‘court is mindful that it is possible it will not be the last court that reviews Tariff No. 8’

Following talks with judge, Maine DOT initiates rule-making for last spring’s ferry ticket hikes

Posted:  Tuesday, November 6, 2018 - 4:00pm
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AUGUSTA — A Kennebec County judge has ruled that the new ticket prices instituted May 21 for Midcoast island ferries will remain in place while the Maine Department of Transportation begins a rule-making process of those new tariffs.

Last summer, the DOT said it was not required to conduct a rule-making process in implementing new ticket prices and instead said it had the right to raise ferry ticket rates through an adjudication process, meaning the agency itself could set the rates without requisite public hearings.

Even though the new ticket prices stay as is, the change of course is good news to the Town of Islesboro and four plaintiffs who appealed the DOT action of instituting Tariff No. 8 to the Kennebec County Superior Court last summer.

They had asked the court to vacate the new ferry price hikes and require the DOT to initiate rule-making process with the ferry rate structure.

Although Judge M. Michaela Murphy did not agree with the plaintiffs to reverse the ferry ticket rate hikes of May 21, 2018, the judge called for a stay on all proceedings until Jan. 1, 2018, or whenever the rule-making proceedings for Tariff No. 8 are completed, whichever comes first.

As part of the rule-making process, the DOT, which oversees the Maine State Ferry Service, ha scheduled a public hearing on the new tariffs on Nov. 28, at noon, at the University of Maine Hutchinson Center in Belfast.  View the fees of Tariff No. 8 here.

The public is invited to attend the hearing to present data, views, arguments, and comments.  

Court history

In May 2018, Islesboro and four of its island citizens —  Gabriel Pendleton, Select Bord member; Philip T. Seymour, Paul C. Hatch, Jr., and Craig R. Olson — filed an appeal of Tariff No. 8 for ferry passengers and vehicles, qualifying it was “improperly, unfairly, arbitrarily, wrongfully, and unconstitutionally” implemented.

In June, the DOT filed a response (see attached PDF), saying Islesboro was free to approach the Maine Legislature to seek more state funding to support the operation of the Maine State Ferry Service or, “to try to make Maine law as Islesboro wishes it to be.”

Lawyers for the DOT added, in their opposition to motion that the state ferry service should revert to the ticket fee structure that in effect prior to May 21, that the state could lose more than $1 million in toll revenues per year.

On Nov. 2, Judge Murphy wrote: “The court also found that substantial harm could result to the ferry system in the form of service disruptions if a stay is granted.”

According to her decision (see attached PDF), on Oct. 4, the court talked with attorneys for Islesboro, the individual plaintiffs and the Dept. of Transportation via teleconference. 

In that teleconference, the DOT told the judge that it would, in fact, initiate rule-making procedure for Tariff No. 8.

Background

According to Islesboro, Tariff No. 8 was different from the rate structure proposed by the DOT last winter, which had been vetted at public hearings. That structure established different rates for in-state and out-of-state residents.

Island citizens rejected that idea, saying it would drive a wedge between the summer residents and year-round residents, all who economically depend on each other.

That was in January and February 2018. 

Maine State Ferry Service representatives, who are considered part of the DOT, returned to Augusta, and no more public hearings were held. 

New ferry ticket prices were released April 17, when the DOT, through the Maine State Ferry Service office, announced that it would implement a new flat rate ticket pricing structure May 21, standardizing ferry prices across the entire system.

Adjusting the ticket prices for flat rates, however, resulted in Islesboro tickets doubling in price and threatening, according to residents and municipal officials, local commerce and trade on Islesboro and the Midcoast communities that lie but one mile across Penobscot Bay.

Belfast, Lincolnville, Camden and Rockport all wrote to the DOT asking the state agency to reconsider the Islesboro rates and discuss the issue.

But the DOT, and the governor’s office, refused to communicate further with Islesboro and legislators, who attempted to talk about the new rates with staff. The DOT denied a request for a stay of their ferry fee schedule implementation.

