Court Opinion

ID: 4112490
Source: CourtListenerOpinion
Date Created: 2016-12-30 19:07:22.877869+00
Date Added: 2024-06-11T14:46:20.803215
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

THE DELAWARE DIVISION OF          )
THE PUBLIC ADVOCATE,              )
                                  )
                Appellant,        )
                                  )    C.A. N15A-12-002 AML
          v.                      )
                                  )
THE DELAWARE PUBLIC               )
SERVICE COMMISSION,               )
                                  )
                Appellee.         )

                      Submitted: September 13, 2016
                       Decided: December 30, 2016

                      MEMORANDUM OPINION

Regina A. Iorii, Deputy Attorney General, STATE OF DELAWARE,
DEPARTMENT OF JUSTICE, Wilmington, Delaware; Attorney for the Delaware
Division of the Public Advocate.

Brenda R. Mayrack, Deputy Attorney General, STATE OF DELAWARE,
DEPARTMENT OF JUSTICE, Dover, Delaware; Attorney for the Delaware
Public Service Commission.

LeGROW, J.
      This is an appeal from a decision of the Delaware Public Service

Commission.     The appellant, the Delaware Division of the Public Advocate,

contends the Commission erred in construing a statute that governs the

circumstances under which utility companies may be exempt from a state law

requiring them to purchase a percentage of their electric supply from renewable

resources. That statute grants the Commission explicit authority to promulgate

regulations regarding procedures for how the minimum renewable energy purchase

requirement may be frozen. Despite this explicit statutory grant of rule-making

authority, the Commission concluded it nevertheless lacks the authority to

promulgate the type of regulations the DPA contends the Commission should have

adopted. I conclude the Commission’s interpretation of the statute constituted

legal error and therefore reverse and remand.

              BACKGROUND AND PROCEDURAL HISTORY

      In 2005, the Delaware General Assembly enacted the Renewable Energy

Portfolio Standards Act, 26 Del. C. §§ 351-364 (“REPSA”), requiring all regulated

Delaware electric utilities to purchase a percentage of their electric supply from

renewable and solar resources. Those purchase requirements are referred to herein

as the “minimum renewable energy purchase requirements.” In 2010, the General

Assembly amended Section 354 of REPSA to permit the Department of Natural

Resources and Environmental Control (“DNREC”) and the Public Service

                                         1
Commission (the “Commission”), “in consultation” with each other, to freeze the

minimum renewable energy purchase requirements for regulated utilities under

certain circumstances, namely when the cost of compliance exceeds certain

thresholds. As amended, Section 354(i) and (j) provides:

             (i) [DNREC] in consultation with the Commission, may
             freeze the minimum cumulative solar photovoltaics
             requirement for regulated utilities if [DNREC]*
             determines that the total cost of complying with this
             requirement during a compliance year exceeds 1% of the
             total retail cost of electricity for retail electricity suppliers
             during the same compliance year. In the event of a
             freeze, the minimum cumulative percentage from solar
             photovoltaics shall remain at the percentage for the year
             in which the freeze is instituted. The freeze shall be lifted
             upon a finding by [DNREC], in consultation with the
             Commission, that the total cost of compliance can
             reasonably be expected to be under the 1% threshold.
             The total cost of compliance shall include the costs
             associated with any ratepayer funded state solar rebate
             program, SREC purchases, and solar alternative
             compliance payments.

