Court Opinion

ID: 4685473
Source: CourtListenerOpinion
Date Created: 2021-05-10 19:04:51.464742+00
Date Added: 2024-06-11T08:04:28.370995
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

Delaware Association of Alternative :
Energy Providers, Inc. ; C.A. No. K20A-09-003 WLW

Appellant,
V.

Chesapeake Utilities Corporation, a
Delaware Corporation and Regulated
Delaware Public Utility,
Division of the Public Advocate, the
Delaware Public Service Commission Staff :
and Public Service Commission of the
State of Delaware,

Appellees.

Submitted: March 5, 2021
Ordered: May 7, 2021

OPINION AND ORDER

Appellees’ Joint Motion to Dismiss
For Failure to State a Claim
Granted.

Francis J. Murphy, Esquire of Murphy & Landon, Wilmington, Delaware; Counsel for
Appellant.

James McC. Geddes, Esquire of Ashby & Geddes, P.A., Wilmington Delaware; Counsel
for Appellee, Delaware Public Service Commission.

Regina A. Iorii, Esquire of Department of Justice, Division of the Public Advocate,
Wilmington, Delaware; Counsel for Appellee, Division of the Public Advocate.

Daniel A. O'Brien, Esquire of Venable, LLP of Wilmington, Delaware and Brian M.
Quinn, Esquire of Venable, LLP, Baltimore, Maryland, Counsel for Appellee, Chesapeake
Utilities Corporation.

WITHAM, R.J.
DAAEP v. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

The Appellees (collectively “Movants”), the Delaware Public Service Commission
(hereafter “PSC”), the Division of the Public Advocate, and Chesapeake Utilities
Corporation (hereafter “Chesapeake”), bring this Motion to Dismiss Appellant's, the
Delaware Association of Alternative Energy Provides, Inc. (hereafter “DAAEP”) appeal
of PSC's Order No. 9635 in Docket No. 20-0357. DAAEP seeks appeal of the PSC order
on numerous grounds, among them errors of law and/or fact. The Movants assert that
DAAEP's complaint brought before PSC was moot and that DAAEP lacked standing to
bring the complaint. This Court has reviewed the parties' motion and response and is
prepared to issue its order affirming the Commission's decision.

Facts and Procedural Background

1. On June 10, 2020, DAAEP filed a complaint with PSC regarding a separate
matter, Docket No. 19-0529, involving a Settlement Agreement between the Movants.
PSC received DAAEP's complaint and filed it as Docket No. 20-0357.2. DAAEP's
complaint attempted to challenge that Settlement Agreement on the grounds that (1) it
exceeded PSC's subject matter jurisdiction; (2) the Settlement Agreement would have
substantial and long-term negative consequences to DAAEP's members; (3) the
Settlement Agreement effectively contradicts previous PSC orders in which DAAEP was
a party; and (4) the Settlement Agreement of Docket No. 19-0529 would violate previous
Settlement Agreements involving the same parties to this case.’ Additionally, DAAEP
sought a stay of PSC's decision in Docket No. 19-0529 in light of its complaint."

2. The Settlement Agreement that DAAEP seeks to challenge regulates the

 

Appellant's Opening Brief at 3.
Id.

Id. at 3 —4.

Id. at 4.

