Accokeek, Mattawoman, Piscataway Creeks v. PSC ( 2016 )

ACCOKEEK, MATTAWOMAN, PISCATAWAY CREEKS COMMUNITY COUNCIL
v. PUBLIC SERVICE COMMISSION (S.T. 2016, No. 26)
PSC granted a Certificate of Public Convenience and Necessity (CPCN) that authorized
Dominion Cove Point LNG (Dominion) to build an electric generating station to support
an expansion of its liquefied natural gas facility at Cove Point, in Calvert County. In
deciding whether to grant the CPCN, PSC was required to consider the economic and
environmental impact of the generating station on the State and county. The CPCN was
subject to nearly 200 Conditions imposed by PSC designed to ameliorate adverse
economic and environmental effects that may result from the construction and operation
of the generating station.
In a judicial review action, Accokeek claimed that (1) two of the Conditions, which
required Dominion to make contributions to State programs designed to reduce
greenhouse gas emissions and to assist low-income families in meeting utility bills,
constituted an unauthorized tax, (2) the failure of PSC to specify the precise dollar value
of the positive economic benefit to the State and county of the generating station deprived
Accokeek of due process, and (3) there was insufficient evidence to support PSC’s
findings regarding the positive economic benefit of the generating station.
Affirming judgments of the Circuit Court for Baltimore City and the Court of Special
Appeals, the Court of Appeals rejected Accokeek’s complaints and held that (1) the two
conditions complained of were not in the nature of a tax but were regulatory measures
within the authority of PSC to impose, (2) PSC make appropriate findings regarding
economic benefit based on the record, and (3) the evidence was sufficient to support
those findings.
Circuit Court for
Baltimore City
Case No. 24-C-14-003896/AA
Argued 11/7/16
IN THE COURT OF APPEALS
OF MARYLAND
No. 26
September Term, 2016
ACCOKEEK, MATTAWOMAN,
PISCATAWAY CREEKS COMMUNITY
COUNCIL, INC.
vs.
PUBLIC SERVICE COMMISSION OF
MARYLAND, et al.
Barbera, C.J.
Greene
Adkins
McDonald
Watts
Getty, JJ.
Wilner, Alan M.,
(Senior Judge, Specially Assigned)
Opinion by Wilner, J.
Filed: December 16, 2016
Dominion Cove Point LNG, LP (Dominion) owns and operates a liquefied natural
gas (LNG) terminal near Cove Point in Calvert County. As initially constructed, the
terminal received LNG from tanker ships, stored it, and, upon a customer’s need,
vaporized it and shipped it in gas form through a pipeline that connects the terminal to a
local distribution company. That operation is ongoing. The terminal and its operation
are subject to approval and regulation by the Federal Energy Regulatory Commission
(FERC). See 15 U.S.C. §717b.
In April 2013, Dominion applied to FERC and the Maryland Public Service
Commission (PSC) for authorization to expand the terminal into a “bi-directional”
facility, so that it could both import and export LNG. Exporting would be a reverse
process – Dominion would obtain the domestic product in gas form, liquefy it, and ship it
abroad in its liquid form. PSC approval, through the grant of a Certificate of Public
Convenience and Necessity (CPCN), was needed because, as part of the expansion
Project, Dominion proposed to construct a 130-megawatt electric generating station to
provide the electricity necessary for the expanded operation, and, under Md. Code, Public
Utility Article (PUA), §§7-207 and 7-208, a CPCN from PSC was required for the
construction of that station. Petitioner, Accokeek, Mattawoman, Piscataway Creeks
Community Council, Inc. (hereafter AMP), a consortium dedicated to protecting local
waterways, was allowed to intervene in the administrative proceeding in opposition to
Dominion’s application.
After three days of hearings and consideration of several thousands of pages of
testimony and documents, PSC entered an 83-page Order granting the CPCN, subject to
approximately 200 Conditions included in a 64-page Appendix. Dissatisfied, AMP
sought judicial review in the Circuit Court for Baltimore City, which affirmed the PSC
Order. On AMP’s appeal, the Court of Special Appeals affirmed the Circuit Court
judgment. Accokeek, Mattawoman & Piscataway v. PSC, 227 Md. App. 265, 133 A.3d
1228 (2016).