             (j) [DNREC] in consultation with the Commission, may
             freeze the minimum cumulative eligible energy resources
             requirement for regulated utilities if [DNREC]
             determines that the total cost of complying with this


  The statute refers to the State Energy Coordinator, who is an employee of DNREC, and the
Delaware Energy Office, which is or was a part of DNREC. I refer to both the State Energy
Coordinator and the Delaware Energy Office as DNREC for clarity. The parties agree that the
statutory references to the State Energy Coordinator and the Delaware Energy Office are to
DNREC for all practical purposes. See Appellant’s Opening Br. 1 n.2; Appellee’s Resp. Br. 5
n.4.
                                            2
               requirement during a compliance year exceeds 3% of the
               total retail cost of electricity for retail electricity suppliers
               during the same compliance year. In the event of a
               freeze, the minimum cumulative percentage from eligible
               energy resources shall remain at the percentage for the
               year in which the freeze is instituted. The freeze shall be
               lifted upon a finding by [DNREC], in consultation with
               the Commission, that the total cost of compliance can
               reasonably be expected to be under the 3% threshold.
               The total cost of compliance shall include the costs
               associated with any ratepayer funded state renewable
               energy rebate program, REC purchases, and alternative
               compliance payments.

Also in 2010, the General Assembly added subsection (b) to Section 362 of

REPSA. That new subsection pertinently provides:

               For regulated utilities, the Commission shall further
               adopt rules and regulations to specify the procedures for
               freezing the minimum [renewable energy purchase]1
               requirement as authorized under § 354(i) and (j) of this
               title . . . .

Section 362 is the only explicit statutory reference to rule-making authority

relating to freezing the minimum renewable energy purchase requirements.

       In May 2011, the Commission issued regulations purporting to implement

Section 354(i) and (j) in accordance with the Commission’s authority under

Section 362(b) (the “Commission’s Regulations”). These regulations state:

1
  The statute refers only to the “cumulative solar photovoltaic” requirement in Section 354(i), but
the parties agree that Section 362(b) includes both the solar photovoltaic requirement and the
eligible energy resources requirement.
                                                3
            3.2.21 The minimum percentages from Eligible Energy
            Resources and Solar Photovoltaic Energy Resources as
            shown in Section 3.2.1 and Schedule 1 may be frozen for
            CRECs as authorized by, and pursuant to, 26 Del.[]C. §
            354(i)-(j). For a freeze to occur, [DNREC] must
            determine[] that the cost of complying with the
            requirements of this Regulation exceeds 1% for Solar
            Photovoltaic Energy Resources and 3% for Eligible
            Energy Resources of the total retail cost of electricity for
            Retail Electricity Suppliers during the same Compliance
            Year. The total cost of compliance shall include the costs
            associated with any ratepayer funded state renewable
            energy rebate program, REC and SREC purchases, and
            ACPs and SACPs alternative compliance payments.

                  3.2.21.1 Once frozen, the minimum cumulative
                  requirements shall remain at the percentage for the
                  Compliance Year in which the freeze was
                  instituted.

                  3.2.21.2 The freeze may be lifted only upon a
                  finding by [DNREC], in consultation with the
                  Commission, that the total cost of compliance can
                  reasonably be expected to be under the 1% or 3%
                  threshold, as applicable.

      On October 2, 2015, the Delaware Public Advocate (the “DPA”) filed a

petition with the Commission to re-open the rule-making docket and promulgate

additional regulations. Specifically, the DPA sought to amend the Commission’s

Regulations to specify when a freeze of the minimum renewable energy purchase

requirements may be declared under Section 354 (i) and (j) (the “DPA’s Petition”).

In other words, the DPA sought detailed regulations from the Commission

                                         4
regarding how and when the cost of compliance with the minimum purchase

requirements and the total retail cost of electricity would be calculated.

      The Caesar Rodney Institute (“CRI”) filed a petition supporting the DPA’s

Petition (considered jointly with the DPA’s Petition, the “Petition”). DNREC then

filed a petition to intervene in the docket, and the Commission staff and DNREC

jointly opposed the Petition. The DPA and CRI filed a joint response, and eight

Delaware House of Representative members filed a letter supporting the Petition.

Dr. Jeremy Firestone and the Mid-Atlantic Renewable Energy Coalition filed

written comments opposing the Petition.

