By Katie Gray and Nora Healy
In an opinion issued this August, the Law Court upheld a Maine Public Utilities Commission order approving a new rate plan for Bangor Gas Company, LLC.
A principal issue before the Law Court was whether Bangor Gas should be entitled to recover in its natural gas delivery rates the unimpaired, “original cost” of Bangor Gas’s assets, or the impaired “acquisition cost” of those assets. In December 2006, Energy West, Inc. offered to purchase Bangor Gas from Sempra Energy, LLC in December 2006 for approximately $500,000, and it later purchased Bangor Gas for that amount. Bangor Gas considered the $500,000 purchase price to represent the fair value of its assets, and therefore wrote down the book value of its assets to zero for accounting purposes. This resulted in an impairment loss of approximately $38 million.
The Office of Public Advocate and Bucksport Mill, LLC appealed the PUC’s order. OPA and Bucksport Mill argued that Bangor Gas’s ratepayers should be responsible for paying only the impaired cost of Bangor Gas’s assets—$500,000, and not the $38 million that was written down for accounting purposes.
Applying its usual administrative deference, the Law Court agreed with the Commission that the impaired book value “would not accurately reflect the current use of the utility’s assets.” The justices found that the PUC’s ratemaking statute “plainly does not mandate one valuation methodology over another,” and gives the Commission broad discretion in setting a reasonable value for utility assets for ratemaking purposes.
The second issue on appeal was whether the Commission erred in permitting Bangor Gas to recover 50% of its regulatory proceeding expenses in rates. The Law Court did not reach the merits of this question because, it determined, the issue did not affect the PUC’s decision to adopt Bangor Gas’s rate plan.
The decision, Office of the Public Advocate et al. v. Public Utilities Commission et al., 2015 ME 113, — A.3d —may be found here.
Eighteen states that are suing the EPA and the Army Corps of Engineers to block the regulation attempting to identify jurisdictional waters of the United States under the Clean Water Act have filed a motion for a preliminary injunction with the U.S. Court of Appeals for the Sixth Circuit. At the same time, the 18 states filed a motion to dismiss the litigation, arguing that the Sixth Circuit does not have original jurisdiction over the challenges to the WOTUS rule and that the challenges should be heard at the district court level.
The motions before the Sixth Circuit follow a preliminary injunction issued on August 28 by the U.S. District Court for North Dakota. The scope of that injunction was clarified in a September 4 order from the district court as applying only in the 13 states that are plaintiffs in that litigation. The district court did not impose its preliminay injunction nationwide, as urged by the plaintiffs, primarily out of deference to other federal courts, in particular the Sixth Circuit, where many, but not all, of the challenges to the WOTUS rule have been consolidated by the U.S. Judicial Panel on Multidistrict Litigation.
Meanwhile, today the EPA renewed its request to the North Dakota District Court to stay its preliminary injunction (i.e. stay the stay) until the Sixth Circuit rules on whether to consolidate all of the challenges to the WOTUS rule. A hearing on the issue is scheduled to be held by the Sixth Circuit on October 1.
Many have remarked at the irony of this procedural morass of litigation and patchwork regulatory framework resulting from the government’s attempt to enact a rule that would bring clarity to Clean Water Act jurisdiction.
What appears to be lost in all of the hyperbole is that the WOTUS rule is not really that big of a change from the status quo. In many ways, the rule is an attempt to codify existing criteria that the EPA and Army Corps have been applying for some time on a case-by-case basis. The current barrage of litigation, mostly pitting lawyers for state attorneys general against lawyers for the federal government (with lawyers for a few issue-oriented NGOs thrown in), appears to be more about states’ rights activism than about clean water.
The rule enacted by the EPA and the Army Corps of Engineers intended to clarify the scope of jurisdictional waters of the United States (often referred to as the WOTUS Rule or Clean Water Rule) was set to take effect on August 28. One day prior to that, a judge in the U.S. District Court for North Dakota issued a preliminary injunction in North Dakota v. EPA, No. 3:15-cv-59, prohibiting application of the rule based on the court’s view that the rule likely exceeded the agencies’ statutory authority and suffered from procedural defects.
Now the same federal judge, Ralph Erickson, must determine whether the injunction he issued applies nationwide, thereby completely barring application of the WOTUS rule even though the rule’s validity is the subject of litigation pending before several other federal courts. (Not only that, but it is not clear whether Judge Erickson’s district court had jurisdiction to hear the case. Two district courts have held that the Clean Water Act requires that a challenge to the WOTUS rule be heard solely by one of the U.S. Courts of Appeals and the U.S. Judicial Panel on Multidistrict Litigation has consolidated challenges to the rule before the Sixth Circuit.)
The EPA and the Army Corps argue that the preliminary injunction should apply only in the thirteen states that were plaintiffs before Judge Erickson. The plaintiff states argue that the injunction should apply nationwide. The parties have submitted briefs on the proper scope of the injunction and are awaiting Judge Erickson’s ruling.
