Court voids law that gave PSC more authority

Judges say legislators ignored Md. Constitution

Rules for utilities at issue

Commission might issue emergency regulations

October 12, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

In a sharp rebuke of the Maryland General Assembly, the state's highest court struck down yesterday a law that gave the Public Service Commission greater authority to monitor utility companies and called the legislative action unconstitutional.

The Court of Appeals decision, written by Judge Alan M. Wilner, said supporters of the legislation ignored Maryland's Constitution and misled their colleagues into surrendering legislative oversight when a last-minute, "stealthily incorporated" amendment was tacked onto a special funding bill to broaden PSC powers.

The ruling is a devastating blow to the PSC in its continuing battle with utilities over an order issued in 2000 that prohibits utilities from sharing brand names, personnel and assets with their unregulated affiliates.

Not only does the ruling nullify the "Code of Conduct" rules governing utility practices in a restructured energy market, but it also jeopardizes the decision-making process used for decades by the PSC to issue orders or regulations.

The ruling could force the PSC to re-examine and reissue regulations for dozens of orders that it has issued in other important cases.

"We were disappointed, but we're not surprised," Susan Stevens Miller, the PSC general counsel, said yesterday. "It is our view that [the ruling] has made a new issue that everyone is going to raise in appeals of prior commission decisions. Every time the commission tries to enforce an order on utilities and they disagree with it, they're going to contend that we violated the law .

"We're very concerned, especially about the fact that the [Code of Conduct rules] were overturned by the court," Miller said. "We're looking at the quickest way possible to put those requirements back in place."

The appeals court remanded the case to Wicomico County Circuit Court and ordered the PSC to pay court costs.

Miller said the PSC probably will issue emergency regulations to temporarily replace the Code of Conduct order, which attempted to create a level playing field for energy companies competing against well-known local utilities in Maryland's deregulated energy market.

Under that order, affiliates would be forced to pay royalties to use a utility's logo or names. They also would be limited in sharing personnel and assets, and prohibited from joint promotions and marketing.

Fourteen utilities took the PSC to court immediately, complaining that the stringent rules gave unfair advantages to out-of-state competitors. Wicomico County Circuit Court disagreed. The utilities appealed.

The Court of Appeals ruled in favor of the utilities April 8 by overturning the PSC order. Focusing on PSC procedure, the appeals court said the commission should not have used "generic proceedings" to issue an order that had "significant changes in policy."

Instead, the court said, the commission should have adhered to the Administrative Procedure Act (APA), which requires the PSC to hold formal administrative proceedings with public notification, public response and legislative review to adopt regulations that affect all utilities. That can take as much as six months.

When a lobbyist, a handful of legislators and the PSC heard about the ruling the morning of April 8, they quickly moved to thwart the court ruling. Using an unremarkable financing measure, House Bill 135, which guaranteed funding to the PSC and Office of the People's Counsel, they added an amendment that excused the PSC's Code of Conduct order from compliance with the procedure act. It was passed by both houses.

That violated the state's "single subject" rule, the appeals court said in its decision yesterday. The Constitution requires that "every law enacted by the General Assembly shall embrace but one subject, and that shall be described in its title."

The amendment was not germane to the subject of HB135, which dealt with PSC financing, the court said, adding that it also deliberately gave up legislative oversight of PSC actions.

"The amendments added to HB135 late on the last night of the session did away with that oversight, both prospectively and retroactively," the appeals court said. "and they were added without ever informing the members of either house. ... The members were told only that the bill related to the non-lapsing fund. ...

"Nothing was said about the dramatic surrender of legislative oversight over a process that directly affects almost every resident and business entity in Maryland."

Miller said the PSC could ask the governor for special legislation this session to remedy the situation.

"Based on Maryland law, there is no other venue for us to take this case," Miller said. "The way the statute was formulated, the bill did not pertain to the same subject. One of the options we're considering is to go to the governor's office to put the legislation back in the next session coming up" in January.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.