      On November 3, 2015, at its regularly scheduled meeting, the Commission

heard oral argument from the parties, deliberated, and voted to deny the Petition.2

The Commission issued its written decision, dated December 3, 2015 (the

“Commission’s Order”), denying the Petition and granting DNREC’s petition for

leave to intervene.3 In its Order, the Commission interpreted Section 354(i) and (j)

as providing “DNREC with the primary responsibility for issuing regulations

governing when a freeze of the minimum percentages of eligible energy resources

and solar photovoltaics may be declared.”4

2
  In re The Del. Div. of the Public Advocate, PSC Docket No. 15-1462, at 49-50 (PSC Hearing
Nov. 3, 2015) (TRANSCRIPT).
3
  Order No. 8807.
4
  Id. at ¶ 19.
                                            5
         On December 7, 2015, the DPA appealed the Commission’s Order. After

the appeal was filed, DNREC issued, on January 1, 2016, regulations governing

when to freeze the minimum renewable energy purchase requirements (“DNREC’s

Regulations”).5 This Court held oral argument on September 13, 2016.

                               THE PARTIES’ CONTENTIONS

         The DPA argues the Commission erred in two ways. First, the Commission

erroneously interpreted Sections 354 and 362(b) to give DNREC the primary

authority to promulgate regulations specifying the procedures for freezing

REPSA’s minimum renewable energy purchase requirements.                  Second, the

Commission improperly delegated to DNREC the Commission’s statutory

authority to promulgate regulations specifying “procedures for freezing” the

minimum renewable energy purchase requirements.           The DPA contends the

Commission abdicated this authority by failing to promulgate detailed regulations

specifying the procedure for freezing the minimum renewable energy purchase

requirements. Instead, the DPA argues, the Commission promulgated regulations

that “simply regurgitate the language of 26 Del. C. §§ 354 (i) and (j),”6 which,

according to the DPA, is not sufficient to comply with Section 362(b).

         The Commission, on the other hand, argues the General Assembly gave

DNREC, not the Commission, the authority to promulgate regulations specifying

5
    Appellee’s Resp. Br. 8.
6
    Appellant’s Reply Br. 3.
                                          6
when to freeze the minimum renewable energy purchase requirements.              The

Commission contends it appropriately declined to address the substantive

calculations of when a freeze should be implemented and the calculation of the

cost of compliance because that calculation specifically is assigned to DNREC in

Section 354(i) and (j).7       The Commission contends DNREC is to determine the

cost of compliance however it chooses and then, if DNREC determines the cost

exceeds the statutory thresholds, the Commission’s Regulations establish the

procedures for further action.8 In other words, the Commission asserts that Section

362 gives it authority to adopt procedural regulations, which apply only if DNREC

first determines the cost thresholds of Section 354 are triggered. It is DNREC, the

Commission contends, that has implicit statutory authority to adopt regulations

relating to how the substantive calculations required by Section 354(i) and (j) will

be made.9

       The Commission further contends it did not abdicate any authority because

the Commission’s Regulations at least minimally complied with the obligation

imposed by Section 362(b) to specify the procedures for freezing the minimum

renewable energy purchase requirements as authorized under § 354(i) and (j).10 In

addition, the Commission posits, since the authority and responsibility for

7
  Appellee’s Resp. Br. 11.
8
  Id. at 14.
9
  Id.
10
   Id. at 10 (citing 26 Del. Admin. C. § 3008-3.2.21).
                                                 7
calculating the cost of renewable energy compliance was given to DNREC, the

Commission would be exceeding its statutory authority by promulgating additional

regulations to specify when to freeze, particularly because, at the time the DPA

filed its Petition, DNREC was completing a lengthy process of promulgating its

own regulations governing when to freeze the minimum renewable energy

purchase requirements.11

                                STANDARD OF REVIEW

       In reviewing a case decision from an administrative agency, this Court

“must determine whether the agency ruling is supported by substantial evidence

and free from legal error.”12 The Court defers to the Commission’s fact-finding if

it is supported by sufficient evidence, “tak[ing] into account the ‘specialized

competence of the Commission.’”13 This Court, however, “may not simply defer

to an agency’s statutory interpretation.”14 Rather, the Court “must perform its own

