In re Investigation Into Solarcity Corp.
In re Investigation Into Solarcity Corp.
Opinion of the Court
¶ 1. Petitioner SolarCity Corporation appeals the Public Utility Commission's decision that petitioner violated 30 V.S.A. § 248 and Commission Rule 5.101 by constructing rooftop solar-energy net-metering systems without first obtaining certificates of public good and its imposition of a civil penalty pursuant to 30 V.S.A. § 30.
I. Overview of Net-Metering Process
¶ 2. We begin with a brief overview of the net-metering process. With an exception not relevant here, Vermont law prohibits any corporation from constructing a new electric-generation facility without first obtaining a certificate of public good (CPG) from the Commission. 30 V.S.A. § 248(a)(2). The Commission determines whether to issue a CPG according to the extensive process set forth in § 248. As an alternative to the § 248 process, the Legislature has provided a simplified procedure for the approval of certain small net-metering systems, such as the solar arrays at issue here. Prior to January 1, 2017, that simplified process was codified at 30 V.S.A. § 219a (2016) (repealed by 2013, No. 99 *1258(Adj. Sess.), § 2 (effective Jan. 1, 2017)).
II. Facts
¶ 3. Petitioner has been installing solar net-metering systems in Vermont since 2015. In June 2017, the Commission informed petitioner that it had failed to file registration forms with the Commission for some of the systems it had installed in 2016. Petitioner subsequently discovered additional systems for which it had failed to file registration forms with the Commission in 2015 and 2017. It had filed the registration forms with the interconnecting utilities and the Department. Petitioner attempted to cure its error by submitting 2016 registration forms for the omitted systems; however, for 134 systems, the Commission required registration under the 2017 form. Petitioner did not challenge the Commission's instruction to use 2017 forms to register the systems. Due to a substantial change in the net-metering program between 2016 and 2017, registering the omitted systems under the 2017 form rather than the 2016 form meant a potentially adverse financial impact for petitioner's customers. To mitigate that financial harm, petitioner modified its customer agreements and offered payment adjustments. Petitioner estimated that these efforts would cost the company around $ 200,000 and would protect its customers from any adverse financial impact.
*1259¶ 4. In September 2017, after petitioner had begun working to correct its error, the Department petitioned the Commission to open an investigation into petitioner's business practices. The Commission did so, pursuant to 30 V.S.A. §§ 30, 209, 247, 248, and 8010, and it appointed a hearing officer to review the matter.
¶ 5. Before deciding whether to approve the stipulation, the hearing officer assigned to petitioner's case requested additional information and briefing. After reviewing these additional filings, the hearing officer recommended that the Commission find that petitioner violated 30 V.S.A. §§ 219a and 248 and § 5.101 of Current Rule 5.100, and recommended a $ 1000 civil penalty pursuant to 30 V.S.A. § 30. The Department and petitioner both filed comments objecting to the hearing officer's proposal for decision. Petitioner also filed a motion requesting the Commission to close the investigation. The Department did not oppose petitioner's motion and recommended that the Commission close the docket.
¶ 6. In May 2018, the hearing officer responded to the parties' comments and repeated his recommendations to the Commission, with some modifications. Without further proceedings, the Commission considered the proposal for decision, the objections to the proposal, and petitioner's motion to close the investigation. The Commission adopted the hearing officer's findings, conclusions, and recommendations, with some modifications. The Commission denied petitioner's motion to close the investigation. It found petitioner had violated 30 V.S.A. §§ 219a and 248 and § 5.101 of Current Rule 5.100, and it concluded that a penalty was warranted pursuant to 30 V.S.A. § 30. In recognition of petitioner's efforts to mitigate potential harm to its customers, the Commission set a "relatively small civil penalty" of $ 1000. Petitioner timely appealed.
¶ 7. Petitioner argues on appeal that: (1) the Commission erred in failing to close the investigation based on the joint stipulation and motion for dismissal; (2) its filing registrations were complete and the Commission erred in saying no filings were made; (3) there was insufficient evidence to support findings of violations or liability or the imposition of a civil penalty; (4) the Commission abused its discretion in failing to treat like cases alike; (5) the Commission failed its mandatory duty to permit petitioner to file the registrations; (6) the Commission abused its discretion in failing to waive a strict application of its rules for good cause; and (7) the Commission erred by ignoring petitioner's intent.
