Opinion ID: 4304527
Heading Depth: 2
Heading Rank: 4

Heading: Legislative Intent Analysis

Text: Although we have found the plain language of PU § 4-210 unambiguous, we find it beneficial to review the legislative history both as a check on our plain language reading and to eliminate alternate theories of legislative intent. The General Assembly first considered the issue of replacing aging gas infrastructure during the 2011 and 2012 Sessions. In the 2011 Session, Senate Bill 332, 18 and the cross-filed House Bill 856, had hearings in their respective committees, Senate Finance Committee and House Economic Matters Committee, but were subsequently withdrawn. Of note, the unsuccessful 2011 legislation contained this statement of legislative intent: “The General Assembly finds and declares that the purpose of this section is to promote gas infrastructure improvements in the State by establishing a mechanism for gas companies to promptly recover investments in eligible infrastructure replacement.” In the 2012 Session, Senate Bill 541, cross-filed as House Bill 662, received a favorable report with amendments from the Senate Finance Committee but failed on a rare procedural second reading vote on the Senate floor. After the Senate floor defeat, House Bill 662 passed the House with amendments but then received an unfavorable report from the Senate Finance Committee because the Senate bill had already failed on the procedural second reader vote. The 2012 legislation modified the statement of legislative intent: “It is the intent of the General Assembly that the purpose of this section is to accelerate gas infrastructure improvements in the State by establishing a mechanism for gas companies to promptly recover reasonable and prudent costs of investments in eligible infrastructure replacement projects separate from base rate proceedings.” The following year, Senate Bill 8, cross-filed as House Bill 89, was passed into law. Senate Bill 8 contained the exact legislative intent language as well as the eligible infrastructure replacement definition found in the 2012 legislation. See 2013 Md. Laws, ch. 161. Interestingly, Senate Bill 8 Fiscal Note highlighted accidents occurring “in Maryland from 2002 through 2011, totaling $12 million in property damage and causing 19 one fatality and 16 injuries.” Senate Bill 8 Fiscal Note, at 6 (emphasis added). Nothing in Senate Bill 8 Fiscal Note suggested that legislators contemplated out-of-state projects. During deliberations for Senate Bill 8, organizations, including Washington Gas, submitted position statements. In its position statement’s introduction, Washington Gas commented that many individuals and entities “have spent the past two years discussing . . . the need to speed up the replacement of aging natural gas infrastructure in Maryland.” Washington Gas stated that the replacement of gas infrastructure was necessary because “Maryland ranks ninth (1,422 miles) in the U.S. of states with the largest amount of cast iron gas pipes. . . . Of the eight states with larger amounts of cast iron pipe, seven of them have accelerated pipeline replacement programs similar to what this bill would establish.” Additionally, Washington Gas’s position statement asserted that in total “30 states and the District of Columbia [] have passed legislation, or regulation to do what S[enate] B[ill] 8 seeks to do.” Of note, Washington Gas observed that “Maryland residents support this surcharge mechanism as a way of paying for the replacement of older pipeline systems.” Supporting this argument, Washington Gas references letters of support, including those from “seven mayors representing older, predominantly African-American communities in Prince George’s County that have aging pipe in service.” (Emphasis added). Washington Gas concluded by commenting that a “significant portion of the entire nation’s energy infrastructure is old and Maryland is no exception.” (Emphasis added). Clearly, Washington Gas did not discuss using the STRIDE statute with regard to out-of-state infrastructure projects. Washington Gas’s argument focused on the benefits to Maryland customers but only in reference to problems with infrastructure located in Maryland. 20 Another public service company, Baltimore Gas and Electric (“BGE”), submitted a position statement in support of Senate Bill 8, “arguing that “[s]ignificant and sustained investment is needed to replace outdated gas infrastructure in Maryland.” BGE detailed that its “650,000 natural gas customers [are] served by 7,000 miles of gas mains covering approximately 800 square miles across Central Maryland.” BGE also stressed that “Maryland has the opportunity to join the dozens of other states that have recognized the policy priority of accelerating the replacement of outmoded gas delivery infrastructure.” In listing some of the significant benefits to Maryland, BGE concluded that the bill would create new jobs in Maryland and a safer, more reliable gas system. BGE, like Washington Gas, described issues with gas lines located in Maryland, making specific references to the amount of mileage of BGE gas lines in Maryland, in its support for the STRIDE statute but did not discuss out-of-state infrastructure. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (“PHMSA”) submitted a position statement supporting the passage of Senate Bill 8. In its statement, PHMSA emphasized that: 3019 miles of gas distribution pipeline in Maryland were installed prior to 1960 which equates to one out of every ﬁve miles. These pipelines have been in the ground for over 50 years. Cast iron, which can be prone to failure, made up nearly 10 percent of Maryland’s natural gas distribution mains. Only ﬁve States have more cast iron pipe than Maryland and according to a 2011 survey by the National Association of Pipeline Safety Representatives, Maryland is the only state in the top 10 that does not have cost recovery mechanisms for cast iron replacement programs. In its position statement, the Commission did not support or oppose the legislation but rather suggested informational comments and recommended technical amendments. 21 The Commission reiterated its duty “to ensure a safe and reliable distribution infrastructure throughout the State” and recognized “the importance of upgrading the State’s gas pipeline infrastructure.” OPC opposed the STRIDE statute and in its position statement argued that “a surcharge mechanism, in addition to base rates,” was not “needed to ensure the delivery of safe and reliable service by natural gas companies.” Later in its position statement, OPC stated that “[e]ven if a gas utility faces a major and sudden need for reliability or safety improvements (and there is no evidence of such a problem in Maryland), utility regulatory accounting requires that these rising expenses be normalized, that is, the rates should reflect only capital expenditures that are in excess of the Company’s normal capital spending.” In response to opposition to the STRIDE statute, the bill file contains two pieces of literature sponsored by the gas distribution industry. First, a document entitled “Pass Strategic Infrastructure Development and Enhancement (STRIDE) and STRIDE FORWARD to accelerate upgrades to Maryland’s natural gas infrastructure” noted that “Maryland lags behind other states in driving accelerated upgrades of its natural gas pipes.” The document stressed that a majority of states have already adopted measures for accelerated natural gas pipeline replacement programs and that the PHMSA applauded Maryland’s efforts to explore similar acceleration measures such as Senate Bill 8. Similarly, the second document is entitled “STRIDE: In Step with AARP’s Consumer Safeguards.” In the introductory paragraph, the document stated that “STRIDE (Maryland Senate Bill 8 and House Bill 89) is a proposal to replace Maryland’s outmoded, leak-prone 22 gas pipes at much faster rates and at the least possible cost to utility customers.” (Emphasis added). The resounding theme of the proponents’ testimony emphasized that Maryland was one of few states between 2011 and 2013 that had not adopted accelerated cost recovery for gas infrastructure replacement systems. Moreover, the testimony urged passage of the STRIDE statute because Maryland had and continues to have outdated gas pipe lines which need to be replaced for safety purposes. Therefore, while the legislative history does not specifically indicate that the legislation was intended only to apply to projects within state lines, each of the documents in the bill file focus on the goal of replacing the gas pipes and related infrastructure within the State of Maryland specifically. As such, this Court recognizes that the legislative history supports the interpretation that the General Assembly intended to accelerate cost recovery for infrastructure replacement projects located within Maryland. Stated another way, there is nothing in the legislative history to support the theory that the STRIDE statute was enacted for accelerated cost recovery for improvements made outside of the state. Finally, at oral argument, Washington Gas argued that the STRIDE statute should be viewed as analogous to Virginia’s cost-allocation statute, the Steps to Advance Virginia’s Energy Plan (“SAVE”) Act, which allows for accelerated cost recovery for outof-state projects.5 While the SAVE Act is similar to the STRIDE statute,6 the SAVE Act 5 The SAVE Act is codified at Va. Code Ann. §§ 56–603 to 56–604. 6 “Eligible infrastructure replacement” is defined almost identically in both the STRIDE statute and SAVE Act. Compare PU § 4-210(a)(3) with Va. Code Ann. § 56–603. 23 does not reference geography anywhere in its text. See Va. Code Ann. §§ 56–603 to 56– 604. In addition, there is no equivalent to the STRIDE statute in the District of Columbia. D.C. Code Ann. § 34–901 et seq. As such, we find comparison between the STRIDE statute and the Virginia and District of Columbia statutes inapposite for our purpose here.