United States v. NSTAR Electric Co.

220 F. Supp. 3d 162, 2016 U.S. Dist. LEXIS 149105, 2016 WL 6393817
CourtDistrict Court, D. Massachusetts
DecidedOctober 27, 2016
DocketCIVIL ACTION NO. 16-11470-RGS
StatusPublished
Cited by1 cases

This text of 220 F. Supp. 3d 162 (United States v. NSTAR Electric Co.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. NSTAR Electric Co., 220 F. Supp. 3d 162, 2016 U.S. Dist. LEXIS 149105, 2016 WL 6393817 (D. Mass. 2016).

Opinion

MEMORANDUM AND ORDER ON THE JOINT MOTION OP DEFENDANTS NSTAR ELECTRIC CO. AND HARBOR ELECTRIC ENERGY CO. TO DISMISS THE CROSSCLAIMS OF THE MASSACHUSETTS WATER RESOURCES AUTHORITY

STEARNS, UNITED STATES DISTRICT JUDGE

In 1989, the U.S. Army Corps of Engineers (ACOE) issued a permit to the Boston Edison Company1 and the Massachusetts Water Resources Authority. (MWRA) to install a submarine electric cable beneath Boston Harbor connecting NSTAR’s K-Street substation (385-T) in South Boston with the Deer Island Waste Water Treatment Plant (Plant). In this lawsuit, the ACOE alleges that defendants violated the permit by failing to bury the cable at the required depth. The ACOE seeks civil penalties as well as injunctive relief in the form of compliance with the permit or removal of the cable.

In response to the lawsuit, the MWRA filed crossclaims against NSTAR and the Harbor Electric Energy Company (HEEC)2 asserting that the utility companies are solely responsible for the costs of [166]*166reinstalling or protecting the existing cable. The MWRA also alleges that the utilities refused to negotiate in good faith over a successor to the parties’ 1990 Interconnection and Facilities Support Agreement (1990 Agreement), in violation of Mass. Gen. Laws ch. 93A, § 11 (Chapter 93A). NSTAR and the HEEC now move to dismiss the crossclaims contending that primary jurisdiction over the dispute rests with the Massachusetts Department of Public Utilities (DPU); that the MWRA’s claims are currently the subject of a pending state-court action; that the MWRA’s resort to alternative litigation venues amounts to impermissible claim-splitting; and that its claim for declaratory judgment is unripe as it has (as yet) suffered no actual harm. The court heard argument on the motion on October 18,2016.

BACKGROUND

On May 19, 1989, this court (Mazzone, J.) ordered the MWRA to undertake the construction of the Plant as the cornerstone of a long-term plan to restore the heavily-polluted Boston Harbor. Among its many provisions, the Order mandated that the MWRA “have electrical power available on Deer Island sufficient to commence construction ... by October of 1990.” In response, the MWRA entered into the 1990 Agreement with Boston Edison and the HEEC. Under the 1990 Agreement, the MWRA undertook to amortize and pay for the cost of constructing and operating the cross-harbor cable and the appurtenant electrical transmission facilities over the 25-year life of the contract. The 1990 Agreement included two spending caps setting the MWRA’s maximum obligation for construction costs. The first, applicable to the Phase I facilities (including the cable), was $25,400,000. The second, applicable to both Phase I and Phase II facilities, was $41,650,000. “Recovery of construction costs through the Interconnection Agreement is capped such that the HEEC, and not the MWRA, will absorb any costs that exceed the cap.” Dkt #30-2 at 8 (DPU approval of the HEEC financing application), citing 1990 Agreement at 8.

The ACOE issued a permit to Boston Edison Company and MWRA to install a 4.15 mile, cross-harbor 115-kilovolt submarine electrical cable to power the Plant. In January of 1990, Boston Edison incorporated the HEEC to build and maintain the cable.3 The following month, the ACOE amended the permit to add the HEEC. The permit required that the cable be installed at least 25 feet below the sea bed of two federally-owned channels in Boston Harbor, the Reserved Channel and the Main Ship Channel.

NSTAR engaged geotechnical consultants to conduct subsurface investigations. These revealed bedrock just beneath the sea floor in the Reserved Channel. NSTAR selected Les Cables de Lyon (CDL) to supply the electric cable. A CDL subcontractor, Harmstorf, was hired to excavate the cross-harbor trench for the cable. NSTAR and the HEEC claim that

during the construction of the Cable, it became apparent that the only way to uniformly reach the specified depths at certain locations would have been blasting through bedrock, which was discouraged by both the [Massachusetts Department of Environmental Protection] and the [ACOE], Although the depth actually achieved during construction was less than the permit specified in certain locations, it was the maximum achievable depths in those locations utilizing construction methods approved at that time, and depth actually achieved was below the official maximum depth [167]*167then anticipated and communicated by the [ACOE] for any future shipping needs.

Am. Answer of NSTAR and HEEC ¶ 14, Dkt #20.

When completed in 1994, the combined costs for the Phase I and Phase II facilities, exclusive of interest and charges, came to less than $41.65 .million, entitling Boston Edison and the HEEC under the 1990 Agreement to an incentive payment of $1,487 million. As amortized over the twenty-five year term of the 1990 Agreement, the costs of the project totaled approximately $104 million (of which $3,475 million is attributable to the incentive award).

In 2000, the Massachusetts Port Authority (Massport) asked the ACOE to undertake a study of the feasibility of deepening the Reserved Channel and the Main Ship Channel to accommodate a new generation of mammoth container ships. The ACOE study laid the groundwork for the Boston Harbor Deep Draft Navigation Improvement Project (Deep Draft Project). During a feasibility exploration, the ACOE discovered that in some locations the cable was not buried to the 25 foot level mandated by the permit — in some areas it lay as little as 12 feet below the sea floor. In 2003, the ACOE notified the three permit holders that the cable’s positioning violated the terms of their permit. The ACOE demanded that the cable be reinstalled at the proper depth requirements to allow the Deep Draft Project to go forward.4

Prolonged settlement negotiations between the ACOE and the permit holders began in 2003.5 NSTAR proposes the placement of protective concrete mats or steel plate structures just above the cable, extending some 1,000 linear feet into the Reserved Channel. NSTAR and the HEEC estimate the cost of trenching and placing the mats to range from $10 to $20 million, as opposed .to the $50 to $100 million cost of installing a new cable. NSTAR and the HEEC also maintain that any “cable protection costs” they incur are recoverable from the MWRA under the 1990 Agreement.

On October 30, 2015, the HEEC, as “own[er] and' operator] of a submarine electric cable and related substation and interconnection facilities that are used exclusively for providing distribution service to the MWRA facility,” filed a petition with the DPU seeking a tariff “to recover its costs to serve MWRA on and after January 1, 2016.” Dkt #30-1 at 1. In its tariff petition, the HEEC stated that the MWRA was then “paying for service under a long-standing contract with the HEEC that expires on November 12, 2015 and will not be renewed.” Id, at 6 (Pet. ¶ 5). Thus, it was “seeking (1) approval of a tariff that will provide a construct for recovery of prudently incurred costs on a going-forward basis; and (2) approval of a rate consistent with the provisions of the tariff rate mechanism to supplant the amounts currently recovered under the expiring Interconnection Agreement ... [but] not ... costs associated with the [ACOE’s] dredging.”6 Id. at 25.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
220 F. Supp. 3d 162, 2016 U.S. Dist. LEXIS 149105, 2016 WL 6393817, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-nstar-electric-co-mad-2016.