*1260III. Stipulation
¶ 8. Petitioner contends that pursuant to Vermont Rule of Civil Procedure 41(a)(1)(ii) and 3 V.S.A. § 809(d), the stipulation and motion to close the investigation effectively concluded the proceedings; therefore, the Commission acted outside its authority in finding a violation and imposing a penalty after the stipulation was filed.
¶ 9. We review with deference the Commission's decisions and its "interpretation of statutes it implements and its rules." In re GMPSolar-Richmond, LLC,
¶ 10. Petitioner's argument essentially asserts that the Commission is only an adjudicative body and that it has no power independently to evaluate the matters within its jurisdiction. This is incorrect. To explain, we begin with background information about the Commission's powers.
A. Commission's Powers
¶ 11. The Legislature has granted the Commission oversight of electricity companies and electric-generation facilities, and the Commission shares this responsibility with the Department. See, e.g., 30 V.S.A. § 203 ("The Public Utility Commission and the Department of Public Service shall have jurisdiction over the following described companies within the State, ... and of all plants, lines, exchanges, and equipment of ... [a] company engaged in the manufacture, transmission, distribution, or sale of gas or electricity ...."). The Commission and the Department are wholly separate bodies. See
¶ 12. With regard to investigations, in various sections throughout Title 30 the Legislature has authorized the Department *1261to petition the Commission to open an investigation, and it has also authorized the Commission to open investigations on its own initiative. See, e.g., ibr.US_Case_Law.Schema.Case_Body:v1">id
¶ 13. The Legislature has invested the Commission with "the powers of a court of record," ibr.US_Case_Law.Schema.Case_Body:v1">id
¶ 14. As we explain below, some of the proceedings that come before the Commission are essentially private disputes that affect only the interests of the parties to the proceeding. Other proceedings more broadly affect the public interest. Where a proceeding involves not only the interests of the parties, but also the interests of the public, the Commission may be responsible for independently evaluating what disposition of the matter is in the public interest.
¶ 15. The Commission made this distinction between its different types of proceedings in Ledgewood, No. 7424,
A stipulation of dismissal applies to a [Commission] proceeding, such as a consumer *1262complaint, initiated by a private party that is akin to a civil court litigation (assuming that the complaint has not prompted an independent [Commission] investigation of a company subject to the [Commission's] jurisdiction). A stipulation of dismissal obviously would not have the effect of dismissing an investigation proceeding opened by the [Commission] or any proceeding in which the [Commission] is required to make an independent determination and decision, such as the statutory approvals required under 30 V.S.A. §§ 107, 108, 109, 231, 248, etc.
[T]his docket resolves only the rights of two participating ... parties, with no decisions being made as to external effects on other ratepayers. Because of these facts, this case is unlike the stipulated resolution of a rate case, a proposed construction project, potential financing, a new service offering, or any other area where the rights of third parties or the general public could be affected. In such cases a hearing officer, on behalf of the [Commission], needs to affirmatively and actively investigate and judge the merits of the facts underlying a stipulated settlement.
Id. at * 1.