WN —
DAAEP vy. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

conversion of more than 40 Propane Community Gas Systems (hereafter “Systems”)
from propane to natural gas.” The Systems are owned and operated by a wholely-owned
subsidiary of Chesapeake.° DAAEP is an association whose members operate Systems
targeted for conversion by Chesapeake just as Chesapeake has done with those owned by
its subsidiary.’ However, the Settlement Agreement adjudicated in Docket No. 19-0529,
PSC Order 9594, pertained only to those Systems owned by the subsidiary and slated for
conversion by Chesapeake. The process of converting these Systems from propane to
natural gas is a long process that could stretch many years.®
3. PSC issued its order for Docket No. 19-0529 on June 17, 2020, as Order 9594.?
DAAEP's complaint filed under Docket No. 20-0357 was decided by PSC on August 19,
2020, as Order 9635. DAAEP filed its appeal of that decision with this Court on
September 17, 2020. The Movants filed this Motion to Dismiss on October 30, 2020, and
DAAEP filed its Response on November 25, 2020. DAAEP makes this appeal of the
PSC order on multiple grounds:
A) PSC erred as a matter of law in dismissing DAAEP's complaint in order 9635;
B) PSC erred as a matter of fact in dismissing DAAEFP's complaint in order 9635;
C) PSC acted arbitrarily and capriciously in dismissing DAAEP's complaint in order
9635;
D) PSC Order 9653 is unsupported by law and/or by fact;

 

5 Id. It is noted that the parties use two different terms when describing these Systems. Chesapeake
uses “Community Propane System” and DAAEP uses “Propane Community Gas System.” Both
terms describe the same system.

Td.

Id.

Id.

Id. at 3.

wo nonw an
DAAEP vy. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

E) PSC relied on the wrong legal standard when dismissing DAAEP's complaint in
Order 9635;

F) PSC erred in issuing Order 9635 by making findings of fact without affording
DAAEP the opportunity of discovery;

G) PSC lacked subject matter jurisdiction to issue Order 9594;

H) PSC erred in determining DAAEP's complaint moot in Order 9635;

I) PSC erred in determining that DAAEP lacked standing to bring its complaint;

J) PSC erred when it acknowledged that DAAEP was party to written settlement
agreements that are binding with Chesapeake;

K) PSC Orders 9594 and 9635 fail to meet the requirements of the Administrative
Procedures Act, particularly 29 Del. C. § 10128;

L) PSC erred in failing to conclude that 26 Del. C. § 206 affords DAAEP standing to
bring its complaint;

M)PSC erred when it concluded that DAAEP failed to allege that it, and not its
members, will suffer any damage from Movants’ breach of the Commission-
approved Settlement Agreements to which all parties are bound;

N) PSC erred in concluding that DAAEP's complaint was untimely, and making
findings of fact based on communiques with DAAEFP's counsel;

O) PSC erred in interpreting its previous Settlement Agreements involving all parties;

P) PSC erred in failing to conclude that DAAEP was without substantial interest in
the outcomes of Order Nos. 9594 and 9635;

Q) PSC orders are state-sponsored and unlawful impairments of DAAFP's contractual

rights;
DAAEP v. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

R) PSC erred by denying DAAEP standing to bring its complaint;
S) PSC erred when it declared in Order 9635 DAAEP should have offered public
comments to PSC regarding Docket No. 19-0529 before PSC reached its decision
in Order No. 9594;
T) PSC failed to consider Delaware's public policy regarding the expansion of natural
gas infrastructure in Delaware;
U) PSC erred by refusing to allow DAAEFP to challenge Order 9594;
V) DAAEP has standing; and
W)PSC erred because Chesapeake waived any right to oppose the filing of DAAEP's
complaint."
4. This Court heard oral arguments on this matter on March 5, 2021.
Argument of the Parties
5. The Movants argue (1) that DAAEP's appeal of PSC Order 9635 is made moot
by its Order 9594; (2) that DAAEP lacks standing because DAAEP was not a party to
Docket No. 19-0529; (3) PSC has no jurisdiction to hear DAAEP's complaint because
DAAEP is an unregulated competitor of Chesapeake; and (4) DAAEP is collaterally
estopped from appealing. The Movants' argument is based on the assertions that DAAEP
and its member constituents are not affected by PSC Order 9594, and the interest that
DAAEP seeks to protect is outside the scope of PSC's jurisdiction as DAAEP's members
are unregulated propane companies.
6. DAAEP counters that (1) the appeal is not moot because DAAEP is attempting
to raise two points that were not factors in PSC Order 9594; (2) PSC has “broad