We granted certiorari to consider three issues raised by AMP:
(1) whether two of the Conditions imposed by PSC in its grant of the CPCN
(Conditions J-3 and J-4) constitute taxes or mandatory payments that PSC had no
authority to impose;
(2) whether PSC’s (alleged) failure to identify the value it assigned to positive
economic value in favor of the CPCN prevented AMP from effectively challenging the
PSC decision; and
(3) whether PSC’s valuation of the economic benefit created by the generating
station is not supported by substantial evidence in the record.
As did the two lower courts, we find no merit in these complaints and therefore
shall affirm the judgment of the Court of Special Appeals.
2
BACKGROUND
The procedure to be followed by PSC in evaluating a CPCN application for
construction of an electric generating station is set forth in PUA §§7-207(c) and (d).
Those sections provide for notice to interested persons and a public hearing, and no one
contends that those procedures were not followed in this case. Section 7-207(e) lists the
factors that PSC must consider in determining whether to grant a CPCN. In relevant part,
they are:
(1) the recommendation of the governing body of the county in which the station
is to be located; and
(2) the effect of the station on:
(A) the stability and reliability of the electric system;
(B) economics;
(C) esthetics;
(D) historic sites;
(E) aviation safety;
(F) air and water pollution; and
(G) availability of means for the timely disposal of waste produced by the
generating station.
Evidence was presented on all of those factors, by Dominion, by the Maryland
Power Plant Research Program (PPRP), a unit and coordinating body within the
Department of Natural Resources, by the PSC Staff, by the Sierra Club, by AMP, and by
others. AMP essentially argued that none of the considerations in §7-207 favored the
granting of a CPCN, including the assertion that the unanimous recommendation of the
Calvert County Board of County Commissioners that the CPCN be granted was invalid
3
and that, because the generating station would serve only the LNG operation at the
terminal and not connect to the electric power grid1, it would have no public benefit that
could offset the pollution that would occur from its fossil-fuel based generation.
PPRP included in its Report and testimony a substantial list of Conditions
necessary, in its view, for the Project to comply with environmental requirements or to
ameliorate negative economic impacts of the Project. It concluded that, with those
Conditions, the generating station would comply with all applicable environmental
requirements. The PSC Staff submitted a report dealing with the impact of the
generating station on the electric power grid. Subject to its list of Conditions, the Staff
concluded that the station would not adversely affect the grid. Dominion accepted the
Conditions proposed by PPRP and the PSC Staff.
One of the major problems with which the parties and PSC had to contend,
particularly in attempting to estimate and evaluate the economic and environmental
impacts of the Project, was that the generating station was needed, and was intended to be
used, solely to support the export operation – to run the compressors necessary to liquefy
the domestic gas. No part of the electricity to be generated was to connect with the grid
or be sold to customers. Because of that, in some important respects it was difficult to
estimate the impact of the generating station as a stand-alone entity, apart from the
1
The electric grid is a complex network for distributing electricity throughout the
country through interconnected generators of electricity, high-power transmission lines,
and lower power distribution lines.
4
overall LNG Project. Both Dominion and PPRP took the position that the generating
station was so intertwined with the overall Project that it was impossible to evaluate the
impact of the generating station as a separate item, and they made little or no effort to do
so. 2
Though lamenting the lack of evidence from Dominion and PPRP directed solely
to the generating station, PSC recognized the problem. It noted in its Order “that the
Generating Station and the larger liquefaction Project are integrally related” and that its
task had been made more difficult “by the fact that [Dominion], and, to some extent,
other parties, have provided testimony that addresses the Project as a whole and have not
seriously attempted to isolate information that applies uniquely to the Generating Station
that we must review.”3 It concluded, however, that:
(1) the environmental impacts of the generating facility had to be evaluated “as
part of the entire project” pursuant to the requirements of the Federal Clean Air Act, and
2
Commenting on the proposed CPCN application on behalf of the Secretaries of the
Departments of Natural Resources, Agriculture, Business and Economic Development,
Environment, Planning, and Transportation and the Director of the Maryland Energy
Administration, PPRP stated, in its Introduction: “Although the proposed generating
station is only a portion of the proposed Project, many of the impacts from constructing
and operating the electric generating equipment cannot be separated from the larger
project and, thus, cannot be evaluated on a stand-alone basis. Therefore, the State’s
review of impacts to resources was not limited to the generation plant, but rather
examined the proposed Project as a whole.” That was consistent with Dominion’s
position. Neither PSC nor AMP has suggested what additional stand-alone evidence
could have been produced.
