Delmarva Power & Light Co. v. Public Service Commission

809 A.2d 640, 371 Md. 356, 2002 Md. LEXIS 790
Court of Appeals of Maryland·Decided October 11, 2002·No. 75, September Term, 2001·Published·Cited by 11 cases

Opinion

*359 ON MOTION FOR RECONSIDERATION

WILNER, Judge.

This case began with a broad attack by several public utilities on an order entered by the Maryland Public Service Commission (PSC). Although that attack is still pressed, the case has taken a new, and most unfortunate, twist, one that calls into question an attempt by the General Assembly, following the announcement of our decision that the PSC order was ineffective because of noncompliance with certain requirements of the Maryland Administrative Procedure Act (APA), to overturn that decision by excusing that order from compliance with those requirements. We shall conclude that the legislative action runs afoul of Article III, § 29 of the Maryland Constitution and, for that reason, is itself invalid. The conclusion reached by us with respect to the PSC Order remains in effect.

BACKGROUND

In July, 1999, the PSC commenced a “generic proceeding” to address changes occurring in the electric and gas industries and to implement certain policy directives mandated by the General Assembly through its enactment of the Electric Customer Choice and Competition Act of 1999 (the Electric Act, Maryland Code, § 7-501 to 7-517 of the Public Utilities Article (PU)) and the Natural Gas Supplier Licensing and Consumer Protection Act of 2000 (the Gas Act, PU §§ 7-601 to 7-607). The end result of that proceeding was a multi-faceted order (Order No. 76292) that placed certain requirements on the electric and gas utilities that remained subject to regulation by the PSC and imposed certain limitations on the relationships that those utilities had with their non-regulated affiliates.

In actions filed in the Circuit Court for Wicomico County, the utilities challenged that order on a number of procedural and substantive grounds. All of the utilities sought judicial review of the order under Maiyland Code, § 10-222 of the *360 State Government Article (SG), which is part of the “contested case” provisions of the APA. In those actions, they complained that various aspects of the order were arbitrary, capricious, unsupported by the record, otherwise unconstitutional, and beyond the PSC’s statutory jurisdiction. Alleging that some provisions of the order fell within the definition of a “regulation” under the APA, one of the utilities, Delmarva Power & Light Company, also sought a declaratory judgment under PU § 3-201 (a) that those parts of the order were also invalid because the PSC had failed to comply with certain requirements embodied in the regulation-making provisions of the APA.

The Circuit Court rejected the argument made in the declaratory judgment action on the grounds that (1) when an order emanates from a generic proceeding, it is not necessary for the PSC to comply with the regulation-making requirements of the APA, and (2) by acquiescing and participating in the generic proceeding and not raising the issue before the PSC, Delmarva was estopped from raising the issue in a declaratory judgment action. The trial court addressed the other procedural and substantive issues raised by the utilities and, in an order entered April 25, 2001, reversed some parts of the PSC Order, remanded other parts for further consideration by the PSC, but affirmed most of the provisions. The utilities appealed and, recognizing the public importance of the issues raised, we granted certiorari prior to review by the Court of Special Appeals to consider the various complaints.

Prominent among the arguments made in the joint brief filed by the utilities was the challenge presented in Delmarva’s declaratory judgment action — that the order indeed constituted a regulation under the APA, that the regulation-making provisions of the APA applied to the PSC, that a regulation is not effective unless there has been compliance with those provisions, that there was no compliance with respect to Order No. 76292, that the order was therefore invalid or ineffective, and that the utilities did not waive their right to raise that issue. That argument was also made, and was extensively addressed, at oral argument.

*361 On April 8, 2002, we filed an opinion in which we concluded that Order No. 76292 constituted a regulation, as defined in SG § 10-101(g), that the PSC was subject to the requirements of the regulation-making provisions of the APA, that it had failed to comply with those requirements, that, as a result, the order was ineffective, and that the utilities had not waived their right to raise the issue in a declaratory judgment action under PU § 3-201(a). Delmarva Power v. PSC, 370 Md. 1, 803 A.2d 460 (2002). In particular, we held that (1) in 1978, the General Assembly specifically included the PSC under the regulation-making provisions of the APA, (2) those provisions required, among other things, that proposed regulations be published in the Maryland Register for public comment and that they be submitted to the General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review (AELR Committee) for its review, and (3) the statute made clear that no regulation may take effect unless and until there has been compliance with those requirements. We specifically rejected the PSC’s arguments that Order No. 76292 did not constitute a regulation under the APA, that, when entering orders that emanate from a generic proceeding, it was not required to comply with the APA requirements, and that, because the utilities participated in the generic proceeding and failed to raise this issue in that proceeding, they were barred from raising it in court. The mandate at the end of the opinion was as follows:

“JUDGMENT OF THE CIRCUIT COURT FOR WICOM-ICO COUNTY REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO ENTER DECLARATORY JUDGMENT UNDER PUBLIC UTILITIES ARTICLE, § 3-201 THAT DIRECTIVES CONTAINED IN ORDER NO. 76292 ARE INEFFECTIVE FOR THE REASONS STATED IN THIS OPINION; COSTS IN THIS COURT AND IN CIRCUIT COURT TO BE PAID BY PUBLIC SERVICE COMMISSION.”

Id. at 38, 803 A.2d at 481-82.

April 8, 2002 — the date our opinion was filed and placed on the Court’s web site — was the last day of the 2002 regular *362 session of the General Assembly. Early in that 90-day session, on January 16, 2002, House Bill 135 was introduced and referred to the House Environmental Matters Committee. It had the very narrow purpose of creating a special, non-lapsing Public Service Commission and Office of the People’s Counsel Fund to fund the operations of the PSC and the Office of People’s Counsel (OPC).

Under the then-existing law, codified in PU § 2-110, the costs and expenses of the PSC and the OPC were funded in the normal manner, through annual appropriations from the General Assembly as part of the State Budget. Section 2-110(c) required, however, that the State Treasury be reimbursed for those appropriations through assessments made by the PSC against the various public utilities that it regulated.

In its first reader form, HB 135 repealed those parts of § 2-110 that provided for legislative appropriations to the PSC and OPC and the reversion of revenue derived from the assessments to the State Treasury.

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Delmarva Power & Light Co. v. Public Service Commission, 809 A.2d 640, 371 Md. 356, 2002 Md. LEXIS 790 (Md. 2002).

809 A.2d 640 (Delmarva Power & Light Co. v. Public Service Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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