Maryland Office of People’s Counsel v. Maryland Public Service Commission., No. 0789, September Term 2019. Opinion by Wells, J.
PUBLIC UTILITIES—GAS—STATUTORY INTERPRETATION
Under Public Utilities Article § 4-211, “when determining necessary and proper expenses while setting a just and proper rate for a gas company,” the Maryland Public Service Commission “may include all costs reasonably incurred by the gas company for performing environmental remediation of real property in response to a State or federal law, regulation or order if the remediation relates to real contamination of real property and the real property is or was used to provide manufactured or natural gas directly or indirectly to the gas company’s customers or predecessors.”
Public Utilities § 3-203 requires a court find every final decision or order of the Maryland Public Service Commission is prima facie correct and shall be affirmed unless some defect, such as unconstitutionality, exceeding statutory authority, or rendering an arbitrary or capricious decision, among other things, is clearly shown.
In setting a “just and proper rate,” Public Utilities Article § 4-211 does not require the Maryland Public Service Commission to exclude from its calculus a portion of acreage that was formerly unused in the manufacture of natural gas when that same portion of acreage is joined to real property that had, in fact, been used to manufacture gas and now requires environmental remediation. To do otherwise would render the statute a nullity. Circuit Court for Baltimore City Case No. 24-C-18-006881 REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 0789
September Term, 2019 _____________________________________
MARYLAND OFFICE OF PEOPLE’S COUNSEL
v.
MARYLAND PUBLIC SERVICE COMMISSION, ET AL. ______________________________________
Reed, Wells, Zarnoch, Robert A., (Senior Judge, Specially Assigned),
JJ. ______________________________________
Opinion by Wells, J. ______________________________________
Filed: June 1, 2020
Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic.
Suzanne Johnson 2020-10-23 15:34-04:00
Suzanne C. Johnson, Clerk Appellee, Columbia Gas of Maryland, Inc. (“Columbia Gas”) sought approval from
the Maryland Public Service Commission (“the Commission”) to increase utility rates for
several reasons among which was to help pay for environmental remediation of its site in
Hagerstown. After negotiations, the parties agreed to the rate increase, but could not agree
on the addition of the remediation costs. As a result, the parties conducted a hearing before
the Chief Public Utility Law Judge (“PULJ”), who ruled that Columbia Gas could include
the remediation costs in the rate increase. Appellant, the Maryland Office of People’s
Counsel (“OPC”), appealed that decision to the Commission, which agreed with the PULJ.
OPC then petitioned for judicial review in the Circuit Court for Baltimore City. After a
hearing, the circuit court affirmed the Commission. OPC now appeals the circuit court’s
ruling and raises two issues for our review:
I. Did the Commission err as a matter of law in failing to apply Public Utilities Article § 4-211’s limitation on a gas utility’s ability to recover environmental remediation expenses from its customers?
II. In failing to offer any explanation for its implicit rejection of OPC’s argument regarding the Statute’s limitation on a gas utility’s ability to recover environmental remediation expenses, did the Commission err as a matter of law in violating § 3-113 of the Public Utilities Article, or act arbitrarily or capriciously?
For the reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
On April 13, 2018, Columbia Gas of Maryland (“Columbia Gas”) filed an
application with the Public Service Commission of Maryland (“the Commission”) under
Maryland Code, (1998, Repl. Vol. 2019), Public Utilities Article (“PUA”) §§ 4-203 and 4-
204 to increase its base rates to its customers by $5,999,212.00. The request arose for multiple reasons, including Columbia Gas’ desire to remediate industrial waste from its
real property.
A. The Contaminated Site
The information contained in this section is taken from the findings of the Chief
Public Utility Law Judge’s (“PULJ”) report dated October 2, 2018. These facts are largely
undisputed.
From 1887 to 1952, the Hagerstown Heat & Light Plant, later known as the
Hagerstown Gas Company, (“Hagerstown Gas”) manufactured gas on what was then its
approximately seven-acre site located in Hagerstown. The carbureted water-gas process
Hagerstown Gas used produced a residue of coal and coke that was discharged into a pond
on the company’s property. This “tar pond” would become the focus of litigation,
including this appeal.
In 1952, Hagerstown Gas sold approximately 2.5 acres of its property, which
included the tar pond, to the Bester-Long Company, a road construction business. In 1975,
Bester-Long sold the 2.5-acre tract to Richard F. Kline, Inc., another construction
company. Twelve years later, in 1987, Kline conveyed 3.85 acres, encompassing the 2.5-
acre tar pond site, to Cassidy Trucking, Inc. Cassidy Trucking later expanded its real
property holdings to become a 5.82-acre parcel known as “the Cassidy Property.”
2 B. Commission Case No. 9316: Columbia Gas I
In 1986, the Maryland Department of Health and Mental Hygiene (“DHMH”) 1
investigated possible environmental contamination at the former Hagerstown Gas site. By
2002, the Maryland Department of the Environment (“MDE”), found that there were likely
potentially hazardous by-products from the manufactured gas process on the property. In
the words of one MDE report, the area near the former tar pond displayed “elevated levels
of constituents common to urban development that may also be associated with MPG
(Manufactured Gas Plant) residuals.” 2
Prompted by these investigations and the possible use of the federal Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”),3 42 U.S.C. §§
9601-9675, Columbia Gas’ parent company, NiSource, Inc., sought to remediate any waste
by-products from its Hagerstown site by participating in Maryland’s Voluntary Clean-up
1 As of June 30, 2017, DHMH is called the Maryland Department of Health. The Maryland Department of Health website: shorturl.at/hIOY9 2 At some point in time the tar pond had been filled-in. 3 The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §9601 et seq. (1980). The Comprehensive Environmental Response, Compensation, and Liability Act -- otherwise known as CERCLA or Superfund -- provides a Federal "Superfund" to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment. Through CERCLA, the U.S. Environmental Protection Agency was given power to seek out those parties responsible for any release and assure their cooperation in the cleanup. Information from the United States Environmental Protection Agency website: https://bit.ly/2LLKxBT.
