Supreme Court, Albany County, June 13, 2019

Rupp Baase Pfalzgraf Cunningham LLC (Phillip A. Oswald of counsel) for petitioner/plaintiff.

John J. Sipos, Acting General Counsel, Public Service Commission of the State of New York (David Scott Bassinson and Donna M. Giliberto of counsel), for respondents/defendants.

Before the court is a hybrid CPLR article 78 proceeding and declaratory judgment action. Petitioner-plaintiff (Accadia), a construction firm, is challenging an adverse determination and{**64 Misc 3d at 635} penalty assessment made by respondent Public Service Commission (PSC). The matter arose out of three separate incidents in which natural gas lines were breached during a public construction project in Lockport, New York. The incidents occurred on October 22, 2014, December 10, 2014, and April 7, 2015. PSC's order was issued on August 15, 2018. Accadia took an administrative appeal via a petition for rehearing. PSC affirmed its original order in an order denying the petition for rehearing. That final order, marking the exhaustion of Accadia's administrative remedies, was dated January 22, 2019.

This lawsuit had been initially commenced by the filing of a petition-complaint on September 14, 2018, prior to the determination of the administrative appeal. Pursuant to a stipulation of counsel, the matter was marked off the calendar and enforcement of PSC's original order was stayed. Following the administrative affirmance, Accadia filed an amended petition-complaint on February 21, 2019. Respondents filed their answering papers on April 12, 2019. The matter was deemed fully submitted with the filing of Accadia's reply papers on May 2, 2019.

Factual Background

Accadia was retained by Niagara County to perform general contracting work on a major road reconstruction project along Lincoln Avenue in Lockport. The project included, among other things, the replacement of water mains, storm sewers, sidewalks, curbs and blacktop. Prior to commencing excavation, Accadia called the Dig Safely hotline in order to enlist the assistance of the local utility companies in marking the locations of underground pipes, cables and other facilities. Among these utility companies was New York State Electric and Gas Corporation (NYSEG), who sent workers to the site to mark the locations of underground natural gas mains and service lines.

On October 22, 2014, Accadia was working in the street in front of a single-family house located at 663 Lincoln Avenue. The location and description of a one-inch^[FN1] steel gas service pipe was clearly and accurately marked with spray paint on{**64 Misc 3d at 636} the blacktop in front of the house.^[FN2] Accadia began digging a trench on the opposite side of the street. What happened next is the subject of considerable disagreement between Accadia and PSC.

Accadia's version of events is related in the affidavit of Anthony G. Milone, a professional engineer who is the project manager for Accadia. Mr. Milone's affidavit recounts (at para 18) that "an individual who was present on site contemporaneously described to me what [*2]he observed and the conditions that resulted in this accident." This unidentified individual, whose veracity and powers of observation and recall are unknown, provided Mr. Milone with information that "the damage at issue occurred while Accadia was using its excavator to remove blacktop" (at para 21). He goes on to state,

"Accadia was removing pavement, not excavating, when the damage to NYSEG's steel gas service occurred. This happened because the steel gas service was located directly below the pavement. The gas service should have been 32 inches deep, but I was advised at the time of the incident that it was in fact only five or six inches deep" (at paras 22-23).

PSC's version, gleaned from page 4 of its August 15, 2018 order, states, "NYSEG recorded the depth of the natural gas service to be 30 inches," and that "NYSEG also documented that Accadia Site Contracting had exposed the natural gas service at a previous location on this site, which meant that Accadia met the requirement that it expose the facility prior to excavating and saw the pipe's depth." The damage, according to NYSEG's invoice for repairs (an exhibit in the record), consisted of the service pipe's having been "hit and pulled from [the] dresser."^[FN3] This, in turn, caused the release of some $575 worth of natural gas.^[FN4]

{**64 Misc 3d at 637}Fortunately, the immediate aftermath of the events of October 22, 2014, was preserved in a digital audiovisual recording. That footage shows the markings on the pavement identifying the location of the one-inch steel service line. It also shows a fairly deep trench, near the middle of which can plainly be seen a bent length of pipe running through it. While it is impossible to discern the precise depth of the pipe from the surface, it is obvious that it is many times deeper than five or six inches and that it is nowhere near pavement level. From the fact that the pipe is not at the very bottom of the trench one may reasonably infer that the initial excavation of the area around the pipe had not been accomplished by machinery but was instead hand-dug. From the shape of the trench and the contours of the bent pipe, however, one may also readily conclude that an overzealous backhoe operator had snagged the pipe with the bucket while enlarging the trench.

