Court Opinion

ID: 4950812
Source: CourtListenerOpinion
Date Created: 2021-09-24 13:00:00.866844+00
Date Added: 2024-06-11T08:15:20.713685
License: Public Domain

FRIEDMAN, Judge,
dissenting.
I respectfully dissent. I believe that the Pennsylvania Public Utility Commission’s (PUC) denial of Diamond Energy Inc.’s (Diamond) request for an oral hearing prior to PUC action on Metropolitan Edison Company’s (MeU-Ed) application deprived Diamond of its procedural due process rights.1 Accordingly, I would vacate the PUC’s approval of Met-Ed’s application and remand this case for a proper hearing.
The Majority has reached a contrary result because it concludes that (1) the plain language of the statute does not mandate an oral hearing, and (2) case law allows a paper hearing where there are no disputed facts which, the Majority asserts, is the situation here.2 (Majority Op. at 1367.) I believe that the Majority’s conclusions are erroneous.
I.
First, the plain language of section 519(b) of the Public Utility Code (Code), as amended, 66 Pa.C.S. § 519(b), does require an oral hearing. The statute mandates that the PUC approve or disapprove an application for the construction of an electric generating unit fueled by natural gas after a “hearing.” Section 1903 of the Statutory Construction Act of 1972, 1 Pa.C.S. § 1903, states that
Words and phrases shall be construed ... according to their common and approved usage; but technical words and phrases *1371and such others as have acquired a peculiar and appropriate meaning ... shall be construed according to such peculiar and appropriate meaning or definition.
A “hearing” is a
[proceeding of relative formality (though generally less formal than a trial), generally public, with definite issues of fact or of law to be tried, in which witnesses are heard and parties proceeded against have right to be heard, and is much the same as a trial and may terminate in final order. It is frequently used in a broader and more popular significance to describe whatever takes place ... before administrative agencies as conducted by a hearing examiner or Administrative Law Judge.
Black’s Law Dictionary 649 (5th ed. 1979) (emphasis added). Thus, properly construed, the plain language of the statute requires an oral healing.
Moreover, PUC regulations governing the procedure here, ignored by the Majority, require an oral hearing.3 See 52 Pa.Code §§ 5.1-5.683 (pertaining to “Formal Proceedings”). These regulations state that formal “[h]earings will be held upon the filing of the [petition to intervene], unless waived by the parties.” 52 Pa.Code § 5.201. Clearly, Diamond did not waive its right to a hearing; quite the contrary, Diamond twice specifically requested an oral hearing.4 (R.R. at 65a-72a; 85a-86a.)
The PUC admitted that it failed to comply with applicable regulations when it denied Diamond’s request for a hearing: “To the extent that our procedure in this matter is inconsistent with the Commission’s rules and regulations, the applicable rules and regulations are deemed waived as provided for in 52 Pa.Code § 5.43.” (R.R. at 89a-90a.) Section 5.43 states:
(a) A petition to the Commission for the ... waiver ... of a regulation shall set forth clearly and concisely the interest of the petitioner in the subject matter, the specific ... waiver ... requested, and shall cite by appropriate reference the statutory provision or other authority involved. The petition shall set forth the purpose of, and the facts claimed to constitute the grounds requiring the ... waiver....
52 Pa.Code § 5.43. However, no one complied with these provisions here. No one filed a petition containing a statement of the interest of the petitioner, the specific waiver requested, the authority, the purpose and the grounds for the waiver. The PUC apparently believes that, in spite of the clear language of the regulation, section 5.43 empowers it to deem waived any procedural right conferred upon the regulated community by these regulations. If that is true, then every regulation is meaningless, and the regulated eom-*1372munity is at the mercy of the PUC. Indeed, such is the position of Diamond here.5
II.
Second, contrary to the view espoused by the Majority, case law demonstrates that Diamond was entitled to an oral hearing before the PUC ruled on Met-Ed’s application. The Majority relies upon Pennsylvania Coal Mining Association v. Insurance Department, 471 Pa. 437, 370 A.2d 685 (1977), for the proposition that a paper hearing provides adequate due process where there are no disputed facts. However, Pennsylvania Coal does not stand for that proposition at all; in fact, a proper application of the actual holding in Pennsylvania Coal shows that Diamond is entitled to an oral hearing.
In Pennsylvania Coal, a coal mining association challenged the procedure for establishing insurance rates for black lung disease. The procedure in question provided that a private insurance group propose the rates; the rates would be deemed approved if the Commissioner took no action; and, after the rates took effect, interested parties.had the right to a full hearing. Our Supreme Court initially determined that a hearing was necessary because of the deemed approval. However, the Court further decided that a paper hearing was sufficient because (1) the determination was not likely to turn on witness credibility (only economic or statistical questions were at issue) and (2) interested parties had the right to a full hearing after the rates took effect.6
*1373Applying Pennsylvania Coal to the facts here, it is first and foremost clear that Diamond is entitled to a due process hearing because inaction by the PUC results in deemed approval of Met-Ed’s application.7
However, a paper hearing would be insufficient here because, unlike Pennsylvania Coal, the PUC determination turned on credibility: the PUC did not believe Diamond’s contention that Meb-Ed required baseload capacity but, instead, accepted Met-Ed’s assertion that it needed peaking capacity. In its opinion, the PUC claimed that it was without authority under section 519 to resolve that factual issue. (See R.R. at 350a.) Nevertheless, the PUC, in exercising its authority under section 519 to decide whether Diamond could provide “comparable capacity,” assumed that Met-Ed needed peaking capacity, (R.R. at 350a), an assumption that the PUC never properly tested.8 Inexplicably, the Majority does not even acknowledge that Diamond disputed the type of capacity that Met-Ed needed.9
In addition, a paper hearing would be insufficient here because, unlike Pennsylvania Coal, Diamond has no right to a full hearing after PUC approval of Met-Ed’s application.10 The Majority, for some unknown reason, has not even considered this factor; instead, the Majority has followed the PUC’s misreading of Pennsylvania Coal. However, this court cannot allow an agency to distort case law to suit its own purpose; nor can this court modify the requirements set forth by our Supreme Court in Pennsylvania Coal for determining whether a paper hearing provides a party with sufficient due process.11 Clearly, when all factors are considered here, this court must conclude that Diamond is entitled to an oral hearing.
*1374Thus, because the plain language of the Code and PUC regulations require that the PUC hold an oral hearing and because applicable case law requires an oral hearing under the circumstances present here, I would vacate the PUC’s approval of Met-Ed’s application and remand for a proper hearing.