3 Program (“VCP”).4 One obstacle to NiSource participating in the VCP was that it did not
own the tar pond site, which was then located on the adjacent Cassidy Property. As
NiSource’s representative explained at the hearing before the PULJ, NiSource decided to
try to purchase the Cassidy Property to “reduce remediation costs, avoid litigation (with
Cassidy Trucking and others) and minimize transaction costs associated with its assessment
and remediation of the property.”
In January 2013, NiSource successfully purchased the Cassidy Property. That same
year, Columbia Gas sought approval from the Commission, in Case No. 9316, for a rate
increase to offset the remediation costs, among other reasons. Following an evidentiary
hearing, the PULJ found that the site of the Cassidy Property was not “used and useful” in
providing utility service to its customers under the then-operative statute, PUA § 4-101,
and did not approve a rate increase. In other words, the Commission found that because
only 2.5 of the Cassidy Property’s 5.85 acres had previously been used by Hagerstown Gas
for the manufacture of gas, Columbia Gas could not pass on the cost to remediate the
Cassidy Property to its customers. Columbia Gas sought judicial review in the Circuit
Court for Washington County, which affirmed the Commission. Columbia Gas then filed
an appeal to this Court.
4 The Maryland Voluntary Cleanup Program or VCP authorized by Maryland Code, (1982, 2013 Repl. Vol.) Environmental Article (“EA”) § 7-503(b) is designed to: “(1) Encourage the investigation of eligible properties with known or perceived contamination, (2) protect public health and the environment where cleanup projects are performed or need to be performed; (3) Accelerate cleanup of eligible properties; and (4) Provide predictability and finality to the cleanup of properties.” Information acquired from the Maryland Department of the Environment website: https://bit.ly/3eqPIni. 4 We affirmed the circuit court. Columbia Gas v. Public Service Commission, 224
Md. App. 575 (2015). In reaching our decision, we observed that the Commission’s
ratemaking policy under PUA § 4-101 required a “just and reasonable rate” that
(1) does not violate any provision of this article; (2) fully considers and is consistent with the public good; and (3) except for rates of a common carrier, will result in an operating income to the public service company that yields, after reasonable deduction for depreciation and other necessary and proper expenses and reserves, a reasonable return on the fair value of the public service company’s property used and useful in providing service to the public.
Id. at 582 (emphasis added). After analyzing the record, we concluded that Columbia Gas
“failed to demonstrate a nexus between the Cassidy Property and the services its customers
received from it to be considered used and useful for ratemaking purposes.” Id. at 586.
We, therefore denied Columbia’ request for a rate increase. The Court of Appeals denied
Columbia Gas’ petition for a writ of certiorari. Id. 445 Md. 488 (2015).
C. A Change in the Law: Public Utilities Article § 4-211
In response to Columbia Gas, during the 2016 session of the General Assembly a
bill was introduced to strike the “used and useful” language from PUA § 4-101. That effort
failed. However, during the 2017 legislative session, S.B. 355/H.B. 414 passed and
became law that same year. Subsequently codified as PUA § 4-211, the statute, in pertinent
part, states:
(a)(1) Except as provided in paragraph (3) of this subsection, when determining necessary and proper expenses while setting a just and reasonable rate for a gas company, the Commission may include all costs reasonably incurred by the gas company for performing environmental remediation of real property in response to a State or federal law, regulation, or order if:
5 (i) the remediation relates to the contamination of the real property; and
(ii) the real property is or was used to provide manufactured or natural gas service directly or indirectly to the gas company’s customers or the gas company’s predecessors.
(2) Environmental remediation costs incurred by a gas company may be included in the gas company’s necessary and proper expenses regardless of whether: (i) the real property is currently used and useful in providing gas service; or
(ii) the gas company owns the real property when the rate is set.
* * *
(4) Environmental remediation costs incurred by a gas company may not be included in the gas company’s necessary and proper expenses if a court of competent jurisdiction determines that the proximate cause of the environmental contamination is a result of the gas company’s failure to comply with a State or federal law, regulation, or order in effect when the contamination occurred.
With this change in the law, Columbia Gas again sought to recover environmental
remediation costs for the Cassidy Property.
D. Commission Case No. 9480: Columbia Gas II
In April 2018, Columbia Gas filed a new application with the Commission,
designated case number 9480. As a result of negotiations, Columbia Gas, the Office of
People’s Counsel (“OPC”), and the Commission’s technical staff unanimously agreed to
each component of a rate increase except the amount for the environmental remediation
costs for the Cassidy Property. On July 31, 2018, the PULJ conducted an evidentiary
hearing on the issue of the cost of environmental remediation for the Cassidy Property. At
6 the hearing, the Commission Staff and Columbia Gas presented evidence in favor of the
rate increase, and OPC presented arguments against.
After the hearing, in a set of findings and a proposed order dated October 2, 2018,
the PULJ approved an adjusted rate inclusive of the cost of environmental remediation for
the Cassidy Property. In reaching his decision, the PULJ preliminarily found that PUA §
4-211 was not ambiguous and did not require an examination of the statute’s legislative
history.
As to the merits, the PULJ undertook a straightforward analysis of “how Columbia
[Gas’] request to recover remediation costs fits within the statute and its criteria.” Looking
at the first criteria found in PUA § 4-211(a)(1), whether the remediation costs were incurred
as a response to a federal or state regulation or law, the PULJ found that as a result of the
DHMH and MDE investigations spanning decades, Columbia Gas entered into the VCP to
help pay for the remediation. Further, the PULJ concluded that CERCLA encouraged
environmental cleanups of this scale. Although no state or federal body had ordered
NiSource to clean up the Columbia Gas site, as OPC noted, the PULJ nonetheless found
that the remediation effort clearly was in response to state and federal laws or regulations,
as the statute’s first prong required.