3
PSC noted that the oral testimony estimated that “the effects of the generating facilities
may account for between 5% and 20% of the overall effects of the Project, but we have
nothing beyond that to further refine the appropriate number.”
5
similarly, the evaluation of potential safety and security impacts of siting the generating
station adjacent to and intertwined with the liquefaction facility and storage tanks also
needed to take into account the possibility of a combined accident; but
(2) the economic and reliability impacts of the generating station can be
evaluated independently of the economic impacts of the liquefaction facility, which
would be reviewed by FERC.
Applying that decision where applicable, PSC concluded:
(1) As to §7-201(e)(1), the Calvert County Board of Commissioners
unanimously supported the CPCN.
(2) As to §7-207(e)(2)(i) – stability and reliability of the electric system –
because there would be no tie between the generating station and the grid, there was no
evidence that the station would contribute to the grid or have any adverse effect on it.
(3) As to §7-207(e)(2)(iii), (iv), (v), and (vii) – esthetics, historic sites, aviation
safety, and waste disposal – that the Conditions proposed by PPRP would adequately
address the concerns raised by AMP and the Sierra Club.
The major part of PSC’s discussion concerned §§7-207(e)(2)(ii) and (vi) –
economics and pollution. The analysis of economic impact was a multi-phase one,
involving both positive and negative effects.
With respect to positive effects, PSC noted that PPRP’s economic consultant, Dr.
Peter Hall, estimated that the employment and income effects of the LNG Project would
be significant but that only a small portion of those effects would be attributable to the
6
generating station. Dominion did not provide an estimate of the employment impact but
proffered that approximately 20 percent of the “dollar impact” from the overall Project
could be attributed to the generating station. PPRP’s estimate was much lower – five
percent of total temporary construction jobs and two percent of overall wages. PSC
noted the variance but acknowledged that it had “nothing beyond that to further refine
the appropriate number.”
Dominion estimated that it would pay $40 million in new revenue to Calvert
County through a Payment in Lieu of Taxes (PILOT) agreement with the county. The
county estimated that it would receive an average of $55 million in annual revenue once
the facility was completed. AMP argued that annual payments to the county would
amount to only $34 million. PSC found that (1) because it would not be connected to
the grid, the generating station would provide no economic benefit to Maryland
consumers as a source of electricity, and (2) because it would be exempt from
purchasing Regional Greenhouse Gas Initiative (RGGI) carbon emission allowances,
even though it would emit significant carbon emissions, it would not contribute to the
strategic energy infrastructure. As a result, not only would there be no benefit from the
purchase of RGGI allowances, but there would be a loss of industrial allowances that
might otherwise be used by a future industrial project or power plant.
PSC considered the more substantial economic impacts in its evaluation of the
statutory factors. It noted a conclusion by Dominion’s Consultant, Navigant Consulting,
Inc., that, due to the additional demand created by the exporting of natural gas from the
7
Cove Point facility, the price of natural gas would increase 5.7 percent by 2020, which
would translate into an incremental cost to Maryland consumers of $26.8 million per year
in real dollars, to which must be added a loss of $16 million in revenues associated with
compliance costs through year 2020. PSC estimated that the annual costs to Maryland
consumers could exceed $75 million by 2025. It noted as well, as negative factors, the
increased emissions of pollutants, Dominion’s use of a limited supply of industrial
greenhouse gas emission allowances, increased noise, cutting of trees, and the burden on
transportation infrastructure and water resources.
Based on the record, PSC concluded that construction of the generating station
with just the conditions proposed by PPRP would not provide sufficient economic and
other benefits to residents of Maryland to justify granting a CPCN.