 

10 Appellant's Petition at § 7 a—w.
DAAEP y. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

jurisdiction to investigate written complaints concerning a public utility;” (3)
Chesapeake's use of case law to argue collateral estoppel relies on advisory opinions that
have no binding authority; and (4) DAAEP attempted to become a party in Docket No.
19-0529 but technical difficulties and failure of PSC prevented such attempts. During the
oral argument, DAAEP made clear that its argument is simply that Chesapeake's intent
behind seeking the Settlement Agreement codified by PSC Order 9594 is to circumvent
statutory restrictions on PSC's jurisdiction to regulate propane. Such circumvention is a
direct injury to DAAEP's members because the conversion of these Systems from
propane to natural gas pertain to the whole of the propane industry in Delaware and not
just Chesapeake's subsidiaries.
Standard of Review

7. This Court has appellate jurisdiction over Commission decisions through 26 Del.
C. § 510: “The Commission's findings shall be upheld if they are supported by sufficient
evidence, free of error of law and not arbitrary or capricious. When factual issues are
reviewed the Court shall take due account of the presumption of official regularity and
the quasi-legislative function and specialized competence of the Commission”!! “A
reviewing court may accord due weight, but not defer, to an agency interpretation of a
statute administered by it. A reviewing court will not defer to such an interpretation as

712 “Where an agency

correct merely because it is rational or not clearly erroneous.
interpretation is longstanding and widely enforced, a reviewing court would ordinarily

accord greater weight to the underlying agency interpretation of the statute in

 

11 26 Del. C. § 510(d).
12 Chesapeake Utilities Corp. v. Delaware Public Service Comm'n, 2017 WL 2480804 at *2 (Del. Super.
June 7, 2017); quoting Pub. Water Supply Co. v. DiPasquale, 735 A. 2d 378 at 382 — 83 (Del. 1999).

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DAAEP v. Chesapeake Utilities Corp., et all.
C.A. No. K20A-09-003 WLW
May 7, 2021

determining, for itself, the optimal interpretation.” 3

8. Movants seek dismissal on Rule 12(b)(6) grounds which restricts this Court to
considering “the relevant universe of facts...confined to the allegations of the petition.”"
Any “factual matters outside the petition may not be considered in ruling upon a motion
to dismiss.”!° Appellant notes that the appeal is being brought under Rule 72(i). Rule
72(i) states “dismissal [of an appeal] may be ordered...for failure to comply with any rule,
statute, or order of the Court or for any reason deemed by the Court to be appropriate.”
Rule 72(i) incorporates Rule 12(b)(6) by authorizing dismissal “when a party fails to set
forth any semblance of a legal argument upon which relief can be granted.”!7

Discussion

9. At issue in this case is how PSC interprets its statutory authority under 26 Del.
C. § 503, rules governing conduct of hearings; findings and order. Specifically, this
appeal is going to rest on whether DAAEP was a party to the hearing for Docket No. 19-
0529. If DAAEP is found to be a party to that PSC action, then it would have been
entitled to challenge the Settlement Agreement that was the subject of that action.

10. In DAAEP's petition for appeal to this Court, it lists 23 grounds on which it
bases its appeal of the PSC order 9635.'§ The Movants explain that this list of grounds
can be divided between those grounds that speak to PSC Order 9635 (items “A” to “I’”),

 

13 Pub. Water Supply Co., 735 A. 2d at 382 n. 8.

14 Dover Historical Society v. City of Dover Planning Commission, 838 A. 2d 1103 at 1110 (Del. 2003).

15 Id.

16 Woodruff'v. Foulk Manor North, 2016 WL 153269 at *2 (Del. Super. Jan. 6, 2016); quoting Superior
Court Civil Rule 72(i).

17 Id.; citing Joyner v. The News Journal, 844 A. 2d 991 (Del. 2003). See also, Buck v. Cassidy
Painting, Inc., 2011 WL 1226403 at *1 (Del. Super. Mar. 28, 2011).