When considering the second prong, -- that the remediation costs be related to the
contamination of real property, -- and third prong -- “the real property is or was used to
provide manufactured or natural gas service directly or indirectly to the gas company’s
customers or the gas company’s predecessors,” -- the PULJ had reached the heart of the
dispute. The PULJ noted that the parties agreed that approximately 4.0 of the 5.82 acres
7 comprising the Cassidy Property required remediation. The parties disagreed whether the
customers should bear the cleanup costs of the approximately 1.5 acres not previously used
to manufacture gas. OPC asserted that the apportioned costs include only the cleanup of
the contaminated 4.0 acres. Columbia Gas argued that the word “relates,” as used in the
statute, took into account the possibility that contaminants migrate, and, therefore, the cost
to remediate all of the Cassidy Property should be factored into a fair rate.
The PULJ agreed with Columbia Gas, finding OPC’s calculation of costs would
alter the “clear and unambiguous” meaning of the statute by “adding restrictions where
none exist.” The PULJ reasoned that PUA § 4-211(a)(1)(i-ii) only required the real
property in question to have been previously used for the provision of service to
manufactured gas customers. The fact that the former tar pond is now part of a bigger
parcel, in the PULJ’s opinion, was irrelevant. Further, the PULJ found that the spread of
contamination could be “directly linked to the tar pond.” “The contamination’s spread
beyond the 2.5 acres is directly linked to manufactured gas service previously provided [to
Hagerstown Gas’] customers.” More pointedly, the PULJ rejected OPC’s argument
because he found that OPC was arguing the applicability of the “used and useful” standard
when the legislature had specifically written that language out of the statute when it
adopted PUA § 4-211.
In the remaining sections of the PULJ’s findings, the PULJ undertook an analysis
of the financial costs that the Columbia Gas’ customers would have to bear, finding that
with regard to the Cassidy Property, the cost to remediate the site would be $318,313.00.
Any future costs would have to be determined. Additionally, the PULJ analyzed whether
8 any other entities potentially could be liable for the costs of remediation. The PULJ
rejected the idea of seeking financial contribution from businesses such as Cassidy
Trucking, CSX Realty (from whom Cassidy Trucking purchased a tract that also comprised
the Cassidy Property’s 5.82 acres), and Central Chemical Corporation, a Superfund site
located adjacent to Columbia Gas’ site, finding in each case that the evidence was
insufficient to hold any of the named businesses responsible for the costs of the cleanup.
The PULJ’s order incorporated the provisions of the negotiated settlement and included
the costs to remediate the Cassidy Property in the proposed rate adjustment.
OPC appealed to the Commission, arguing that PUA § 4-211’s language is
ambiguous. The Commission disagreed, finding that PUA § 4-211 was not ambiguous. In
the Commission’s analysis, the legislature’s purpose in drafting the statute was to remove
the “used and useful” language from PUA § 4-101 and specifically allow Columbia Gas to
recover the remediation costs for the Cassidy Property. The Commission reiterated the
PULJ’s finding that “[t]o attack the statute as ambiguous and rely on extraneous sources to
understand the statute[’]s meaning is futile.” In other words, the Commission found OPC’s
interpretation of the statute – that would require severing 1.5 acres from the Cassidy
Property -- would render the plain language of the statute meaningless. The Commission
adopted the PULJ’s findings and signed the proposed order.
On December 21, 2018, OPC petitioned for judicial review. Before the Circuit
Court for Baltimore City, OPC argued that in properly applying the language of PUA § 4-
211 to determine what amount of the remediation costs should be borne by its customers,
Columbia Gas was required to subdivide the Cassidy Property into two parcels: one for the
9 property on which Hagerstown Gas manufactured gas and one parcel on which the
production of natural gas did not occur. OPC argued the Commission’s failure to explain
why the property should not be subdivided violated PUA § 3-113 which requires the
Commission to state the grounds for its conclusions. As the Commission did not address
or otherwise state why the Cassidy Property should not be subdivided, OPC argued the
Commission’s decision was “arbitrary and capricious.”
In response, Columbia Gas and the Commission argued that OPC was attempting to
resurrect the “used and useful” requirement from the former statute. Columbia Gas argued
that it had met all of the statutory requirements under PUA § 4-211, namely, that the
Cassidy Property is, in fact, real property, part of which was used to manufacture gas.
The circuit court sustained the Commission. It found that the contamination located
on part of the Cassidy Property, in fact, “related” to real property owned by Columbia Gas
which had been used in the manufactured gas process, satisfying the requirements of PUA
§ 4-211(a)(1)(i) and (ii). The court concluded that the environmental harm continued to
spread throughout the whole of the Cassidy Property. Finally, the court concluded that
OPC did not prove that the Commission acted unreasonably in reaching its decision. OPC
filed a timely appeal.
Additional facts may be discussed, as needed.
DISCUSSION
I. The Commission Properly Applied PUA § 4-211 to Columbia Gas’ Request for a Rate Increase
The central question here is whether the Commission properly included the costs to
10 remediate the entire parcel known as “the Cassidy Property” in setting a new utility rate
for the customers that Columbia Gas services. As we will explain, our conclusion is that
the Commission’s decision was correct.
As in any appeal from judicial review of an agency decision, we look through the
decision of the circuit court to examine the agency’s ruling. Maryland Office of People’s
Counsel v. Maryland Public Service Commission, 461 Md. 380, 391 (2018) (citing
Accokeek, Mattawoman, Piscataway Creeks Community Council, Inc. v. Public Service
Commission, 451 Md. 1, 11 (2016)). Most importantly, because this is a review of a
decision of the Maryland Public Service Commission, Maryland Code, (1998, 2019 Repl.