statutory interpretation,” while “accord[ing] due weight . . . to an agency[‘s]

interpretation of a statute administered by it.”15

11
   Appellee’s Resp. Br. 8 (“These regulations took effect on January 11, 2016.”) (citing 19 Del.
Reg. 643 (Jan. 2016) (Final); 7 Del. Admin. C. § 2102).
12
   Public Water Supply Co. v. DiPasquale, 735 A.2d 378, 381 (Del. 1999) (citing Dept. of Labor
v. Med. Placement Servs., Inc., 457 A.2d 382, 383 (Del. Super. 1983), aff’d 467 A.2d 454 (Del.
1983)); see also 29 Del. C. § 10142.
13
   Reybold Grp. v. Public Serv. Com’n, 2007 WL 2199677, at *5 (citing 26 Del. C. § 510; 29
Del. C. § 10142).
14
   Reybold Grp., 2007 WL 2199677, at *5 (citing DiPasquale, 735 A.2d at 382-83).
15
   Reybold Grp., 2007 WL 2199677, at *5 (“When the issue is one of agency interpretation of
statutory law, and application of that law to undisputed facts, this Court’s review of the agency’s
                                                8
                                       ANALYSIS

       In construing a statute, this Court must search for the legislative intent.16

Courts have no authority to depart from the clear meaning of a statute or ignore its

mandatory provisions.17         If, however, there is more than one reasonable

interpretation, the Court applies accepted methods of statutory interpretation to

determine the legislature’s intent.18 “To that end, the statute must be viewed as a

whole, and literal or perceived interpretations which yield mischievous or absurd

results are to be avoided.”19 This Court “also ascribe[s] a purpose to the General

Assembly’s use of particular statutory language and construe[s] it against

surplusage if reasonably possible.”20

       A. DNREC’s Regulations cannot moot the DPA’s appeal.

       The Commission first argues that the DPA’s appeal is moot because

DNREC promulgated rules regarding the cost calculations under Section 354 and

adopted them in January 2016. The fallacy in this argument is apparent. One

decision is plenary, and it is not bound by the agency’s conclusion.”) (citing DiPasquale, 735
A.2d at 380-81 (citing Stoltz Mgmt. Co., Inc. v. Consumer Affairs Bd., 616 A.2d 1205, 1208
(Del. 1992))); see also E.I. Du Pont Nemours Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113
(Del. 1985).
16
   Zambrana v. State, 118 A.3d 773, 775 (Del. 2015) (citing Spielberg v. State, 558 A.2d 291,
293 (Del. 1989)).
17
   Zambrana, 118 A.3d at 775 (citing Bd. of Adjustment of Sussex County v. Verleysen, 36 A.3d
326, 331 (Del. 2012)).
18
   Zambrana, 118 A.3d at 775 (citing Hudson Farms, Inc. v. McGrellis, 620 A.2d 215, 217-18
(Del. 1993) (citing Coastal Barge Corp. v. Coastal Zone Indus. Control Bd., 492 A.2d 1242,
1246 (Del. 1985))).
19
   Zambrana, 118 A.3d at 775 (citing Spielberg v. State, 558 A.2d 291, 293 (Del. 1989)).
20
   Zambrana, 118 A.3d at 775 (citing PHL Variable Ins. Co. v. Price Dawe 2006 Ins. Trust, 28
A.3d 1059, 1070 (Del. 2011)).
                                              9
agency cannot, through its own purportedly invalid rule-making, moot a challenge

to another agency’s alleged failure to engage in rule-making.        To conclude

otherwise would effectively grant an agency both legislative and judicial powers.