18 See supra. at n. 10.
DAAEP vy. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

which dismissed DAAEP's complaint as moot, and PSC Order 9594 (items “J” to “W”),
to which DAAEP was not a party nor was it an intervenor.'? Without addressing each
ground individually, this Court agrees with the Movants in that, because DAAEP lacks
standing, those grounds not addressing the issue of standing are rendered moot because
DAAEP was not a party to Docket No. 19-0529 and did not petition to be an intervenor to
Docket No. 19-0529.

11). The chapter of the Delaware Code that defines “party” is Chapter 101,
Administrative Procedures. There “party” is defined as “each person or agency named or
admitted in an agency proceeding as a party, or properly seeking and entitled as of right
to be admitted as a party to an agency proceeding.””’ To be a “party” to a PSC hearing,
the prospective person or entity must meet the definition of “person” and also be
“aoorieved.” Although DAAEP may meet the definition of “person” for the purposes of
Delaware statutory interpretation, it does not meet the definition of “aggrieved.”

12. Under 1 Del. C. § 302(15), “person” is defined as “corporations, companies,
associations, firms, partnerships, societies, and joint-stock companies, as well as
individuals.””! There is no disputing DAAEP's designation as a “person” for purposes of
determining whether it is a “party.” However, DAAEP's designation as a “person” does
not end the analysis.

13. To be “aggrieved” means “that a person or entity [is] subject to the regulations”

of the agency or commission with whom the complaint is filed.” DAAEP asserts that

 

19 Def.'s Motion to Dismiss at 3.

20 29 Del. C. § 10102 (6).

21 1 Del. C. § 302(15).

22 DNREC vy. Delaware Public Service Commission, 2020 WL 888493 at *4 (Del. Super. Feb. 24, 2020)
citing Baker v. DNREC, 2015 WL 5971784 at *10 (Del. Super. Oct. 7, 2015).

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DAAEP v. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

PSC may investigate “any matter” where a public utility is involved, and, despite propane
not being classified as a “public utility” subject to PSC's regulatory jurisdiction, PSC has
jurisdiction to act upon written complaints concerning a public utility.2? Even if this
seeming contradiction in logic were true, DAAEP's claim of being “aggrieved” would fail
because DAAEP is not subject to the regulations that PSC may issue regarding the
conversion of the Systems from propane to natural gas. That was the basis for the
holding in Chesapeake Utilities Corp. v. Delaware Public Service Commission, “that PSC
lacked the statutory authority to allow unregulated utility competitors—in this case,
DAAEP—to intervene in PSC proceedings involving regulated utilities.”

14. DAAEP cannot be an aggrieved party because DAAEP is not subject to PSC's
regulatory jurisdiction because DAAEP and its members were not members of the
“consuming public” under the statute giving PSC its purpose. Additionally, DAAEP
was not a party to PSC Docket 19-0529 and therefore could not have standing to bring
this appeal of Order 9594. DAAEP's argument that regulating the conversion of propane
delivery systems to natural gas delivery systems allows for circumvention of the statute
regarding PSC's lack of jurisdiction over propane is without merit because PSC's
regulatory jurisdiction begins at the moment of conversion from propane to natural gas
and can go no further into the realm of propane.

15. Further, DAAEP's assertion of injury is based in the forward-looking concern
that many of its members have regarding the conversion of the Systems “persist[ing] for

decades.” Standing requires two elements. First, there must be a claim of injury-in-fact.

 

23 Appellant's Response at 5.

24 Appellee's Motion to Dismiss at 4; citing Chesapeake Utilities Corp. v. Delaware Public Services
Commission, 2017 WL 2480804 at *2 (Del. Super. June 7, 2017).