Vol.), PUA § 3-203 controls:
Every final decision, order, or regulation of the Commission is prima facie correct and shall be affirmed unless clearly shown to be:
(1) Unconstitutional; (2) Outside the statutory authority or jurisdiction of the Commission; (3) Made on unlawful procedure; (4) Arbitrary or capricious; (5) Affected by other error of law; or, (6) If the subject of review is an order entered in a contested proceeding after a hearing, unsupported by substantial evidence on the record considered as a whole.
Further, we are bound by the Court of Appeals’ prior decisions regarding this
statute. The Court has stated,
[w]hile this Court has made clear that a decision of the PSC is subject to judicial review, it will not be disturbed on a basis of a factual question except upon clear and satisfactory evidence that it was unlawful and unreasonable. Such a decision is accorded the respect due an informed agency that is aided by a competent and experienced staff. Questions of law, however, are completely subject to review by the courts. This is consistent
11 with the standard of review applicable to administrative agencies generally.
Severstal Sparrows Point, LLC v. Public Service Commission of Maryland, 194 Md. App.
601, 610-611 (2010) (quoting Town of Easton v. Public Service Commission of Maryland,
379 Md. 21, 31-32 (2003) (internal citations omitted)).
On pure questions of law, our review is de novo. See Maryland Office of People’s
Counsel, 461 Md. at 394 (internal citations omitted). However, we give the Commission’s
interpretation of a statue it enforces, such as PUA § 4-211, a heightened degree of
deference. The Court of Appeals has stated that this degree of deference is dependent on
several factors. One factor is the length of time an agency’s interpretation has been
consistently applied. Office of People’s Counsel v. Public Service Commission, 355 Md.
1, 17 (1999). Additionally, the Court reasoned that if the agency’s decision was reached
after a contested adversarial process, then the agency’s interpretation of a statute should be
afforded greater weight than if the decision was reached without such a process.
Another important consideration is the extent to which the agency engaged in a process of reasoned elaboration in formulating its interpretation of the statute. When an agency clearly demonstrates that it has focused its attention on the statutory provisions in question, thoroughly addressed the relevant issues, and reached its interpretation through a sound reasoning process, the agency’s interpretation will be accorded the persuasiveness due a well-reasoned opinion of an expert body.
Id.
In undertaking our analysis, we begin with the text of the relevant portion of the
statute, PUA § 4-211, which states:
(a)(1) Except as provided in paragraph (3) of this subsection, when determining necessary and proper expenses while setting a just and reasonable rate for a gas company, the Commission may include all costs
12 reasonably incurred by a gas company for performing environmental remediation of real property in response to a State or federal law, regulation, or order if:
(i) The remediation relates to the contamination of the real property; and
(ii) The real property is or was used to provide manufactured or natural gas service directly or indirectly to the gas company’s customers or the gas company’s predecessors.
(2) Environmental remediation costs incurred by a gas company may be included in the gas company’s necessary and proper expenses regardless of whether:
(i) The real property is currently used and useful in providing gas service; or
(ii) The gas company owns the real property when the rate is set.
Before this Court, OPC argues that PUA § 4-211(a)(1)(i) limits which
environmental remediation costs Columbia Gas may recover from its customers. In OPC’s
view, under PUA § 4-211(a)(1)(ii), the costs of remediation may only be associated with
land that was once used for manufactured gas service related “directly or indirectly to the
gas company’s customers or the gas company’s predecessors.” OPC, citing Mayor and
City Council of Baltimore v. Chase, 360 Md. 121, 128 (2000), argues the Commission’s
decision rendered this provision “superfluous” or “nugatory,” as the Commission did not
limit remediation costs only to Columbia Gas’ site that was previously “used and useful”
for gas service. OPC readily admits that PUA § 4-211 changed the requirement that the
land subject to remediation must “currently” be “used and useful.” OPC argues PUA § 4-
211’s plain language requires that the land to be remediated “must have at least been
13 previously used and useful” in the manufacture of gas. In other words, OPC asserts that
before Columbia Gas can recover the cost to remediate a parcel of land “some utility
customers, even from a different era, did benefit from the land in question.”
At the heart of OPC’s argument is the fact that of the 5.82 acres that comprised the
Cassidy Property only 4.0 acres require remediation. OPC maintains that Hagerstown Gas,
Columbia Gas’ predecessor, used 2.5 of the 4.0 acres for manufactured gas production. In
OPC’s estimation, approximately 1.5 acres were never used for that purpose. OPC argues
the Commission’s ruling, that customers bear the cost of remediating all of the Cassidy
Property, is contrary to the Court of Appeals’ holding in Centre Ins. Co. v. J.T.W., 397 Md.
71 (2007). There, the Court instructed that when engaged in statutory interpretation, a
reviewing court should “avoid a construction of the statute that is unreasonable, illogical,
or inconsistent with common sense.” Id. at 81. OPC argues that the Commission’s
decision to include the cost of remediation for the Cassidy Property would be contrary to
the plain meaning of PUA § 4-211 and common sense.
The Commission’s response is the subdivision of the Cassidy Property into two
parcels, one on which manufactured gas was produced and one parcel on which that activity
did not occur solely to restrict remediation costs, would be to read restrictions into PUA §
4-211 that the General Assembly never intended to add. In the Commission’s view, OPC’s
interpretation of PUA § 4-211(a)(2)(i) goes against well-established tenets of statutory
interpretation. The Commission cites to Bottini v. Department of Finance, 450 Md. 177,
188 (2016), where the Court of Appeals unequivocally stated that when engaged in
statutory interpretation, a reviewing court must “neither add nor delete words to a clear and
14 unambiguous statute to give it a meaning not reflected by the words that the General
Assembly used or engage in forced subtle interpretation in an attempt to limit the statute’s
meaning.” (internal citations omitted).
Columbia Gas argues that the cost to remediate the Cassidy Property sufficiently
“relates” to the manufactured gas plant that Hagerstown Gas once operated there.