. Med-Ed applied for permission to construct an electric generating unit fueled by natural gas pursuant to section 519 of the Public Utility Code (Code), as amended, 66 Pa.C.S. § 519 (emphasis added), which states that the PUC shall approve an application for the construction of an electric generating unit fueled by natural gas
(b) .... if, after reasonable notice and hearing, the affected public utility proves, and the commission finds, any of the following:
(1) There are no reasonably available sites on which a unit ... of comparable capacity fueled by coal ... could be operated in compliance with present and reasonably anticipated environmental laws and regulations.
(2) There is a strong probability that construction and subsequent operation of a unit ... of comparable capacity fueled by coal ... would be more costly to ratepayers over the useful life of the ... nongas unit ... than would construction and subsequent operation of the unit proposed by the utility.

. The Majority also maintains that there are no substantial property rights at stake here. (Majority Op. at 1369.) I disagree.
It is well accepted that a substantive property interest may be created by a statute. See Sasko v. Charleroi Area School District, 121 Pa.Commonwealth Ct. 220, 550 A.2d 296 (1988). Here, the Majority acknowledges that the legislative intent of section 519 is to promote the coal industry. (Majority Op. at 1368.) However, the Majority fails to recognize that section 519 of the Code confers upon Diamond a substantial property right in its coal-fired generating unit.
Indeed, Diamond's coal-fired unit is within the legislative contemplation of section 519. If the legislature intended that section 519 apply only to base-load situations, and not where peaking capacity is involved, the legislature could have excluded peak-load situations from the requirements of section 519. It is obvious that the legislature did not exempt peaking activity from the mandate of section 519. Yet, the PUC’s actions here have done just that.

. Met-Ed filed its original application pursuant to PUC regulations at 52 Pa.Code §§ 5.11-5.14. (R.R. at 5a.) Diamond then filed its petition to intervene under 52 Pa.Code § 5.71. (R.R. at 34a.) Met-Ed followed with its answer to Diamond’s petition pursuant to 52 Pa.Code § 5.61. (R.R. at 50a.) Then, after Diamond requested a hearing, Met-Ed responded pursuant to 52 Pa. Code § 5.63. (R.R. at 75a.)

. The Majority concludes that Diamond waived its right to an oral hearing because Diamond failed to object to the lack of oral hearings in its December 15, 1993 letter to the Secretary. (Majority Op. at 1369.) In support thereof, the Majority cites Octoraro Railway, Inc. v. Pennsylvania Public Utility Commission, 85 Pa.Commonwealth Ct. 283, 482 A.2d 278 (1984), which is not applicable here.
In Octoraro, this court cited Pa.R.A.P. 1551(a) for the proposition that an argument raised for the first time in a petitioner’s brief is waived. I fail to see any connection between Octoraro and the present case, where Diamond twice specifically requested an oral hearing. In Diamond’s Response and Request for Hearing, Diamond stated:
[Diamond] hereby ... requests that an eviden-tiary hearing be held in the above docketed proceeding because the Answer clearly demonstrates that there are numerous disputed questions of fact material to the Commission’s consideration ....
(R.R. at 65a.) Subsequently, in the Response of Diamond Energy, Inc. to Metropolitan Edison Reply, Diamond stated:
For the reasons set out above and in its previous pleadings in this docket, Diamond believes that it has raised disputed questions of material fact that must be resolved by a hearing in order for the Commission to make either of the findings required to approve Met-Ed’s application herein.
(R.R. at 85a-86a.)