This is not the only information provided by the video. The camera operator focuses for a moment on a spot of ground above the buried gas main, a few feet beyond the trench. A mud puddle can clearly be seen emitting bubbles as the operator says, "The ground is bubbling. The gas main is right here." Taken together, then, this evidence provides ample support for PSC's determination that Accadia had violated 16 NYCRR 753-3.8, which prohibits the use of [*3]mechanized or powered equipment within four inches of a known facility.

The second incident occurred on December 10, 2014. Accadia was digging in front of 6444 Lincoln Avenue when the tooth of the bucket of an excavator punctured a four-inch plastic gas main. That this incident occurred is not in dispute. What is disputed is whether the location of the main was accurately marked by NYSEG and whether Accadia was excavating within the "tolerance zone" on either side of the marking (see 16 NYCRR 753-3.6). PSC's citation (paraphrased in the Aug. 15, 2018 order) alleges, "Staff conducted an investigation of documentation and has determined that Accadia Site Contracting, Inc. employed powered or mechanical excavating equipment closer than four inches in any direction from the staked, marked or otherwise designated or known outside diameter or perimeter of such facility or its protective coating." The citation also claims, "Staff reviewed NYSEG documentation indicating {**64 Misc 3d at 638}that the excavator did not hand dig to expose the facility within 2 feet of the facility markings." The only NYSEG documentation in the record relevant to this incident is NYSEG's invoice for repairs and nine photographs.^[FN5]

The repair invoice is terse in its description of the incident: "Contractor hit 4" M[edium] D[ensity] P[oly]E[thylene] Gas Main." The nine photographs provide ample proof that the gas main was punctured, but no evidence that the incident occurred within two feet of any markings. While the yellow flags indicating the location of the gas service lines are clearly visible, the only indication of any marking relevant to the main (which, as is shown in the photograph at page R 069 of the record, runs perpendicular to the service lines and parallel to the street) is a series of spray-painted lines at the edge of the street (as seen in the photograph at page R 066). As can readily be seen in that photograph, the painted markings—if indeed they relate to the gas main at all, as they are not yellow in color as required by 16 NYCRR 753-4.7 (a)—are far in excess of two feet from the situs of the incident. There is no marking visible in any of the nine photographs that appears to show that the damage occurred within the tolerance zone of the gas main. In fact, when respondents' counsel asserts (at 13 of the mem of law in support of the answer), "NYSEG's records credibly demonstrated that the facility was accurately marked," the only reference is to the page in PSC's August 15, 2018 order where this ipse dixit is uttered, and not to any specific evidence in the record leading to this conclusion.

The third incident occurred on April 7, 2015. Accadia was digging in front of 771 Lincoln Avenue. An excavator severed a two-inch gas main. That this incident occurred is beyond dispute. The critical fact here is that, according to PSC's citation, "Staff reviewed NYSEG documentation indicating that the excavator had previously worked in the area and [*4]removed{**64 Misc 3d at 639} all dig safe markings." The only NYSEG documentation in the record, though, is the repair invoice, whose only relevant entry states, "Contractor Excavated Through 2" Poly Gas Main," and 12 photographs, all of which appear to have been taken subsequent to the incident. As a result, it is impossible for the photographs to show "dig safe markings" that were said to have been previously removed. There is no evidence in the record whatsoever to support the allegation that Accadia—or anyone else—had removed any markings, as there is nothing in the record showing markings for this specific gas main having been in place prior to this excavation.

On December 1, 2016, PSC sent Accadia a notice of probable violation (NOPV) and citations for the three above incidents.^[FN6] On January 4, 2017, Accadia—represented only by its president and Mr. Milone, and not by counsel—attended an informal conference with respondents' representatives pursuant to 16 NYCRR 753-6.5 (c). At the conference, Accadia did not request—nor did respondents provide—any documentary discovery. The conference did not result in a resolution to this matter.

Following the conference, Accadia retained counsel. Counsel submitted a letter brief and supporting affidavits to respondents. PSC subsequently issued its August 2018 order. That order not only found Accadia liable for the three charged incidents, it also imposed on Accadia the maximum penalty allowed by law: fines totaling $22,500 (see General Business Law § 765 [1] [a]).

