinking Water requires the PWSB to enforce the policy against the Appellant. Appellees further argue that, even if the Property is residential, § 46-13-22(b) does not preempt the cross-connection control policy. Specifically, Appellees argue that § 46-13-22(b) authorizes the DOH to require the installation of cross-connection control devices at residential properties; section 9.4(a) of the DOH's Rule and Regulations mandates that water utilities such as PWSB require that customers install cross-connection control devices at preexisting residential properties such as the Property; and that section 9.4(a) is not ultra vires of § 46-13-22. Additionally, Appellees argue the cross-connection control policy does not violate either the Rhode Island or the Federal Constitution. Specifically, the Appellees argue the cross-connection control policy does not constitute an unlawful tax; it does not violate the Equal Protection Clause; and PWSB has applied it fairly and rationally. Finally, the Appellees argue procedurally that the Appellant's appeal should be dismissed because the appeal was not properly filed, nor does the Appellant name the correct respondent.

         II

         Standard of Review

         The Superior Court's appellate review of a final administrative decision is governed by the Administrative Procedures Act. Sec. 42-35-15; Iselin v. Ret. Bd. of Emps.' Ret. Sys. of R.I., 943 A.2d 1045, 1048 (R.I. 2008) (citing Rossi v. Emps.' Ret. Sys. of R.I., 895 A.2d 106, 109 (R.I. 2006)). Section 42-35-15(g) delineates the applicable standard of review for administrative appeals to this Court:

"(g) The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced ...

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