B. Rule 41(a)(1)(ii) and 3 V.S.A. § 809(d)
¶ 16. This distinction between different Commission proceedings and its role in these proceedings is important to whether Vermont Rule of Civil Procedure 41(a)(1)(ii) and 3 V.S.A. § 809(d) require the Commission to accept a joint stipulation or request for dismissal. Rule 41(a)(1)(ii) provides that "an action may be dismissed by the plaintiff without order of court ... by filing a stipulation of dismissal signed by all parties who have appeared in the action." In its usual application, "voluntary dismissal by stipulation under Rule 41(a)(1)(A)(ii) is effective immediately upon filing and does not require judicial approval." 9 C. Wright & A. Miller, Federal Practice and Procedure § 2363, at 448 (3d ed. 2008) (reporting federal courts' interpretation of Federal Rule of Civil Procedure 41(a)(1)(A)(ii), which is substantially similar to Vermont Rule 41(a)(1)(ii) ); see also Alma Realty Co. v. Sugerbush Valley Corp.,
¶ 17. But the rationale that ordinarily compels dismissal pursuant to Rule 41(a)(1)(ii) and 3 V.S.A. § 809(d) does not apply in administrative proceedings where the agency has an independent responsibility *1263to protect the public good. As the Secretary of the U.S. Department of Labor reasoned in Bunn v. Foley, "in ordinary lawsuits brought by one private party against another private party, where the rights of other persons will not be affected, settlement of the dispute is solely in the hands of the parties," and therefore a "trial court judge must stand indifferent, and not interfere with the parties' unconditional right to a dismissal by stipulation." No. 89-ERA-5,
C. This Proceeding
¶ 18. Specific to this matter, the Commission opened an investigation into petitioner's business proceedings pursuant to 30 V.S.A. §§ 30, 209, 247, 248, and 8010. Briefly, § 30 authorizes the Commission to impose civil penalties for violations; § 209(a)(3) provides that the Commission has jurisdiction "to hear, determine, render judgment, and make orders and decrees ... in all matters respecting ... the manner of operating and conducting any business subject to supervision under this chapter"; § 247 provides for an additional penalty for violations; § 248 sets forth the Commission's authority and procedures respecting electric-generation facilities; and § 8010 governs the current net-metering-approval process. The parties agreed at oral argument that this proceeding was not an administrative-citation proceeding pursuant to § 30(h), but rather an investigation under the more general provisions of § 30 into whether a penalty was warranted.
¶ 19. The proceedings here did not affect only the participating parties. On the contrary, these proceedings began as an investigation into petitioner's business practices and, more specifically, its failure to obtain Commission approval for some of its net-metering systems prior to construction-a failure that involved petitioner's customers and the public interest. The Legislature has determined that net-metering electricity systems are a matter of public concern that require government regulation, and it has explicitly entrusted the Commission, and only the Commission, with the authority to determine whether an electricity system will promote the public good. See id. § 248(a)(2)(B). Thus, the Commission had a responsibility to independently evaluate the parties' proposal, and it had authority to decide differently than the parties recommended in their stipulation.
¶ 20. Petitioner argues that Gloss requires a different result, but Gloss is consistent with our decision here. 135 Vt. at 420-21,
¶ 21. Petitioner also maintains that the Commission undermined Vermont's public policy favoring settlement in acting contrary to the recommendations of the joint stipulation. See Miller v. Flegenheimer,
IV. Filings
¶ 22. Petitioner contests the Commission's finding that "no filings were made." It urges us to characterize its registration filings as substantively complete, despite its failure to submit the forms to the Commission, because they had been sent to the interconnecting utilities and the Department. Petitioner contends that the plain language of § 219a and §§ 5.108 and 5.110(A) of Prior Rule 5.100 indicate that the Commission had no substantive role in the approval of net-metering systems; thus, absent an objection from the utility, the CPGs became effective despite no involvement from or even notice to the Commission. We generally defer to the Commission regarding the "interpretation of statutes it implements and its rules," GMPSolar-Richmond,
¶ 23. We note that the Commission determined that some of the affected systems were installed before January 1, 2017, when § 219a and Prior Rule 5.100 applied, and some were installed after January 1, 2017, when § 8010 and Current Rule 5.100 applied. Petitioner does not contest that finding on appeal. But petitioner focuses its argument on § 219a and Prior Rule 5.100 and asserts that "[v]irtually all of the 134 systems at issue fell under" § 219a and Prior Rule 5.100. The Commission's opinion, in contrast, considered the regulatory schemes before and after January 1, 2017. We review the merits of the Commission's decision under §§ 219a, 248, and 8010, and under Prior and Current Rule 5.100-the regulatory schemes in effect both before and after January 1, 2017. These statutes and rules all set the same requirements for registering net-metering systems, so there is no reason to do otherwise. Petitioner also notes that nearly all of the affected systems were smaller systems that fell under § 5.110(A) of Prior Rule 5.110, but a few were larger systems that fell under § 5.110(B), which follows a similar scheme *1265as § 5.110(A). Petitioner makes no arguments based on the sizes of the systems. We also do not distinguish between the different systems and do not address § 5.110(B).
¶ 24. Under 30 V.S.A. § 248, "no company ... may begin site preparation for or construction of an electric generation facility ... unless the Public Utility Commission first finds that the same will promote the general good of the State and issues a certificate to that effect." § 248(a)(2).