In the aggregate, it found that “the negatives created by the construction and
operation of the Generating Station require the provision of additional economic benefits
to the State before the CPCN can be approved.” It concluded that Dominion’s last
minute agreement to a $20.38 million in-kind contribution to support Maryland’s
Greenhouse Gas Reduction Act goals (Condition J-4) was “too speculative and
insufficient” to provide the necessary offsetting economic benefits. In place of that, the
PSC focused on contributions that would benefit both the environmental and economic
interests of the State by benefitting renewable and clean energy resources, mitigating
climate change effects, and promoting beneficial changes in generation and electric usage
by consumers.
8
To those ends, it proposed, as a substitute J-4 Condition, that Dominion contribute
$40 million, over a five-year period, to the State’s Strategic Energy Investment Fund
(SEIF), a Fund administered by the Maryland Energy Administration, to be used for the
purpose of investing in the promotion, development, and implementation of renewable
and clean energy resources, greenhouse gas reduction or mitigation programs, cost-
efficiency and conservation programs, or demand response programs designed to
promote changes in electric usage by customers.
PSC also found the proposed J-3 Condition – a one-time $400,000 contribution to
the Maryland Energy Assistance Program (MEAP) to offset the impact from the Project
of increasing natural gas rates to Maryland consumers – to be inadequate. It directed
instead that that contribution be increased 20-fold – an annual contribution of $400,000
to MEAP or other low income assistance programs to be specified by PSC for a period of
20 years, a total of $8 million.
The overall conclusion of PSC, stated in its Order, was that:
“if all conditions imposed under this Order are met to address environmental,
economic, health and safety impacts demonstrated in this proceeding, the
Generating Station can be built in conformity with applicable Maryland and
Federal laws and standards; and in a way that will be consistent with the public
convenience and necessity standard.”
Dominion was given ten days to determine whether to accept the modified
Conditions. The company timely accepted them, and the Order became final.
9
STANDARD OF REVIEW
As recently stated in Hollingsworth v. Severstal Sparrows Point, 448 Md. 648,
654, 141 A.3d 90, 93 (2016), “[i]n an appeal from judicial review of an agency action, we
review the agency’s decision directly, not the decision of the Circuit Court or the Court of
Special Appeals.”
The general standard, or scope, of review of final PSC Orders is set forth in PUA
§3-203. A PSC Order is prima facie correct and shall be affirmed unless it is clearly
shown to be (1) unconstitutional, (2) outside PSC’s statutory authority or jurisdiction, (3)
made on unlawful procedure, (4) arbitrary or capricious, (5) affected by other error of
law, or (6) if entered in a contested proceeding after a hearing, which the Order before us
was, it is unsupported by substantial evidence in the record considered as a whole.
In CWA v. Public Service Commission, 424 Md. 418, 36 A.3d 449 (2012), we put
the familiar gloss on that, noting that, although questions of law are “completely subject
to review by courts,” as a general matter, “[s]o long as a reasoning mind could have
reached the same conclusion as the agency, we will not disturb the agency’s decision”
and that because PSC “is well informed by its own expertise and specialized staff, a court
reviewing a factual matter will not substitute its own judgment on review of a fairly
debatable matter.” Confirming earlier pronouncements, we added that “[a]s long as an
administrative agency’s exercise of discretion does not violate regulations, statutes,
common law principles, due process or other constitutional requirements, it is ordinarily
unreviewable by the courts.” In Easton v. PSC, 379 Md. 21, 30, 838 A.2d 1225,
10
(2003), we added that a PSC decision will not be disturbed on the basis of a factual
question “except upon clear and satisfactory evidence that it was unlawful and
unreasonable.”
These principles are in general accord with those applied to most judicial review
actions (see Cashcall & Reddam v. Comm’r of Fin. Reg., 448 Md. 412, 426, 139 A.3d
990, 998-99 (2016)), but this Court has tended to accord particular deference (though not
total deference) to PSC decisions. As noted in Balto. Gas & Elec. v. Public Serv.