Discussion

Accadia raises a number of issues, procedural and substantive. First, it argues that respondents violated their own regulations when they failed to provide discovery, at the informal conference, of the evidence supporting the citations. 16 NYCRR 753-6.6 (a) provides that, at an informal conference, "[a]ny evidence that department staff may have which indicates that the respondent may have violated this Part shall be made available."

There was no violation of the regulation here. There is a critical distinction between "providing evidence" and "making evidence available." The regulation requires the latter, not the former. "Providing evidence" implies an affirmative duty not {**64 Misc 3d at 640}present in the regulation; "making evidence available" implies allowing discovery when requested. Accadia, not having been represented by counsel at the informal conference, did not request disclosure. Accadia cannot now be heard to complain because respondents did not volunteer more than was required of them.

Accadia also contends that the order was issued in violation of lawful procedure because the NOPV did not include "a description of the evidence on which the allegations are based" pursuant to 16 NYCRR 753-6.4 (b) (1). This objection exalts form over substance, however. Included with the NOPV were copies of the citations, which do describe the evidence on which the allegations are based. Therefore, in the same mailing, Accadia was provided, not only with notice that they were being charged with regulatory violations, but also with a description of the evidence on which those allegations were based.

Case authority on this particular issue is nonexistent. Yet a comparison with how a [*5]similar situation is treated in criminal law may yield some insight. A misdemeanor criminal prosecution may be commenced with the filing of a complaint, an initial accusatory instrument which, standing alone, may be legally insufficient. The complaint may, however, be supplemented by one or more supporting depositions. These documents may then be considered together to constitute the accusatory instrument: the complaint is deemed converted to an information (see CPL 100.15, 100.20). Here, then, while a strict reading of section 753-6.4 (b) (1) would require that the NOPV itself contain "a description of the evidence on which the allegations are based," the inclusion in the same mailing of the citations, which did include such a description of the evidence, effectively supplemented the NOPV and converted it into a legally sufficient administrative pleading.

Accadia also contends that it was denied due process. It argues that what it perceives as the inordinate delay between the dates of the incidents and the date of the NOPV was so excessive as to amount to a constitutional violation. Yet, as respondents correctly point out, due process in administrative proceedings is a flexible concept, requiring a case-by-case analysis of the reasonableness of the actions in question (see generally Matter of Harner v County of Tioga, 5 NY3d 136, 140 [2005]; Matter of City of Rochester [Duvall], 92 AD3d 1297, 1298 [4th Dept 2012]). When the period of time—slightly more than two years for the earliest of the alleged violations—is {**64 Misc 3d at 641}compared with the seriousness of the incidents—the uncontrolled release of a highly flammable gas at high pressure in a residential area—Accadia's argument gains little traction. When compared with time-tested statutes of limitation with which we are all familiar (e.g. three years for torts, six years for contractual disputes), the two-year delay in this case hardly suggests a due process violation.

Moreover, it must be remembered that this is an administrative matter in which the parties on both sides are experienced professionals in their respective fields. A savvy firm such as Accadia should reasonably expect that consequences will flow from accidents that rupture gas mains. Taking a few snapshots and jotting down a few notes from conversations with employees who were on site is hardly too much to expect when incidents of such magnitude occur. Particularly where, as here, a pivotal question will be whether the site was properly marked, relevant evidence should be gathered promptly and maintained carefully. A broken gas main will likely be repaired in less than a day; the trench will be backfilled shortly afterwards. Once that occurs, unpreserved evidence will have been lost. It therefore matters little for due process purposes whether any citations are issued two days later or two years later.

[1] The single pivotal issue in this case is whether PSC's determination was arbitrary and capricious. As both sides fully understand, the scope of this court's review is severely limited by CPLR 7803 (see e.g. Matter of Save America's Clocks, Inc. v City of New York, 33 NY3d 198, 207 [2019], citing Lutheran Church in Am. v City of New York, 35 NY2d 121, 128 n 2 [1974]). Such review is deferential (id.). Even if a court disagrees with an administrative decision, it cannot substitute its judgment for that of the agency, provided that the agency's determination is based on some evidence in the record. Here, it is the audiovisual exhibit relevant to the incident of October 22, 2014, that renders respondents' determination unassailable as to that particular violation.