¶ 25. Likewise, the regulation implementing § 219a provides that "[u]pon filing the Net Metering Registration Form with the Commission, ... the applicant must also submit a copy of the form to the serving electric company and the Vermont Department of Public Service." Prior Rule 5.100, § 5.110(A)(1) (emphasis added). The rule continues:
If no letter raising interconnection issues is timely filed with the Commission by the interconnecting utility, a CPG shall be deemed issued by the Commission on the eleventh day following the filing of the Net Metering Registration Form, without further proceedings, findings of fact, or conclusions of law, and the applicant may commence construction of the system.
¶ 26. Section 8010 does not set registration requirements, instead leaving registration procedures to the Commission. 30 V.S.A. § 8010(c)(3). But the regulation implementing § 8010 provides the following: "A net-metering system ... must be registered with the Commission in accordance with the filing procedures and registration form prescribed by the Commission, *1266" Current Rule 5.100, § 5.105(B) (emphasis added); "[u]pon filing the net-metering registration form with the Commission, the applicant must also cause notice of the form to be sent to the [interconnecting utility] and to the Department,"
¶ 27. According to petitioner, this statutory and regulatory scheme establishes that a system may be "deemed issued" a CPG without any Commission involvement whatsoever. We disagree. The statutes and rules relax the process for obtaining a CPG for qualifying systems, but they do not remove the Commission's jurisdiction over the net-metering-approval process or eliminate its role. On the contrary, they explicitly require an applicant to submit a registration form to the Commission as the start of the approval process. The procedure by which a system may be "deemed issued" a CPG does not begin until the applicant files the registration forms with the Commission. Petitioner's interpretation would place the authority to issue CPGs entirely within the hands of applicants and utilities. Nothing in the statutes or rules supports that result. The Commission retains sole authority to issue a CPG.
¶ 28. Nonetheless, petitioner claims error because Commission Rule 2.106 requires the Commission to "liberally construe[ ]" its rules "to secure the just and timely determination of all issues presented to the Commission." Rules of Practice, Rule 2.100, § 2.106, Code of Vt. Rules 30 000 2000 [hereinafter Rules of Practice 2.100], https://puc.vermont.gov/sites/psbnew/files/doc_library/2100-scope-and-construction-of-rules.pdf [https://perma.cc/7QZ3-NWF2]. But petitioner's failure to file registration forms was not a minor oversight; it was a substantial error. To adopt petitioner's view would not be a liberal construction-it would rewrite the statutory and regulatory scheme altogether. See Lecours v. Nationwide Mut. Ins. Co.,
V. Evidentiary Support
¶ 29. Petitioner maintains that the evidence fails to support the Commission's findings of violation and liability and the imposition of a civil penalty. "We accept the [Commission's] findings and conclusions unless the appealing party demonstrates that they are clearly erroneous, and, in reviewing those findings and conclusions, we defer to the [Commission's] particular expertise and informed judgment." Citizens Utils. Co.,
¶ 30. Petitioner admitted in the Statement of Stipulated Facts that it installed at least 134 systems without first filing the appropriate registration forms with the Commission. This is evidence on which the Commission was entitled to rely. See City of Burlington v. Fairpoint Commc'ns, Inc.,
¶ 31. As we have explained, the only way an applicant could start the streamlined CPG-approval process set forth in § 219a and Prior Rule 5.100 was by filing a registration form with the Commission. The same is true for Current Rule 5.100. By failing to do so, petitioner failed to take advantage of the net-metering-approval process and failed to obtain the necessary CPGs prior to beginning construction, in violation of § 248. Thus, the stipulated facts, statutes, and rules support the Commission's finding that petitioner installed at least 134 net-metering systems without first obtaining the required CPGs.
¶ 32. Nor does it disturb our conclusion that the parties agreed in the stipulation that "no additional financial penalty [was] warranted." An agreement about whether the Commission should impose a penalty says nothing about whether the evidence shows that petitioner committed violations. Furthermore, petitioner is incorrect in asserting that the Department said there was no evidence of a violation. The Department stated that "the Commission may but need not find that [petitioner] violated Title 30." In any case, regardless of the Department's conclusion, the stipulation alone supports the Commission's finding.