Comm’n, 305 Md. 145, 170, 501 A.2d 1307, 1320 (1986), “[i]n light of [the predecessor
statute to PUA §3-203], we have consistently held that [PSC] orders enjoy a high degree
of judicial deference on review. . . . Recognizing the experience and special expertise of
the Commission and its staff, a reviewing court must not substitute its judgment for that
of the Commission.” See also People’s Counsel v. MPSC, 355 Md. 1, 14, 733 A.2d 996,
1003 (1999) (PSC decision “is accorded the respect due an informed governmental
agency that is aided by a competent and experienced staff.”)
CONDITIONS J-3 AND J-4
Conditions J-3 and J-4 emanated initially from PPRP in an April 17, 2014
submission. Condition J-3 directed that, prior to operation of the facility, Dominion
make a one-time contribution of $400,000 to MEAP or other Maryland low income
11
energy assistance program to be specified by PSC.4 Its explanation for this Condition
was exceedingly brief. It argued that the contribution “offsets some of the burden low
income Marylanders may face if the project does indirectly cause higher natural gas
prices for Maryland consumers.”
Condition J-4 was that Dominion provide $20.38 million in in-kind contributions
and funding to support Maryland’s Greenhouse Gas Reduction Act (Md. Code,
Environment Article, §§2-1201 through 2-1211). Specifically, for a price of one dollar,
Dominion would offer a perpetual license of its EDGE Energy Efficiency Program to five
listed Maryland electric distribution utilities, the license to include installation and start-
up user training, and, for each utility that adopted the program, Dominion would service,
maintain, and provide software updates at no cost for the first four years. PPRP
estimated the aggregate value of the EDGE product licenses at $20.38 million ($9.28
million to BGE, $4.67 million to Pepco, $2.15 million to Delmarva, $1.8 million to
SMECO, and $2.48 million to Potomac Edison).5
4
MEAP is a program administered by the Office of Home Energy Programs, a statutory
unit within the Family Investment Administration of the Department of Human Services.
The Office is authorized, among other things, to carry out an energy emergency crisis
intervention program to prevent low income households from experiencing danger to
health or survival due to imminent discontinuation of energy services by a utility vendor
by making payments on behalf of qualified households to defray fuel and utility costs.
See Md. Code, Human Resources Article §§5-5A-01 through 5-5A-08.
5
For any utility that failed to execute a license agreement by January 1, 2017, Dominion
would be required to execute a trust agreement or similar instrument in the amount equal
to the allocate EDGE value for that utility, to be used to fund other greenhouse gas
reduction projects determined by PSC.
12
In support of that Condition, PPRP pointed out that intervenors and the public had
raised concerns about greenhouse gas emissions from the Project and its overall
contribution to climate change. PPRP added:
“The State of Maryland is particularly vulnerable to the threats
associated with climate change, and is taking proactive steps to
address these challenges through initiatives such as the Greenhouse
Gas Reduction Act Plan, participation in the Regional Greenhouse
Gas Initiative, and sound investments in energy efficiency,
conservation, and renewable resources. Therefore, PPRP and
its sister agencies continued to work with [Dominion] after the
evidentiary hearings to explore mechanisms for support of
Maryland’s greenhouse gas reduction goals.”
As noted, PSC found that Condition to be both insufficient and too speculative to
provide offsetting economic benefits and replaced it with a $40 million contribution to
SEIF.
Relying heavily on Eastern Diversified v. Montgomery Cty., 319 Md. 45, 570 A.2d
850 (1990) (Eastern Diversified), AMP argues that the payments to State agencies
mandated by Conditions J-3 and J-4 constitute a tax, which the General Assembly has not
authorized PSC to impose, but without which the CPCN would not have been granted.
PSC and Dominion both take issue with that argument. They maintain that the two
Conditions are not primarily for the purpose of raising revenue, which is the hallmark of
a tax, but constitute proper regulatory requirements designed to offset the negative
economic impact of the Project that would occur without them. Dominion offers two
additional rebuttals – that the Conditions are not taxes because Dominion has agreed,
13
voluntarily, to pay them, and that AMP has no standing to raise the argument in any event
because it is not subject to the Conditions.
We shall dispose first of Dominion’s standing argument. Dominion informs us
that it has located no other Maryland case in which a third party was permitted to
challenge the lawfulness of a putative tax that an unrelated entity was paying but that the
complainant was not required to pay. The cases cited by AMP, Dominion argues, all
involved an action challenging a tax to which the complaining party was subject.