Columbia Gas’ argument is that OPC reads PUA § 4-211(a)(2)(i)’s language that
remediation costs must “relate[] to the contamination of real property,” to mean “is limited
to the contamination of real property.” Columbia Gas asserts that by re-defining “relates”
to be restrictive, it renders the meaning of the words “relates to” “superfluous or nugatory.”
Columbia Gas urges us not to be beguiled by OPC’s clever attempt to “rewrite the statute.”
Further, Columbia Gas maintains the contamination is not solely limited to the 2.5
acres of the Cassidy Property that Hagerstown Gas formerly owned. Citing Office of
People’s Counsel v. Maryland Public Service Commission, 355 Md. 1 (1999), Columbia
Gas maintains OPC’s argument runs afoul of the very principles of statutory interpretation
on which OPC relies, namely that a statute should not be read ‘in a way that is inconsistent
with, or ignores, common sense or logic.’” Id. at 23 (internal citations omitted). Here,
according to Columbia Gas, “common sense or logic” dictates that over the span of
decades, the contamination deposited over 70 years ago will spread throughout the entire
area that comprised the Cassidy Property.
The Court of Appeals has instructed that when interpreting the meaning of a statute,
our paramount duty is “to discern and carry out the intent of the legislature.” Blue v. Prince
George’s County, 434 Md. 681, 689 (2013). Kushell v. Dep’t of Natural Resources, 385
15 Md. 563, 576 (2005) (“The cardinal rule of statutory interpretation is to ascertain and
effectuate the intent of the legislature.”) (citing Collins v. State, 383 Md. 684, 688 (2004)).
To properly discern the legislature’s intent, the Court has consistently instructed us that
“[s]tatutory construction begins with the plain language of the statute, and ordinary,
popular understanding of the English language dictates interpretation of its terminology.”
Adventist Health Care v. Maryland Health Care Comm’n, 392 Md. 103, 124 n. 13 (2006)
(internal quotation marks and citations omitted). See Stevenson v. Edgefield Holdings, LLC,
244 Md. App. 604 (2020).
When a statute’s language is unambiguous, we need only to apply the statute as
written, and our efforts to ascertain the legislature’s intent end there. Adventist Health
Care, 392 Md. at 125. In Blue, supra, the Court of Appeals explained,
[t]ext is the plain language of the relevant provision, typically given its ordinary meaning, viewed in context, considered in light of the whole statute, and generally evaluated for ambiguity. Legislative purpose, either apparent from the text or gathered from external sources, often informs, if not controls, our reading of the statute. An examination of interpretive consequences, either as a comparison of the results of each proffered construction, or as a principle of avoidance of an absurd or unreasonable reading, grounds the court’s interpretation in reality.
Blue, 434 Md. at 689 (quoting Town of Oxford v. Koste, 204 Md. App. 578, 585 86 (2012),
aff’d, 431 Md. 14 (2013) (citations omitted)) (emphasis supplied). We presume that the
General Assembly has acted with full knowledge of prior legislation and construe the
statute as a whole so that no word, clause, sentence, or phrase is rendered surplusage,
superfluous, meaningless, or nugatory. Oakland, 392 Md. at 316; Mazor v. State Dep’t of
Correction, 279 Md. 355, 360–61 (1977).
16 On the other hand, statutory language is ambiguous when it can be reasonably
understood to have two different meanings. Deville v. State, 383 Md. 217, 223 (2004). We
will resolve any ambiguity in light of the legislative history, caselaw, and statutory purpose.
Oakland, 392 Md. at 316; Comptroller v. Phillips, 384 Md. 583, 591 (2005). We will
examine the ordinary meaning of the language, as well as “how that language relates to the
overall meaning, setting, and purpose of the act,” resolved to avoid any unreasonable,
illogical, or inconsistent interpretation of the statute. Oakland, 392 Md. at 316; Gwin v.
MVA, 385 Md. 440, 462 (2005).
Finally, as the Court of Appeals recently noted in Office of People’s Counsel v.
Maryland Public Service Commission, 461 Md. 380, 392 (2018) PUA § 3-203 establishes
a highly deferential standard. Under PUA § 3-203, we are required to find that the
Commission’s decision is presumptively correct absent clear evidence that some defect has
affected the decision, among which are: unconstitutionality, a lack of statutory authority,
or that the decision was arbitrary or capricious. Absent such a “clearly shown” defect,
PUA § 3-203 commands that the Commission’s ruling “shall be affirmed.” 5 Id. at 392.
5 Every final decision, order, or regulation of the Commission is prima facie correct and shall be affirmed unless clearly shown to be: (1) unconstitutional; (2) outside the statutory authority or jurisdiction of the Commission; (3) made on unlawful procedure; (4) arbitrary or capricious; (5) affected by other error of law; or (6) if the subject of review is an order entered in a contested proceeding after a hearing, unsupported by substantial evidence on the record considered as a whole. PUA § 3-203
17 With this standard in mind, first we note that the PULJ’s findings and proposed
order comprise more than 50 pages of text. The PULJ’s report contains a history of the
case, a recitation the parties’ argument, and an analysis of those arguments coupled with
the applicable statutory authority and caselaw. Second, we are cognizant of the fact that
the PULJ reached his decision after a contested hearing where testimony and documentary
evidence was voluminously produced.
Our review of the PULJ’s findings reveals a comprehensive understanding of the
issues, the positions of the parties, the costs that would be incurred by Columbia Gas’
customers, as well as knowledge and application of the applicable law and statutes. We
have no trouble determining that the PULJ’s decision was well-reasoned. We therefore
afford it great deference. Severstal Sparrows Point, 194 Md. App. at 610-11.
Further, we find nothing inappropriate in the Commission adopting the findings of
the PULJ, since it was they who charged the PULJ with making those findings. See
Commission Order 88923 at 1. Further, in its written order, the Commission sets forth the
appropriate statutory authorities, including PUA § 4-211, the positions of the litigants and
its own staff, and concludes that the PULJ’s decision should be sustained. We note that the
Commission made an independent assessment of the statute and found that it permitted
Columbia Gas to remediate the entire Cassidy Property. We are constrained that the
Commission’s decision will not be disturbed on a basis of a factual question except upon
clear and satisfactory evidence that it was unlawful and unreasonable. Town of Easton,
379 Md. at 31-32; Severstal Sparrows Point, 194 Md. App. at 610-11. We do not conclude
that any of the essential facts are in dispute.