¶ 33. Petitioner's additional argument that no evidentiary basis existed for the Commission to find liability and impose a penalty is without merit. The evidence supporting the Commission's finding that petitioner committed a violation also provides an evidentiary basis to find liability and to support the imposition of a penalty. See 30 V.S.A. § 30(a) ("A person, company, or corporation subject to the supervision of the Commission ... who violates a provision of ... section ... 248 of this title, or a rule of the Commission, shall be required to pay a civil penalty ...."). Given the evidence of a violation, the fact that petitioner explicitly refused to admit to liability in its stipulation is irrelevant.
VI. Treatment of Like Cases Alike
¶ 34. Petitioner maintains that the Commission failed to recognize that the filing requirement with regard to the Commission was merely ministerial, and that in failing to do so, it arbitrarily treated this case differently than it did similar cases. Petitioner cites Cady Hill,
¶ 35. Again, we disagree that petitioner's error was nonsubstantial. The requirement to submit registration forms to the Commission is not ministerial. On the contrary, the entire process for the approval for net-metering systems starts with the submission of registration forms to the Commission. See 30 V.S.A. § 219a(c)(1) ; Current Rule 5.100, § 5.105; Prior Rule 5.100, § 5.110(A)(1). By statute, the Commission is entrusted with the sole authority to issue a CPG, whether the CPG is "deemed issued" or directly ordered by the Commission. See 30 V.S.A. § 219a(c)(1) (2016)); 30 V.S.A. § 8010 ; see also 30 V.S.A. § 248. Cady Hill, which addresses slight errors in CPG applications, is inapposite.
¶ 36. Petitioner also contends that the Commission arbitrarily treated this case differently than it did similar investigations cases pursuant to 30 V.S.A. § 30. It cites to two cases in which the Commission dismissed investigations following the stipulations of the parties: In re Deerfield Wind, LLC, No. 17-4311-INV,
¶ 37. In Peck Electric, a landowner and the Town of New Haven complained that Peck Electric had failed to install and maintain adequate vegetative screening, as required by its CPG. No. 17-2591-INV,
¶ 38. Deerfield Wind and Peck Electric are readily distinguishable from the present case. In both Deerfield Wind and Peck Electric, the proceeding produced no clear evidence of a violation, whereas here the stipulation supplied clear evidence that petitioner had constructed at least 134 net-metering systems without first filing the required registration forms with the Commission. As we have stated, that evidence alone supports a finding that petitioner violated 30 V.S.A. § 248. Given that distinction, the Commission did not act arbitrarily in refusing to close the investigation here.
VII. Mandatory Duty to Permit Filing
¶ 39. As an alternative argument, petitioner claims that Rule 2.208 requires the Commission to allow petitioner "to cure any defect or insufficiency" in its filing and that it abused its discretion by failing to afford petitioner this opportunity. Rules of Practice, Rule 2.200, § 2.208, Code of Vt. Rules 30 000 200 [hereinafter Rules of Practice 2.200], https://puc.vermont.gov/sites/psbnew/files/doc_library/Commission% 20Rule% 202.200% 20% 289-15-18% 29% 20Adopted% 20CLEAN.pdf [https://perma.cc/99YD-5L7N]; see also In re Halnon,
¶ 40. This argument has no merit. As we have explained, the net-metering process begins with filing the registration forms with the Commission. Until that is done, there is no filing, and thus no defective filing, that can be cured. See also Rules of Practice 2.200, § 2.204 (establishing that "filing occurs only upon receipt by the clerk or the Commission"). The Commission had no obligation to allow petitioner to "cure" its omission after it had violated § 248 by constructing net-metering systems without first obtaining CPGs.
VIII. Waiver of Strict Application of Rules
¶ 41. Petitioner claims that the Commission abused its discretion by failing to waive "the strict application of its rules," pointing to Commission Rules 1.200 and 2.107.
*1270Petitioner argues that good cause exists here.
¶ 42. It is questionable whether the Commission could have waived the requirement at issue here, at least with regard to the systems governed by § 219a. For those systems, the registration-form-filing requirement was set by statute, not only by rule. See 30 V.S.A. § 219a. The Commission cannot act in a way that contradicts the statutes it implements. See Cady Hill,
¶ 43. Assuming for the sake of argument that the Commission had authority to waive the filing requirement, we review the Commission's refusal to grant a waiver for abuse of discretion. See In re LK Holdings, LLC,
IX. Petitioner's Intent
¶ 44. Finally, petitioner maintains that the Commission impermissibly ignored petitioner's intent. This argument is based on 30 V.S.A. § 30(a)(1), which lists several types of violations that would support a civil penalty. One type of violation occurs when a "person, company, or corporation subject to the supervision of the Commission ... fails, other than through negligence, to furnish any returns, reports, or information lawfully required by it."