Standing to bring an action for judicial review of an administrative agency’s final
decision is ordinarily a matter of statute. Merchant v. State, 448 Md. 75, 100, 136 A.3d
843, 858 (2016). In Sugarloaf v. Dept. Of Environment, 344 Md. 271, 287, 686 A.2d
605, 614 (1996), involving an action for judicial review under the State Administrative
Procedure Act (Md. Code, State Government Article, §10-222(a)), the Court held that, in
order to have standing under that statute, a person must be both a party to the
administrative proceeding and “aggrieved” by the agency decision, because that is what
the statute said. To be “aggrieved,” we said, a person must ordinarily “have an interest
‘such that he is personally and specifically affected in a way different from . . . the public
generally.’” Id. Dominion extrapolates that principle into the argument that, as AMP is
not subject to the payments required of Dominion (and only Dominion), it is not
aggrieved by that requirement.
This action was not brought under the State Administrative Procedure Act. It was
brought under PUA §3-202(a) – a statute peculiar to PSC that permits “a party or person
14
in interest [other than the Staff of the Commission] . . . that is dissatisfied by a final
decision or order of the Commission [to] seek judicial review of the decision or order as
provided in this subtitle.” It does not require that the person be “aggrieved” but merely a
party or person in interest who is “dissatisfied,” a qualification that is met when the party
“seeks judicial review, proffering reasons for the court to reverse the order or decision.”
Mid-Atlantic v. Public Service, 361 Md. 196, 204-06, 760 A.2d 1087, 1091-92 (2000).
AMP satisfies the statutory test for standing. It was a party to the PSC proceeding, and it
is certainly dissatisfied with the PSC Order.
The issue raised by AMP regarding the two Conditions – tax or regulation? -- has
been before this Court a number of times, but we may start and end with Eastern
Diversified. The question there was whether a development impact fee imposed by
Montgomery County constituted a valid regulatory fee under the county’s home rule
power or a tax that the county had no authority to impose. Diversified desired to build an
automobile sales and service facility. After its subdivision plat was approved, it filed an
application for a building permit.
The application was approved subject to payment of a $118,000 impact fee. A
local ordinance imposed such a fee on new development in two areas of the county to
help finance the cost of road construction in those areas; it was payable as a condition to
obtaining a building permit. The hearing examiner, the local Board of Appeals, and the
Circuit Court rejected Eastern Diversified’s challenge to the fee as an unlawful tax, on
the ground that the fee was not a tax, in that it was not for general revenue purposes and
15
was not compulsory but only to help finance road improvements that directly benefitted
the property sought to be developed. This Court, granting certiorari before any
meaningful proceedings in the Court of Special Appeals, disagreed with that reasoning
and reversed the Circuit Court judgment.
We started with the proposition that counties have no general taxing authority, but
only that which has been granted by the State. Pursuant to the “Express Powers Act,”
however, Charter counties do have broad authority to enact ordinances not inconsistent
with State law that “may aid in maintaining the peace, good government, health, and
welfare of the county.” See Md. Code, Local Government Article, §10-206(a).6
Building on several earlier decisions, we confirmed that there was a distinction
between “the imposition of fees as a necessary part of a regulatory measure and the
imposition of a tax for revenue purposes” but observed that (1) a regulatory measure may
produce revenue and a revenue measure may provide for regulation, and (2) “[t]here is no
set rule by which it can be determined in which category a particular Act [or in this case
an administrative Order] primarily belongs.” Eastern Diversified, 319 Md. at 52-53, 570
A.2d at 854. The best we could do was this:
“In general, it may be said that when it appears from the Act
itself that revenue is its main objective, and the amount of the
tax supports that theory, the enactment is a revenue measure.
‘In general. . . where the fee is imposed for purposes of regulation, and the
statute requires compliance with certain conditions in addition to the
payment of the prescribed sum, such sum is a license proper, imposed by
6
As a result of Code Revision, the language of that statute has changed slightly, but not in
substance, from that in place when Eastern Diversified was decided.
16
virtue of the police power, but where it is exacted solely for revenue
purposes and its payment give[s] the right to carry on the business without
any further conditions, it is a tax’” (quoting in part from 33 Am. Jur.,
Licenses, ¶ 19, p.340.