The video not only memorializes evidence of the escaping natural gas, it also provides proof of all the necessary elements of the violation charged. The video shows, unmistakably, that [*6]the one-inch steel gas service pipe was correctly identified and located by NYSEG's markings. The video shows, unmistakably, that Accadia's claim that the pipe was immediately below the level of the pavement is incredible. The video provides evidence,{**64 Misc 3d at 642} in the form of the dug-out area immediately below the service pipe, that the pipe had previously been located prior to the accident, as was alleged in the citation. And the video shows, through the image of the twisted pipe, that a piece of mechanical excavating equipment had snagged the pipe and pulled it out of the Dresser coupling at the gas main, consonant with the facts recited in NYSEG's invoice.

Contrary to Accadia's contention, the Milone affidavit does not render the PSC determination against the weight of the evidence as to this incident. As noted previously, Mr. Milone did not claim to have witnessed the incident. He merely reported the observations of an unidentified eyewitness. While there is no evidence whatsoever to suggest that Mr. Milone was not being entirely truthful, there is also no evidence at all to suggest that the unidentified eyewitness either knew what he was talking about or was worthy of belief. Such evidence does not even meet the threshold requirement for reasonable suspicion (see People v Johnson, 24 NY3d 1138, 1140 [2014]). It can hardly, therefore, put a dent in the veracity of the overwhelmingly compelling evidence of the video.

[2] The analysis as it relates to the other two incidents, however, is entirely different. That a four-inch gas main was punctured on December 10, 2014, and that a two-inch gas main was severed on April 7, 2015, is beyond dispute. That the instrumentalities of the accidents were pieces of mechanized equipment is also not in issue. Yet what is entirely lacking is any evidence that the excavation of December 10 was done inside the tolerance zone, and what is entirely lacking is any evidence that Accadia had removed "dig safe" markings prior to the April 7 incident.

The violations charged are not strict liability offenses. The mere fact that an excavator damages a gas main does not automatically result in liability for administrative penalties. Only if it can be shown that the contractor caused the damage by using mechanized equipment within the marked tolerance zone can liability attach (see General Business Law § 765 [1] [b]; 16 NYCRR part 753). Since none of the evidence in the record shows that Accadia was digging within the tolerance zone on December 10, 2014, when it struck the four-inch gas main, and since none of the evidence in the record shows that Accadia had removed "dig safe" markings prior to the April 7, 2015 rupture of the two-inch gas main, PSC's determination as to these two alleged violations was arbitrary and capricious and therefore cannot stand.

{**64 Misc 3d at 643}[3] This is not the end of the analysis, however. Since the determination of the violation on October 22, 2014, remains undisturbed, the court must address the issue of the penalty imposed. PSC, in its August 2018 order, misquoted the General Business Law as mandating a fine of $2,500 for an initial violation and $10,000 for subsequent violations. Rather, these figures are maximum fines, as the statute directs that the fine imposed may be "up to" these amounts (General Business Law § 765 [1] [a]). Accordingly, this matter must be remitted to respondents for reconsideration of the fine to be imposed for the October 22, 2014 violation. In the exercise of its discretion, PSC should articulate its reasoning for imposing a particular fine. Among factors expressly to be considered must be "the nature, circumstances and gravity of the violation, history of prior violations, effect on public health, safety or welfare, and such other matters as may be required" (Public Service Law § 119-b [8]).

Finally, inasmuch as this lawsuit is a challenge to administrative actions by a body or officer and full relief may be accorded within the ambit of the CPLR article 78 proceeding, the declaratory judgment action is subject to dismissal (see Laker v Association of Prop. Owners of Sleepy Hollow Lake, Inc., 172 AD3d 1660, 1661 [3d Dept 2019]). Accordingly, it is ordered and adjudged that the petition is granted to the extent that the determination of respondents adverse to petitioner regarding violations found and penalties assessed under citations 6111 and 6112 is vacated and annulled; and it is further ordered and adjudged that the petition is dismissed as to the determination of respondents adverse to petitioner regarding the violation found under citation 6110; and it is further ordered and adjudged that the penalty assessed under citation 6110 is vacated, and the matter is remitted to respondents for reconsideration of the penalty to be imposed, consistent with the terms of this decision, order and judgment; and it is further ordered and adjudged that the declaratory judgment action is dismissed.