If (as the DPA argues) the Commission had exclusive statutory authority to

promulgate regulations relating to Section 354(i) and (j), and failed to do so,

DNREC could not usurp that rule-making authority by issuing its own regulations

and then moot a legal challenge intended to establish which agency was charged

with adopting regulations. DNREC either has rule-making authority under the

statute, in which case DPA’s appeal fails on its merit, or DNREC lacks rule-

making authority, in which case DPA’s appeal may prevail. Either way, the fact

that DNREC adopted its own regulations has no bearing on the DPA’s appeal

regarding the Commission’s Regulations.

      B. The Commission incorrectly interpreted REPSA to give DNREC the
         authority to promulgate regulations specifying the procedures for
         freezing the minimum renewable energy purchase requirements
         under REPSA.

      Under REPSA, the General Assembly gave DNREC the ability to calculate

cost caps and determine, in consultation with the Commission, whether a freeze

should be implemented and subsequently lifted; it did not give DNREC the

authority to promulgate regulations specifying how the cost of compliance with the

renewable energy mandates and the total retail cost of electricity are calculated.

Rather, the General Assembly afforded the Commission exclusive authority to
                                        10
establish procedures for freezing the requirements. To conclude DNREC has rule-

making authority under the statute would collapse the plain, and presumably

intentional, statutory distinction between creating the regulation and calculating the

cost cap.

          Section 362(b) states “the Commission shall further adopt rules and

regulations to specify the procedures for freezing the minimum [renewable energy

purchase] requirement as authorized under § 354(i) and (j) of this title.” This is the

only explicit rule-making authority granted by the General Assembly. According

the statutory language its plain and ordinary meaning, I conclude that the General

Assembly intended that the Commission have exclusive authority to promulgate

regulations for freezing the minimum renewable energy purchase requirements,

including regulations regarding when and how the calculations will be made.

Based on those regulations, DNREC performs the calculations to determine

whether the cost caps have been exceeded.21 The Commission and DNREC then

consult to determine whether a freeze should be declared and, if so, when it should

be lifted.22

          The Commission contends the General Assembly also intended DNREC to

have rule-making authority, calling attention to the use of the word “procedures” in

Section 362(b). This interpretation, however, is not reasonable. First, to conclude

21
     See 26 Del. C. §354(i) and (j).
22
     Id.
                                         11
DNREC was given implicit rule-making authority would be at odds with the fact

that the General Assembly gave explicit rule-making authority and gave it only to

the Commission.          Moreover, if the General Assembly intended to draw a

distinction between procedural and substantive regulations, it is reasonable and

logical to conclude such distinction would be explicit in the statute or, at a

minimum, reflected in the legislative history. The Commission, however, can

point to no such distinction made by the General Assembly. The most (in fact

only) reasonable interpretation, taking into account the legislative scheme and the

statutory language, is that the General Assembly intended the Commission to adopt

all regulations necessary to implement Section 354(i) and (j.)                       To conclude

otherwise renders the language of Section 362 meaningless.23 In short, the specific

grant of rule-making authority in Section 362(b) does not support the conclusion

that the General Assembly intended implicitly to grant DNREC other, unspecified

rule-making authority.

23
   See Martin v. Am. Potash & Chem. Corp., 92 A.2d 295, 299 (Del. 1952) (“It is elementary that
in construing a statute every clause must be given effect . . . and plaintiffs' proposed construction
of Section 28 would render the phrase ‘at private sale’ superfluous and meaningless. Such a
construction is therefore unacceptable.”); see also Gonzales v. Oregon, 546 U.S. 243, 257 (2006)
(“An agency does not acquire special authority to interpret its own words when, instead of using
its expertise and experience to formulate a regulation, it has elected merely to paraphrase the
statutory language.”).
                                                 12
                                       CONCLUSION

       For the foregoing reasons, the Commission’s Order is REVERSED and

REMANDED for proceedings consistent with this decision.24                            IT IS SO

ORDERED.

24
   In their briefs, the parties identified a secondary issue: whether the Commission could delegate
its rule-making authority to DNREC. The Commission conceded at oral argument that, if the
Court concluded Section 362(b) gave the Commission exclusive rule-making authority, the
Commission could not delegate that authority.
                                                13