Applying those guidelines, the Court concluded that the impact fee was a tax. The
revenue objective, we said, was evident in the statute. It was to raise money for county
road construction. The fees were not based solely on the service provided to the property
owner or to defray the expenses of the regulatory process. As the developer argued, there
was no indication that the amount charged had any relevance or relationship to road
construction made necessary by the particular development. Our conclusion was that the
fee was exacted “solely for revenue purposes . . . to finance road construction which
benefit the general public.”
This case is far different. As a preface, the application for the CPCN was filed
pursuant to both PUA §7-207 and §7-208, which deals with generating stations and
associated transmission lines. Section 7-208(f)(1) requires PSC to include in its CPCN
the requirements of Federal and State environmental laws and standards identified by the
Department of Environment and “the methods and conditions that the Commission
determines are appropriate to comply with those environmental laws and standards.”
Apart from any general incidental authority PSC may have to attach conditions to
approvals, §7-208(f)(1) requires PSC to attach conditions it finds appropriate, which
necessarily may include conditions that may call for payments of one kind or another to
governmental agencies, at least to the extent that they do not otherwise partake of a tax.
17
Unlike the ordinance in Eastern Diversified, which we concluded on its face was a
revenue measure, the authority conferred in PUA §7-208(f)(1) is unambiguously
regulatory in nature.
The payments required by Conditions J-3 and J-4 are not general exactions on all
applicants for a CPCN to construct an electric generating station. They were not for the
primary purpose of raising revenue, as there was no evidence that any of the recipients
were in need of additional revenue. In determining whether to grant a CPCN, PSC was
required by law to consider and weigh any positive economic or environmental impact
against any negative impact – a purely regulatory matter. The Conditions were particular
to that end – to offset the prospect of an increase in natural gas prices in the future due to
the exporting of LNG by Dominion from the Cove Point facility by a contribution to
MEAP, to help low-income families who would be specially affected by such an
increase, and to offset the impact of the emission of pollutants from the fossil-fueled
electric generating station by contributions to the State’s greenhouse gas reduction
programs. Accordingly, we hold that the exactions imposed by the two Conditions were
primarily regulatory rather than revenue measures and did not constitute taxes. In light of
that conclusion, we need not address whether compliance with those exactions was
voluntary. Nor need we address Dominion’s argument that, though clearly aware of the
two Conditions, AMP never raised the issue of whether they amounted to unlawful taxes
before PSC.
18
FAILURE TO IDENTIFY VALUE OF POSITIVE FACTOR
PUA §3-113 requires, in relevant part, that a PSC decision and order (1) be based
on consideration of the record, (2) be in writing, and (3) state the grounds for the
conclusions of the Commission. The Order in this case complied with those
requirements. It made extensive references to the record; it based its conclusion on what
was in the record; it was in writing; and it stated the basis for the conclusions reached.
One of the things PSC was required to consider was whether and to what extent
the economic benefit of the electric generating station would offset any negative
economic impact from the station. AMP complains that PSC failed to state any finding in
that regard – that, although it did assign some value to positive economic benefit, it did
not state “what value, or range of values” it assigned to the positive effects.
In what would seem, at worst, to be an alleged failure by PSC to make a
statutorily-required finding, AMP complains that it was denied due process because, by
failing to state the value of the positive economic impact it assigned to the generating
station, PSC “made it impossible to effectively challenge how the [statutory] balancing
test was implemented.”
AMP does not tell us, and we do not understand, how any imprecision in a
required finding, if there was one, prevented AMP from challenging the PSC decision,
much less how it has been denied due process of law. It is true, as this Court held in Blue
Bird Cab v. Dep’t Emp. Sec., 251 Md. 458, 466, 248 A.2d 331, 335(1968) and later in
Overpak v. Baltimore, 395 Md. 16, 40, 909 A.2d 235, 249 (2006) that “a fundamental
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requirement of due process of law in a quasi-judicial proceeding is the right of the parties
to be apprised of the facts relied on by the tribunal in its decision,” but we think that
occurred here.