18 As for the Commission’s interpretation of PUA § 4-211, which we review with the
requisite deference to the Commission interpreting its own statute, see PUA § 3-203, we
agree with the PULJ and the Commission; the statute is not ambiguous and does not require
an exposition of legislative history. Deville, 383 Md. at 223. We, therefore, construe the
statute “as a whole so that no word, clause, sentence, or phrase is rendered surplusage,
superfluous, meaningless, or nugatory.” Oakland, 392 Md. at 316. Further, we presume
that the General Assembly “acted with full knowledge of the former statute,” when it
passed PUA § 4-211. Id.; Mazor v. State Dep’t of Correction, 279 Md. 355, 360–61 (1977).
We now examine statute’s provisions. PUA § 4-211(a)(1)(i-ii) states three
requirements: (1) that the environmental remediation costs be “in response to a State or
federal law, regulation or order,” (2) that the contamination “relates” to real property, and
(3) “the real property is or was used to provide manufactured or natural gas service to the
gas company’s customers or … predecessors.” From our review of the record, it is
undisputed that the Columbia Gas site is a tract of land on which Hagerstown Gas used to
manufacture gas from 1887 to 1952 and which Columbia Gas has owned and operated
since 1968. The site has been investigated numerous times since 1986 by the Maryland
Department of Health and MDE for the presence in the soil of potentially hazardous by-
products and waste from the manufacture of gas. The MDE traced the source of some of
the contamination to a pond into which Hagerstown Gas for decades dumped waste from
the process of manufacturing gas. That pond sat on the Cassidy Property, approximately
1.5 acres of which Columbia Gas acknowledges was not used in the manufacture of gas.
We hold that these facts support the Commission’s conclusion that: (1) the Columbia Gas’
19 remediation effort is in response to the investigations of the site by State and federal
regulators, (2) the contamination relates to real property Columbia Gas owns, and (3) the
property was used by Hagerstown Gas, Columbia Gas’ predecessor, to manufacture gas for
its customers.
OPC’s interpretation of the statute is unwarranted. The intransitive verb “relates,”
as used in PUA § 4-211, means “to have connection or reference.” 6 We conclude that this
indicates that the Cassidy Property must have a connection to the manufacture of gas. In
our view, it does. Nothing in the text of the statute requires severing a portion of the
Cassidy Property, as OPC argues, since the site relates to the manufacture of natural gas.
We agree with Columbia Gas’ assessment that OPC’s subdivision argument focuses only
on the second prong of PUA § 4-211 – where the gas was manufactured – to the exclusion
of the first prong -- that the contamination relate to the property. Both prongs must be read
together so as not to render either prong meaningless. Oakland, 392 Md. at 316. In this
instance, we conclude that the Commission’s interpretation of the statute is correct and
affirm its findings. See PUA § 3-203.
II. The Commission’s Decision Did Not Violate PUA § 3-113
OPC posits that the Commission’s decision was arbitrary and capricious because,
in OPC’s opinion, the Commission failed to “offer any explanation for its implicit rejection
of OPC’s argument regarding [PUA § 4-211]’s limitation on a utility’s ability to recover
environmental remediation expenses,” in violation of PUA § 3-113. Consequently, OPC
6 The Oxford English Dictionary On-line: https://bit.ly/36hc3kr. 20 urges us to order a remand so that the Commission may more clearly state the rationale for
its decision.
Favorably citing a series of cases including Mehrling v. Nationwide Ins. Co., 371
Md. 40, 64 (2002); Walker v. Department of Housing and Community Development, 422
Md. 80, 106 (2011); Blue Bird Cab Co. v. Md. Department of Employment Security, 251
Md. 458, 466 (1968), each of which discussed the need for an administrative agency
decision to state with clarity the findings and the conclusion of law on which it relied when
rendering a decision, OPC asserts that the Commission’s decision was conclusory. Indeed,
OPC argues that the Commission’s decision was so threadbare it was “even more deficient
than the orders that necessitated remand in the above cases.” Because, in OPC’s view, the
Commission’s decision was capricious, OPC urges us send the decision back and require
the Commission to “chronicle, in the record, full, complete and detailed findings of fact
and conclusions of law.”
The Commission responds that OPC’s argument is misplaced. The Commission
ratified the recommendations of the PULJ, to whom the Commission specifically delegated
the task of fact-finding and making recommendations for an appropriate order. In the
Commission’s understanding of PUA § 3-113, “the rationale of the PULJ is sufficient
without supplementation from the Commission.” The Commission explains that PUA § 3-
113 does not require it to “provide additional rationale for affirming a [p]roposed [o]rder
on appeal if the PULJ’s analysis is not deficient.” Further, the Commission reminds us
that OPC “must overcome a very deferential standard to rebut the presumption that the
Commission exercised its discretion properly.” Office of People’s Counsel, 461 Md. at 392.
21 Citing Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463
U.S. 29 (1983), the Commission urges us to consider that the United States Supreme Court
held that a court’s review of an administrative decision, particularly a determination
whether that decision was arbitrary or capricious, “is not an invitation for a court to second-
guess an agency’s judgment: ‘a decision of less than ideal clarity’ will be upheld ‘if the
agency’s path may be reasonably discerned.’” The Commission asks, solely for the sake
of argument, that even if the Commission’s decision “ha[d] less than ideal clarity,” reading
the order as a whole reveals that it “fully contemplated the underlying facts and legal
analyses to reach its decision to affirm the [PULJ’s] [p]roposed [o]rder.”