¶ 45. Petitioner's argument fails because it is the second category of violation quoted above, not the first, that applies here. Petitioner is again attempting to depict its error as a nonsubstantial, clerical error-a mere failure to provide "returns, reports, *1271or information"-and this misconstrues the facts. The failure to file registration forms here was not a clerical error. It was a substantive violation of § 248. The second category applies, which says nothing about whether the violation was intentional. The Commission did not err in finding a violation regardless of whether petitioner's error was unintentional.
Affirmed.
SolarCity Corporation is now known as Tesla Energy Operations and is a wholly owned subsidiary of Tesla, Inc.
The Public Service Commission's predecessor was the Railroad Commission, which was renamed the Public Service Commission in 1908. 1908, No. 116, § 1; Sabre v. Rutland R.R.,
The act repealing § 219a provided that "§ 219a and rules adopted under that section shall govern applications for net metering systems filed prior to January 1, 2017." 2013, No. 99, § 10(f).
All references to § 219a are to 30 V.S.A. § 219a (2016).
Current Rule 5.100 became effective July 1, 2017, following the installations at issue in this case. From January 1, 2017, through June 30, 2017, an interim version of Rule 5.100 (Interim Rule 5.100) was in effect. Revised Net-Metering Program, Rule 5.100, https://puc.vermont.gov/sites/psbnew/files/doc_library/5100-PUC-attachment-a-onreconsideration_0.pdf [https://perma.cc/QKD2-S8LN]. The provisions at issue here are identical in Current Rule 5.100 and Interim Rule 5.100, so we do not distinguish between the interim and current rules when referencing net-metering regulations in effect following the repeal of § 219a.
Section 8 of Title 30 authorizes the Commission to appoint a hearing officer to "inquire into and examine any matter within the jurisdiction of the Commission," § 8(a), and to "report his or her findings of fact in writing to the Commission in the form of a proposal for decision," § 8(c). The judgment may be rendered only by the Commission.
Petitioner also claims that the Commission erred by ignoring its authority under 30 V.S.A. § 30 to not impose a penalty at all, even after finding a violation. Without commenting on whether the Commission has authority under § 30 to not impose a penalty, despite a finding of a violation, we conclude that this argument is not relevant. The Commission explicitly did not base the penalty on a determination that the statute requires one whenever a violation is found. Rather, the Commission imposed the penalty because it thought it was appropriate to do so based on the facts of the case.
Where another Commission rule or order does not control, the Vermont Rules of Civil Procedure apply to Commission proceedings pursuant to Rules of Practice, Rule 2.100, §§ 2.103-2.104, Code of Vt. Rules 30 000 2000 [hereinafter Rules of Practice 2.100], https://puc.vermont.gov/sites/psbnew/files/doc_library/2100-scope-and-construction-of-rules.pdf[https://perma.cc/7QZ3-NWF2].
The Commission's opinion was written by a hearing officer and then adopted by the Commission without modification. See
Petitioner claims that 30 V.S.A. § 248 does not govern here, and instead § 219a operates alone. Petitioner did not raise this argument below, so normally we would not consider it. In re Lorentz,
Petitioner contends that the exhibits and testimony filed with the Commission after the hearing officer's request for additional briefing do not support the Commission's findings and conclusions. Because the stipulated facts alone support the Commission's findings and conclusions, we do not consider whether the exhibits and testimony provide evidentiary support.
Deerfield Wind, No. 17-4311-INV,
As the Commission notes on appeal, petitioner stipulated that initially it did not request a waiver. Petitioner first raised the waiver issue in its response to the hearing officer's request for additional briefing. Although the hearing officer and the Commission treated petitioner's argument as a request for a waiver, on appeal the Commission argues that petitioner never asked for a waiver because it did not do so initially. We need not decide this issue because, regardless, the Commission did not err in declining to waive the filing requirements.
Reference
- Full Case Name
- IN RE Investigation into SOLARCITY CORPORATION
- Cited By
- 4 cases
- Status
- Published