The case has highlighted an interesting jurisdictional question arising from the fact that there is no set rule governing what happens when a federal district court invalidates a federal agency regulation. Does the court’s holding apply only within the geographic boundaries where the district court has jurisdiction? Does it apply to the jurisdictions where the succesful plaintiffs are located? Does the holding apply to the rule itself, invalidating the agency action irrespective of geographical factors (i.e. nationwide)?
The answer is that it could be any of the above, depending on two factors: what the court believes is required to provide adequate relief to the prevailing parties and what is required to abide by the somewhat nebulous concept of comity between federal courts. When an “injunction has the effect of precluding other circuits from ruling” on the validity of a federal regulation, “such a result conflicts with the principle that a federal court of appeals’s decision is only binding within its circuit.” Virginia Soc’y for Human Life, Inc. v. Fed. Election Comm’n, 263 F.3d 379, 393 (4th Cir. 2001).
Although the Eighth Circuit (in which North Dakota is located) has little or no helpful case law on the issue, the fact that identical litigation is pending before both district and circuit courts in multiple jurisdictions should weigh heavily in favor of Judge Erickson ruling that his preliminary injunction does not apply nationwide.
In the meantime, the only thing guaranteed to apply nationwide will be regulatory confusion.
The U.S. District Court for the Northern District of California on Tuesday struck down a U.S. Fish and Wildlife Service regulation allowing issuance of 30-year take permits under the Bald and Golden Eagle Protection Act. The court’s holding is a blow, albeit likely temporary, to wind power developers seeking certainty about liability for take of eagles under BGEPA.
The court in Shearwater v. Ashe held that USFWS violated the National Environmental Policy Act by adopting the 30-year permit rule without conducting an environmental impact statement or environmental assessment. USFWS claimed that the rule was “strictly administrative” in nature and therefore fit within the NEPA categorical exclusion for federal actions that have no significant effect on the environment. The court disagreed, citing, among other things, USFWS staff comments that it was a “no-brainer that [FWS] needed to do a NEPA analysis” and that the 30-year permit rulemaking process was a “trainwreck.”
The 30-year take permit framework was adopted by USFWS in December 2013, replacing the previous regulation that allowed issuance of BGEPA take permits for a maximum duration of five years. The increase to 30 years was adopted primarily to address concerns by wind power developers that “the five-year maximum tenure of permits under the Eagle Take Rule is fundamentally unworkable for the industry considering the life of most wind projects is 20 to 30 years.” The court noted that, “[w]hile promoting renewable energy projects may well be a worthy goal, it is no substitute for the [agency’s] obligations to comply with NEPA and to conduct a studied review and response to concerns about the environmental implications of major agency action.”
The court remanded to rule back to USFWS, which will presumably revive the 30-year permit program by conducting an EA or EIS to satisfy NEPA’s procedural requirements.
Massachusetts Governor Baker recently appointed Verrill Dana attorney Harlan Doliner to the newly established Seaport Economic Council. The duties and responsibilities of the Council include designing and implementing a statewide growth strategy for the maritime economic sector that includes clean energy. Governor Baker established the Council pursuant to Executive Order No. 564, which establishes the Council’s duties as follows:
- researching and monitoring economic activity in the local, national, and global maritime economy so as to make informed, up-to-date policy and funding recommendations to the Governor;
- using best available science and information regarding potential threats to coastal communities from rising sea levels and extreme weather events in order to evaluate and improve the sustainability and resilience of projects in which the Council invests;
- designing and implementing a statewide growth strategy for the maritime economic sector, including: trade, science and technology, recreation and tourism, clean energy, and the seafood industry;
- coordinating state agencies’ activities which are associated with coastal community planning and investment activities, with the aim to stimulate sustainable economic development and create jobs in the maritime economy sector as well as to protect coastal assets;
- designate, for investments across the maritime economic sector, capital funds authorized by the Legislature and allocated by the Governor to the Council;
- designate, for investments in resilient coastal infrastructure, capital funds authorized by the Legislature and allocated by the Governor to the Council; and
- reviewing state programs and regulations relating to the Commonwealth’s coastal communities and advising the Governor as to their effectiveness.
The Seaport Economic Council replaces the Seaport Advisory Council.
Harlan brings to the Council over 37 years of experience in practicing environmental, energy and maritime law. He is honored by this opportunity to advance Massachusetts’s clean energy policy as integral with the economic progress of its ports.
The following was originally posted by Christopher Monroe on Verrill Dana’s Maritime Law Blog, Law on the Water Line: www.atlanticmaritimelaw.com.
Recent reports from the Associated Press indicate that massive steel foundations for the Nation’s first offshore wind project will soon leave fabrication facilities in Houma, Louisiana, destined for Block Island, Rhode Island. According to Deepwater Wind, the 5-turbine Block Island Wind Farm is scheduled to be online during the third quarter of 2016 and could supply most of Block Island’s power.
The full article can be read here.