For its part, Columbia Gas argues that the Commission adequately explained its
rejection of OPC’s strained interpretation of PUA § 4-211. Further, Columbia Gas argues
that OPC provides no relevant legal authority to support its position that the Commission
acted arbitrarily. Citing Mehrling v. Nationwide Insurance Co., 371 Md. 40, 65 (2002),
Columbia Gas asserts that in reviewing an appeal from an administrative decision “one
must be able to discern from the record the facts found, the law applied, and the relationship
between the two.” And in Columbia Gas’ opinion, the Commission’s decision “easily
complies with that standard,” since the Commission fully explained why it rejected OPC’s
interpretation of PUA § 4-211. Consequently, Columbia Gas asserts the decision is neither
arbitrary nor capricious in that the facts regarding the Cassidy Property and the applicable
law were fully discussed.
We begin our analysis with Maryland Code, (1998, Repl. Vol. 2019), PUA § 3-
113(a), which states:
22 A decision and order of the Commission in a contested proceeding shall: (1) Be based on consideration of the record; (2) Be in writing (3) State the grounds for the conclusions of the Commission; and (4) In the case of a complaint proceeding between two public service companies, be issued within 180 days after the close of the record.
OPC contends that the Commission neglected to fully state the “grounds and conclusions”
for why it rejected OPC’s argument that the Cassidy Property should be apportioned where
only that part of the property on which gas was manufactured should be used in determining
a rate increase. Because the Commission failed to do this, OPC argues the decision was
arbitrary or capricious.
Federal jurisprudence has informed Maryland’s appellate decisions as to whether an
agency’s decision is arbitrary or capricious. See Harvey v. Marshall, 389 Md. 243 (2005).
Federal appellate review of administrative decisions must show the agency articulated a
“rational connection between the facts found and the choice made.” Burlington Truck
Lines v. United States, 371 U.S. 156, 168 (1962). While the reviewing court, “may not
supply a reasoned basis for the agency’s action that the agency itself has not given,
[appellate review] will uphold a decision of less than ideal clarity if the agency’s path may
reasonably be discerned.” Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc.,
419 U.S. 281, 285-86 (1974). In Alaska Dep’t. of Environmental Conservation v. E.P.A.,
540 U.S. 461 (2004), the United States Supreme Court, finding that “the E.P.A.’s three
skeletal orders” were neither arbitrary nor capricious, stated that the test to be used is,
“whether the Agency’s action was ‘arbitrary, capricious, an abuse of discretion, or
23 otherwise not in accordance with law.’ Even when an agency explains its decision with
‘less than ideal clarity,’ a reviewing court will not upset the decision on that account ‘if the
agency’s path may reasonably be discerned.’” Id. at 496-97 (quoting Bowman Trucking,
supra.)
The Court of Appeals has characterized Maryland’s “arbitrary or capricious”
standard as similar to that found in federal administrative law, in that one challenging an
agency decision must show that the agency exercised its discretion unreasonably or without
a rational basis. Harvey, supra, 389 Md. at 297-304. “Whether an agency decision is
arbitrary or capricious also depends, to some extent, on the degree of discretion that the
Legislature has conferred on the particular agency with respect to the particular decision.”
Communication Workers of America v. Maryland Public Service Commission, 424 Md.
418, 434 (2012). “[W]hen an agency acts in its discretionary capacity, it is taking actions
that are specific to its mandate and expertise and, unlike conclusions of law or findings of
fact, have a non-judicial nature ... [for which] we owe a higher level of deference.” Id.
(quotation marks and citation omitted). Further, determining whether an agency decision
was arbitrary or capricious is “a deferential standard in which a court may consider such
things as the agency’s expertise, policy goals stated in pertinent statutes or regulations,
consistency with the agency’s past decisions, and whether it is possible to follow the path
of the agency’s reasoning.” Maryland Office of People’s Counsel, 461 Md. at 405.
Our task then is to determine “whether it is possible to follow the path of the
[Commission’s] reasoning” in reaching its decision. On the record before us, we may do
so.
24 Here, the Commission’s decision is a twenty-page document dated November 21,
2018. Section “A” is a detailed recitation of the PULJ’s findings, including a history of
the Cassidy Property, the Commission’s findings and order in Columbia I, as well as
mention of this Court’s 2015 decision. The discussion also cites and analyzes PUA § 4-
211, focusing on OPC’s and Columbia Gas’ arguments at the hearing. Specifically, the
Commission discusses each of the three prongs of PUA 4-211 and analyzes the PULJ’s
findings on each prong. Section “B” of the report discusses OPC’s contentions before the
Commission, in particular, OPC’s insistence that the remediation costs benefit ratepayers.
Significantly, the Commission sets forth OPC’s argument that the cost of remediation
should be limited to the portions of the Cassidy Property that were used to manufacture
gas. Section “C” details the Commission’s staff’s position, which rejected OPC’s
argument that the “used and useful” standard still exists. The staff notes that the General
Assembly specifically drafted PUA § 4-211 to omit that language. The Commission’s staff
rejected OPC’s argument because in their opinion to do as OPC wished would neuter the
statute. In their words, “[a] statute cannot be interpreted to be meaningless.” Section “D”
explains Columbia Gas’ reply to OPC’s argument. Finally, in section “E,” the Commission
explains its decision. Essentially, the Commission found that PUA § 4-211 was
unambiguous. In the Commission’s view, the legislature specifically removed the “used
and useful” language from the statute to allow Columbia Gas to recover the remediation
costs for the Cassidy Property. The Commission agreed with its staff, finding that to read
the statute as OPC asks would, essentially, render it a nullity. The Commission affirmed
25 the PULJ’s recommendations and approved the rate increase including the remediation
costs for the Cassidy Property.