Read: Maine DOT refuses to postpone ferry ticket increase; Islesboro to forge ahead with appeal

“MDOT did not hold any public hearings on the rate structure that was ultimately adopted, even though the adopted rate structure was substantially different than the proposed rate structure,” wrote Islesboro’s attorney, Mary Costigan, in the appeal.

Tariff No. 8 became effective May 21, she wrote, “only 38 days after the decision was signed by the Commissioner and less than one month after the decision was received by the Town.” It was not approved by the Attorney General prior, she added.

The DOT has said, however, that the new tariffs do not constitute a rule change, and used adjudicatory processes allowed under the Administrative Procedure Act.

But Costigan countered that the DOT acted in error.

“MDOT was required, pursuant to 5 M.R.S.A. § 8052(5)(A),[state statute governing rule making] to adopt a written statement explaining the factual and policy basis for the rule, listing the names of persons whose comments were received, and addressing the specific comments and concerns raised.”

Costigan calls the tariff on Islesboro’s end a revenue-raising device that is not calculated with a fair approximation of the costs to government and the benefit to the individual of the services, “and therefore constitutes a tax on petitioners.”

“The Maine Constitution requires that all taxes be initiated by the Maine House of Representatives,” Costigan wrote.

 Islesboro wanted the court to void Tariff No. 8, and declare it an arbitrary, capricious and unfair approximation of the Islesboro ferry’s cost to the government and benefit to ferry users, thus constituting an illegal taxation without representation.

Islesboro had maintained that the DOT must undergo rule-making before repealing and replacing tolls in the Maine State Ferry Service.

The DOT had argued, however, that Maine statute did not require the DOT to establish tolls through rule making but instead, “permits Maine DOT to establish tolls through an adjudicatory proceeding,” as written in the DOT June 13 response to the appeal.

Rule-making, according to the Maine Secretary of State, is part of the Maine Administrative Procedure Act, which was adopted in 1978 and applies uniform requirements to state agencies when they are adopting and implementing rules.

In response to a decades-long concern about regulatory activity, the federal government and many other states have adopted administrative procedure acts,” according to the Maine Secretary of State. “The intent has been to improve public access to agency decision-making and to increase awareness of agency rules.”

Public hearing, Nov. 28

The DOT’s initiation of rule-making on the ferry fees includes a Nov. 28 public hearing on “tolls for all routes served by the Maine State Ferry Service,” according to the public notice circulated Oct. 31.

“The proposed Rule 602 would establish tolls that are consistent with the tolls as they are currently set out in Tariff No. 8,” according to the DOT. “This Rule would also allow for surcharges on said tolls if the costs of the MSFS increase or ridership decreases causing a shortfall in operating funds.

For additional information, for a printed version of the proposed rule, for a copy of the statement of impact on small business pursuant to 5 M.R.S.A. Section 8052(5-A), or to submit written data, views, arguments, and comments, contact:

James Billings, Esq.

Legal Division, Maine Department of Transportation

16 State House Station, Augusta, ME 04333-0016

Telephone (207) 624-3020, TTY Users dial Maine Relay 711

James.Billings@maine.gov.

Written submissions must be received by December 12, 2018.  

A copy of the proposed rule may be viewed online at: https://www1.maine.gov/mdot/rulemaking/

 

Stay Proceedings

In her decision, Judge Murphy wrote that the court had discussed with the DOT and Islesboro plaintiffs about staying court proceedings until rule-making was complete, “but the parties could not agree on the course of the future proceedings.”

She then told both parties that she would stay proceedings until Jan. 1, 2019, “or until rule making is complete, whichever occurs first.”

“The court is also mindful that it is quite possible it will not be the last court that reviews Tariff No. 8,” she wrote. “The court concludes that judicial economy would be best served by a temporary stay of further proceedings to allow completion of rule-making. The parties will then be given the opportunity, if they would like, to alter or refine their positions on the legal issues which remain unresolved.”

 

Related stories

Islesboro files appeal of DOT’s new ferry rates in Kennebec County Superior Court

Maine DOT refuses to postpone ferry ticket increase; Islesboro to forge ahead with appeal


Reach Editorial Director Lynda Clancy at lyndaclancy@penbaypilot.coml 207-706-6657