25 Appellee's Motion to Dismiss at 5; citing Chesapeake Utilities Corp., at *7 - *8.

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DAAEP vy. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

Second, the plaintiff's interest must be one that can be either protected or regulated by
statute or by a constitutional guarantee.”° In terms of “grievance[s] widely held,” in this
case an alleged grievance of members of an organization, such grievances are “judicially
cognizable if individual plaintiffs can demonstrate a concrete and particularized injury.”*’
This Court cannot see that there is a judicially cognizable harm done to the members of
DAAEP based on the record provided.*® All that can be ascertained from the response
offered by DAAEP is that members of its association that own Systems are having to wait
an undetermined period of time before these Systems are converted from propane to
natural gas. There is no indication provided by DAAEP or from any portion of the record
that DAAEP or its members have suffered a judicially cognizable harm sufficient to
vacate the PSC's Order 9635 and remand it for further adjudication by the commission.”
16. One last point to make, DAAEP argues that Chesapeake Utilities Corporation
v. Delaware Public Services Commission, a decision by this Court, was not on point and
is a “non-binding, unreported order, and does not constitute stare decisis.”*° In that case,
Chesapeake was appealing a decision of the PSC that granted DAAEP's request to

intervene in an action unrelated to this one. This Court found that PSC erred because it

“exceeded its statutory authority when it granted DAAEFP's petition to intervene...because

 

26 Oceanport Industries, Inc. v. Wilmington Stevedores, Inc., 636 A. 2d 892 at 900 (Del. 1994); quoting
Gannett Co., Inc. v. State, 565 A. 2d 895 (Del. 1989).

27 Dover Historical Soc. v. City of Dover Planning Comm'n, 838 A. 2d 1103 at 1113 (Del. 2003).

28 The petition brought by DAAEP to this Court appears to be a request for an impermissible advisory
opinion because DAAEP cannot credibly claim an imminent harm caused by the Settlement
Agreement involving the Movants for itself as an organization or for its members. Chrysogelos v.
London, 1992 WL 58516 at *4 (Del. Ch. Mar. 25, 1992).

29 The proper remedy DAAEP should seek would be to petition the Delaware legislature to change the
statute pertaining to regulation of propane.

30 Appellant's Response at 5 — 6.

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DAAEP vy. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

the sole interest claimed by the intervenor was as an unregulated competitor”?! DAAEP
argues that this Court lacked jurisdiction to issue its order in Chesapeake Utilities Corp.
because of precedent from a previous case. It is interesting to note that at the time the
order in Chesapeake Utilities Corp. was issued against DAAEP, DAAEP did not appeal
it. In fact, no party appealed that order. If DAAEP wishes to now make the argument that
that Order should not have stood because this Court lacked jurisdiction, then this Court
will have to categorically dismiss such an argument.

17. The apparent reason to attempt to distinguish the Chesapeake Utilities Corp.
case from this one is because DAAEP knew it could not be granted intervenor status in
this present case in which it attempted to stop a Settlement Agreement to which it was not
a party. Instead, DAAEP attempted to intervene without actually going through the
procedural process to become an intervenor because it knew, from Chesapeake Utilities
Corp., that it would not be granted such status. DAAEP makes the argument that it
would have been a party to Docket No. 19-0529 but for a faulty PSC filing system, and it
brings a showing of evidence suggesting that its complaint should have been included in
the file for said docket. However, this was not further developed by PSC in its issuance
of Order 9635, and this Court is not willing to substitute its judgment for that of PSC

personnel in handling DAAEP's complaint.

 

31 Chesapeake Utilities Corp., 2017 WL 248-8-4 at *1.

11
DAAEP y. Chesapeake Utilities Corp., et al.
C.A. No. K20A-09-003 WLW
May 7, 2021

Conclusion
WHEREFORE, for the reasons stated above, this Court GRANTS the
Defendant's Motion to Dismiss on 12(b)(6) grounds of failure to state a claim for which

relief can be granted.

IT IS SO ORDERED.

/s/ William L. Witham, Jr.
Resident Judge

WLW/dmh

12