Relating to Real Estate

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PSC Solar Project Approval Was Not Based on Proper Standard

In Frederick County, Maryland v. LeGore Bridge Solar Center, LLC, No. 1249, Sept. Term 2019, 2020 WL 6892007 (Nov. 24, 2020), the Court of Special Appeals (CSA) reversed a decision of the Public Service Commission (PSC) to grant a Certificate of Public Convenience and Necessity (CPCN) to LeGore Bridge Solar Center, LLC (LeGore) to construct a proposed 20 MW solar farm in Frederick County. Although the CSA recognized the PSC’s preemptive authority over local zoning processes, the CSA ruled that the PSC’s decision was based on an error of law by deeming the applicant to have had a “vested right” to proceed with the project even though the project had not yet begun construction. The CSA held that it could not affirm for any reason that had not been relied on by the PSC. The CSA remanded the case back to the PSC for reconsideration of its decision without improperly relying on the “vested rights” doctrine.

PSC’s Authority over Electric Generating Station Siting

The PSC is an independent statewide agency entrusted with the siting and regulation of generating stations (i.e., power plants) to ensure that Marylanders have an adequate and affordable supply of electricity. In determining whether to grant a CPCN for a particular proposed generating station, the PSC is required to give “due consideration” to a number of factors, including environmental impacts, consistency with local zoning and the recommendation of the local governing body. Recognizing that local governments may not always act in the best interests of the State as a whole, however, the General Assembly has determined that the PSC’s siting authority preempts local zoning and that the PSC is not bound by the local jurisdiction’s laws or recommendation. The PSC’s preemptive authority over the siting of solar electric generating stations was unanimously affirmed in 2019 by the Court of Appeals in Board of County Commissioners of Washington County v. Perennial Solar, LLC, 464 Md. 610 (2019).

PSC Proceedings on LeGore’s CPCN Application

LeGore filed its application for a CPCN with the PSC in October 2016. Before that filing, LeGore received a special exception for the development of its solar project from Frederick County. In the special exception, the County determined that the project was consistent with the County comprehensive plan, was in harmony with the neighborhood and would not have an adverse impact on neighboring properties. During the CPCN process, the project was thoroughly evaluated by PSC Staff and the State’s Power Plant Research Program (PPRP), and the parties agreed to numerous licensing conditions. Both PSC Staff and PPRP recommended approval of the project.

After the record was closed in the CPCN proceeding but before the Public Utility Law Judge (PULJ) could issue a decision, Frederick County moved to intervene in the case and reopen the record. The County argued that its local zoning had changed since LeGore received its special exception and argued that LeGore should go back and apply for approval under the County’s new zoning ordinance. The PULJ rejected the County’s position as unreasonable and recommended granting the CPCN.

The PSC affirmed the PULJ’s decision and granted a CPCN for the project. The PSC reasoned that LeGore had a “vested right” in its special exception and the County’s late intervention in the case would be fundamentally unfair and violate LeGore’s due process rights. In an effort to show some deference to the County, the PSC expressly declined to rely on its preemptive authority as a basis for granting the CPCN.

Court of Special Appeals Decision

In a 2-1 decision, the CSA held that the PSC erred in concluding that LeGore had a vested right in its special exception. Under established law in Maryland, to obtain a vested right to an existing zoning use, the owner must obtain a valid permit and undertake a “substantial beginning in construction.” Because LeGore had not begun construction on the project, it could not have a vested right in its special exception. Similarly, LeGore’s due process rights were not violated because it did not have a vested right.

The majority of the CSA recognized that the PSC’s decision was based on equitable notions of fundamental fairness and that it would be “grossly unfair” to deny LeGore a CPCN under the circumstances. Unfortunately, the PSC decision was premised on a strict legal construct of having obtained a “vested right” and the CSA could not overlook the legal error that tainted the PSC’s reasoning. Because a reviewing court may only uphold the PSC’s decision for the reasons stated by the PSC, and because the PSC had specifically declined to base its decision on the doctrine of preemption, the majority felt that it must remand the case to the PSC to articulate grounds for its decision that is not based on a mistakenly applied concept of vested rights.

The dissenting judge agreed that the PSC’s decision included an error of law by mistakenly applying the vested rights doctrine. However, the dissenting judge would have affirmed the grant of the CPCN because the PSC’s final decision incorporates the PULJ’s more thorough decision, which appropriately applied preemption to reject the County’s arguments. Thus, in the dissenting judge’s view, the PSC’s decision was not ultimately affected by the error of law.

Commentary

The PSC’s decision represents a case of “no good deed goes unpunished.” By trying to be nice to the County and expressly declining to rely on its preemptive authority, the PSC opened the door to an unnecessary legal error that left its decision vulnerable on judicial review. The case will now go back to the PSC for a new decision on LeGore’s CPCN application.

Margaret M. Witherup, Chairperson, and David W. Beugelmans, Member of Gordon Feinblatt’s Environmental and Energy Law Group, represented the applicant LeGore Bridge Solar Center, LLC throughout the CPCN proceedings and on appeal.

For questions, contact Margaret M. Witherup.

 

Maggie Witherup
410-576-4145 • mwitherup@gfrlaw.com