. The regulations also provide Diamond with the right to conduct discovery. However, the PUC denied Diamond's motion to compel discovery because Diamond did not "initiate discovery as early in the proceedings as reasonably possible.” (R.R. at 341a, n. 9.) The Majority affirmed the denial. (Majority Op. at 1369.) I disagree.
Diamond filed its petition to intervene on September 16, 1993 and filed its request for a hearing on October 28, 1993. Diamond learned for the first time on December 7, 1993 that its request for a hearing was denied and that the PUC would consider only four issues in reaching its decision on Met-Ed's application. (R.R. at 88a-91a.) About one week later, on December 15, 1993, Diamond requested an extension of time to file briefs and affidavits; two days later, Diamond delivered its discovery request to Met-Ed. I believe that Diamond thus initiated discovery as early in the proceedings as reasonably possible.

. In Barasch v. Pennsylvania Public Utility Commission, 119 Pa.Commonwealth Ct. 81, 102, 546 A.2d 1296, 1306 (1988), appeal denied, 523 Pa. 652, 567 A.2d 655 (1989) (emphasis added) (Milesburg I), we summarized the holding in Pennsylvania Coal as follows:
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. Section 519(d) of the Code states: “If the commission fails to approve or disapprove an application within six months after the date on which the application is filed, it shall be lawful for the affected utility to construct the proposed electric generating unit as though the commission had approved the application.” 66 Pa.C.S.A. § 519(d).

. The PUC rested its entire adjudication upon that untested assumption, stating as follows:
given the assumption that Met-Ed needs additional peaking capacity, and given the undisputed fact that a comparable coal-fired peaking unit is not commercially available, we are compelled to accept the Met-Ed’s assumed capacity factor of 15 percent for both the proposed Portland CT and the Clearfield project in order to make a determination pursuant to Section 519.
(R.R. at 350a) (emphasis in original). Thus, the PUC rejected Diamond’s 86.6 percent capacity factor, which is appropriate for a coal-fired base-load unit, concluded that the capital and operating costs of the coal-fired unit would be greater than those of Met-Ed's gas-fired unit, and approved Met-Ed’s application.
I note also that the PUC assumed that Met-Ed needed peaking capacity knowing that a comparable coal-fired peaking unit was not commercially available. Thus, the PUC's interpretation of "comparable capacity" automatically precludes coal-fired units from competing with gas-fired units that provide only peaking capacity. This means that any application for construction of an oil or gas-fired generating unit can defeat section 519(b) by simply asserting that it will provide only peaking capacity. Because the PUC claims here that it lacks authority to investigate the veracity of representations made on a section 519 application, the PUC has created a loophole that, in effect, eliminates section 519(b) provisions altogether.

. The Majority states that Diamond did not dispute that Met-Ed needed peaking capacity. (Majority Op. at 1365.) Quite the contrary, Diamond's entire case rests upon its claim that MetEd requires the baseload capacity that it can provide. In support of its assertion, the Majority erroneously cites page 21 of the PUC opinion. The PUC does not state on page 21, or anywhere in its opinion, that Met-Ed’s need for peaking capacity was undisputed; rather, the opinion states that the PUC assumed that Met-Ed needed peaking capacity. (See R.R. at 350a.)

. In Milesburg I, 119 Pa.Commonwealth Ct. at 103, 546 A.2d at 1306, we stated:
If the commission’s order is affirmed by the courts, then the [approval] ... will not be subject to later challenge in a complaint proceeding before the commission under section 701; that issue will have been fully adjudicated already in these proceedings.

. The Majority also relies upon Lehigh Valley Power Committee v. Pennsylvania Public Utility Commission, 128 Pa.Commonwealth Ct. 276, 563 A.2d 557 (1989), where this court stated that "a hearing or trial procedure is necessary only to resolve disputed questions of fact and is not required to decide questions of law, policy or discretion.” Id. at 289, 563 A.2d at 564. Admittedly, we did not consider the right to a later full *1374hearing to be a factor in Lehigh Valley. Nevertheless, there are at least two disputed questions of fact in this case. First, Diamond disputes that Met-Ed requires peaking capacity. Second, Diamond disputes that there is community opposition to the construction of transmission lines necessary to interconnect Diamond’s generating unit with Met-Ed. (R.R. at 356a.) Thus, even under the standard espoused by this court in Lehigh Valley, an oral hearing is required here.