While OPC correctly states that the Commission did not explicitly address OPC’s
argument about limiting the remediation costs in section “E” of its decision, there is no
doubt that the Commission considered OPC’s argument in those sections of its report that
detailed OPC’s position and the Commission’s staff’s reply. We hold that the Commission
need not have explained in detail the basis for its decision when its rationale can be readily
discerned after reading the entire order. The Court of Appeals recently reached the same
holding in Maryland Office People’s Counsel, supra, finding the Commission’s decision
there was not arbitrary or capricious, despite a similar challenge from OPC that the
Commission “failed to adequately discuss the potential harm of [an electrical company
merger] to consumers with respect to alternative energy generation.” Maryland Office of
People’s Counsel, 461 Md. at 406. The Court determined that the Commission, when
rendering a decision under PUA § 3-113, is “not required to repeat itself in its fact findings
and analysis when a reasoning mind can readily grasp the connection between related
issues.” Id. Here, the Commission recited and adopted the factual findings and conclusions
of law that the PULJ rendered. Those findings rejected OPC’s interpretation of PUA § 4-
211.
Additionally, the cases offered by OPC in support of its position: Mehrling, Walker,
and Blue Bird Cab Co., supra, are all unavailing. The three cases on which OPC relies
turned on application of the Maryland Administrative Procedure Act (“APA”). As we said
in the first section of this opinion, the APA does not guide the proceedings here. Instead,
26 PUA § 3-203, with a much more deferential standard of review, controls.
Each of the cases on which OPC relies may be further distinguished. Mehrling
concerned the appellant’s challenge to her dismissal as an insurance agent by filing a
complaint with the Maryland Insurance Agency (“MIA”). Mehrling, 371 Md. at 45. The
MIA adopted the recommendations of the administrative law judge (“ALJ”) of the Office
of Administrative Hearings (“OAH”) dismissing Mehrling’s complaint on the ground that
Mehrling had been divested of standing due to her pending bankruptcy. Id. at 48. The
ALJ, however, was apparently unaware that Mehrling’s bankruptcy case had been
dismissed five days before his decision. Id. The Associate Deputy Commissioner
nonetheless adopted the ALJ’s recommended decision to dismiss Mehrling’s complaint for
lack of standing. Id. at 48-49. Mehrling’s subsequent motion for reconsideration was
denied. Id. A request for judicial review affirmed the MIA. Id. at 50. In an unreported
opinion, we affirmed. Id. at 50-51. The Court of Appeals concluded that the record was
not clear that the Deputy Insurance Commissioner considered the fact that the bankruptcy
had been dismissed before the ALJ reached its decision. Id. at 65. That the Deputy
Insurance Commissioner did not mention that fact led the Court to suspect that the Deputy
Insurance Commissioner was unaware that Mehrling’s bankruptcy had been dismissed. Id.
Consequently, the Court remanded “to the MIA to prepare legally adequate findings of fact
and conclusions of law based on the administrative record as a whole.” Id. at 67. In
contrast, here, none of the parties claims the record is incomplete. The PULJ discussed
OPC’s arguments about the subdivision of land and rejected them. Further, the PULJ and
the Commission discussed and considered the relevant facts and the law.
27 For similar reasons, the decision in Walker is also inapposite. There, the issue was
whether the recipient of subsidized housing vouchers could have a contested hearing before
the Department of Housing and Community Development in accordance with the APA.
Walker, 422 Md. at 82. Concluding that Walker had a right to a contested proceeding and
to have the agency explain its findings, the Court of Appeals, citing Mehrling, stated, “[w]e
have explained time and time again, ‘not only the importance but the necessity that
administrative agencies resolve all significant conflicts in the evidence and then chronicle,
in the record, full, complete and detailed findings of fact and conclusions of law.’” Id. at
106. Here, it is beyond cavil that the parties participated in a contested evidentiary hearing
before the PULJ. As discussed, we have concluded the PULJ resolved the one disputed
issue as raised by OPC and gave a “complete and detailed findings of fact and conclusions
of law.”
Blue Bird Cab concerned a decision by the Department of Employment Security
that taxicab drivers who operated cabs owned by the Blue Bird Cab Company were
employees under the then-applicable unemployment insurance law, so that those drivers
had to report their services and Blue Bird had to pay the drivers’ insurance contributions.
Blue Bird Cab, 251 Md. at 459. Blue Bird contested the Board of Appeals’ finding that an
employer was responsible for its drivers’ insurance payments. Id. On judicial review, the
circuit court affirmed the Department of Employment Security’s decision. Id. at 459-60.
On writ of certiorari, the Court of Appeals considered Blue Bird Cab’s contention that the
Board of Appeals failed to make findings in reaching its decision. Id. at 466. The Court
held that the facts were undisputed as the parties had reached a stipulation of the essential
28 facts. Id. The Court held that because the Board of Appeals adopted the facts as stipulated,
there was no need for the Board to make separate findings. Id. The Court subsequently
affirmed the circuit court and the Board of Appeals. Id. at 467.
OPC specifically cites Blue Bird Cab for this language the Court used: “A
fundamental requirement of due process of law in a quasi-judicial proceeding is the right
of the parties to be apprised of the facts relied upon by the tribunal in its decision.” Id. at
466. We certainly agree. Just as the Court of Appeals found no dispute of fact there, so
too are the facts undisputed here. The difference, however, is that here the controversy is
not over the facts but, rather, interpretation of the provisions of PUA § 4-211. The issue
of whether the Commission should approve a rate increase that included remediation of the
entire area that encompassed the Cassidy Property was put before the PULJ and, ultimately,
the Commission. The disagreement is that the Commission’s interpretation of the statute
differs from that of OPC.
We conclude the Commission’s decision was neither arbitrary nor capricious. In
reaching its decision, the Commission focused its attention on the statutory provisions in
question, thoroughly addressed the relevant issues, and reached its interpretation of PUA
4-211 through sound reasoning. One may readily “follow the path of the [Commission’s]
reasoning” in approving this rate increase. Maryland Office of People’s Counsel, 355 Md.
at 17. We affirm.
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED. COSTS TO BE PAID BY APPELLANT.