As we have observed, given the unusual (though not unprecedented) nature of the
Project, with the generating station to be used solely to support the exporting phase of the
entire LNG facility, it was difficult for the parties (other than AMP, which contended that
there was no economic benefit from the generating station because it was not to be
connected to the grid) and for PSC to isolate entirely the economic benefit of the
generating station from the economic benefit of the Project as a whole. There was
evidence of some increased employment, both during the construction of the station and
later from its operation and some additional taxes based on the value of the station, once
constructed, and PSC, though regarding it as minimal, took that into account.
In its Order, PSC recounted the conclusions of the major participants regarding the
positive and negative economic impacts, including rough estimates in dollars of the
positive economic impact, which is all that it had. It was enough to find that, absent
Conditions J-3 and J-4, the positive impact was insufficient to offset the negative impact
but that, with those Conditions, totaling $48 million, the positive and negative impacts
would be sufficiently in balance. It is a fair inference that, in concluding that, absent
those Conditions, the net negative economic impact would not justify the granting of a
CPCN, PSC estimated that the positive economic impact, absent those conditions, would
be approximately $48 million less than the value of the negative economic impact, which
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is within the range estimated by the parties in their submissions. We fail to see how
AMP was hindered in challenging the PSC Order.
SUFFICIENCY OF EVIDENCE
Finally, AMP complains that the evidence of the separate economic impact of the
electric generating station was legally insufficient for PSC to draw any conclusion
regarding that factor. AMP acknowledges that there was a good bit of evidence
regarding the economic impact of the Project as a whole, but very little regarding the
generating station itself.
This argument implicates the problem noted above -- the difficulty in isolating and
estimating the overall economic impact of just the electric generating station when its
sole function was to support the larger Project. There was evidence, which was disputed,
regarding the economic benefit that would accrue from the employment of people to
build and operate the station and from property taxes that would accrue to Calvert County
under the PILOT agreement. It is not clear whether there was any evidence of whether
Dominion could have proceeded with the export operation without building the
generating station – i.e., draw the needed electricity from the grid – or, if so, what the
positive and negative effects of that might have been compared to those arising from
building the generating station. There is no reference by any of the parties to any such
evidence in the record.
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PSC was faced with a dilemma. Dominion and PPRP stated that they produced all
the evidence they could produce of the positive economic benefit of just the generating
station. Neither PSC nor AMP has suggested what further evidence could have been
produced. PSC was certainly aware that a decision by FERC was pending, and, in fact,
according to its website (https://ferc.gov/media/news-releases/2014/2014-3/09-29-
14.asp), FERC authorized construction of the Cove Point LNG Export Project (Docket
No. CP13-113-000) on September 29, 2014.
It is clear from the submissions of PPRP and Dominion that the favorable
economic impact of the entire Project would have been far greater in terms of
employment and taxes than the impact of just the generating station, and PSC had to
consider whether taking the strict view espoused by AMP, as opposed to accepting the
evidence that PPRP and Dominion said was all they were able to produce, would have the
effect of scuttling a Project that FERC might approve (and did approve) that could
produce significant economic benefit to the State and county.
AMP insists that PSC should have denied the CPCN, not because of anyone’s
failure to produce additional evidence that could have been produced but because of the
failure to produce evidence that the parties concluded, and PSC reluctantly accepted,
could not have been produced due to the integration of the generating station into the
overall Project. We again note PPRP’s statement that, due to that intertwining, “many of
the impacts from constructing and operating the electric generating equipment cannot be
separated from the larger project and, thus, cannot be evaluated on a stand-alone basis.” .
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PSC recognized that the evidence regarding just the impact from the generating
station alone was less than what it would have liked but dealt with what it had, which was
all it was going to get. It did not ignore the statutory requirement to consider economic
impact. It concluded that the evidence that it had sufficed to require the imposition of
Conditions J-3 and J-4 and, with those Conditions, to warrant the granting of the CPCN.
Under the circumstances, that decision was not an unreasonable one. It was one that fell
within the discretion of PSC, guided by its expertise, to make, and we shall defer to it.
JUDGMENT OF COURT OF SPECIAL APPEALS AFFIRMED;
PETITIONER TO PAY THE COSTS.
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