Matter of Md. Off. of People's Counsel
Date Filed2023-12-22
Docket2033/22
JudgeGraeff
Cited0 times
StatusPublished
Full Opinion (html_with_citations)
In the Matter of Maryland Office of Peopleâs Counsel, et al., No. 2033, September Term,
2022. Opinion by Graeff, J.
REGULATION OF PUBLIC UTILTIES â PUBLIC INTEREST â DISMISSAL
OF COMPLAINT âACCARDI DOCTRINE
The Public Service Commission (the âCommissionâ) does not have unfettered
discretion to dismiss a complaint filed under the Public Utilities Article (the âPUAâ).
Rather, pursuant to COMAR 20.07.03.03A, the Commission may dismiss a complaint only
where it finds that the complaint fails to state a claim upon which relief can be granted.
The Commission may not dismiss a complaint because it has âno interestâ in deciding the
merits of a complaint or because it decides that the issue is not âworthy of [its] time or
resources.â Dismissal of a complaint on a ground other than failure to state a claim violates
the Accardi doctrine, which provides that an agency of the government must observe its
own rules, regulations, or procedures.
The Commissionâs dismissal of the complaint for failure to state a claim without
addressing the PUA was erroneous and/or arbitrary and capricious. The Commission found
that dismissal was warranted because the complaint was an inappropriate forum to address
broader issues related to natural gas. The complaint, however, did not require the
Commission to resolve far-reaching environmental policy issues. Rather, it asked the
Commission to consider whether three specific statements violated the PUA because the
unqualified claims were deceptive. The Commission was not authorized to dismiss the
complaint on the grounds that it involved broad issues that may affect other natural gas
companies because the Commission may only dismiss a complaint for failure to state a
claim.
Dismissal of claims against WGL Energy for violations of the utility code of
conduct based on improper affiliation was an abuse of discretion. The record demonstrates
that there were still facts in dispute regarding the source of the marketing message, and
therefore, dismissal was premature.
Circuit Court for Montgomery County
Case No. C-15-CV-22-001977
REPORTED
IN THE APPELLATE COURT
OF MARYLAND
No. 2033
September Term, 2022
______________________________________
IN THE MATTER OF MARYLAND OFFICE
OF PEOPLEâS COUNSEL, ET AL.
______________________________________
Graeff,
Leahy,
Getty, Joseph M.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Graeff, J.
Dissenting Opinion by Getty, J.
______________________________________
Filed: December 20, 2023
* Tang, Rosalyn, J., and Albright, Anne K., J.,
did not participate in the Courtâs decision to
designate this opinion for publication pursuant to
Md. Rule 8-605.1.
This case arises from two orders issued by the Maryland Public Service Commission
(the âCommissionâ), one of the appellees. Order No. 90057 dismissed the complaint filed
by the Office of Peopleâs Counsel (the âOPCâ), alleging that marketing statements issued
by Washington Gas Light Company (âWashington Gasâ), another appellee, in affiliation
with appellee WGL Energy Services, Inc. (âWGL Energyâ), the third appellee, were
deceptive and misleading in violation of the Public Utilities Act (âPUAâ) and the Code of
Maryland Regulations (âCOMARâ). Order No. 90175 denied the OPCâs request for a
rehearing on the dismissal of the complaint.
The OPC and Sierra Club, appellants, filed separate petitions for review in the
Circuit Court for Montgomery County. The circuit court affirmed the Commissionâs
decisions.
On appeal, appellants present several questions for this Courtâs review, which we
have consolidated into the following question:
Was the Commissionâs dismissal of the OPCâs complaint alleging
deceptive marketing practices under the PUA and a violation of the utility
code of conduct unlawful and/or arbitrary and capricious? 1
1
The OPC raises the following two questions:
1. By dismissing OPCâs complaint based on the âforumâ and
accepting as true Washington Gasâs representations, rather than
addressing the complaintâs legal sufficiency, was the
Commissionâs dismissal unlawful and procedurally defective?
2. Did the Commission act arbitrarily and capriciously when it (a)
did not address OPCâs claims under the Public Utilities Article,
and (b) failed to consider how the marketing impacts greenhouse
gas emission reductions and State climate goals?
For the reasons set forth below, we shall reverse the judgment of the circuit court
and order that court to vacate the Commissionâs orders and remand to the Commission for
further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
I.
Public Utilities Act
The Maryland Public Service Commission was established in 1910. Office of
Peopleâs Counsel v. Md. Pub. Serv. Commân, 355 Md. 1, 24 (1999). âIt is an independent
unit in the Executive Branch of State government,â Md. Code Ann., Public Utilities (âPUâ)
§ 2-101(a) (Supp. 2023), and it supervises and regulates public service companies that
engage in or operate a utility business in the state, as well as third-party suppliers of gas
and electric power. PU §§ 2-112, 2-113, 7-507, 7-603. The Commissionâs authority is
pervasive and governs entry into the industry, safety and service standards, franchise
Sierra Club raises the following three questions:
1. Does the Commissionâs failure to articulate its rationale for
dismissing OPCâs complaint render the Commissionâs decision
arbitrary and capricious?
2. Did the Commission err as a matter of law in resolving issues of
material fact in the absence of any evidence on the record?
3. Did the Commission err when it determined that WGL has a right
of self-certification?
2
activities, the regulation of rates, stock issuance, and reporting requirements. Delmarva
Power & Light Co. v. Pub. Serv. Commân of Maryland, 370 Md. 1, 7 (2002).
Pursuant to PU § 2-113(a) (2022 Supp.):
(1) The Commission shall:
(i) supervise and regulate the public service companies subject to the
jurisdiction of the Commission to:
1. ensure their operation in the interest of the public; and
2. promote adequate, economical, and efficient delivery of utility
services in the State without unjust discrimination; and
(ii) enforce compliance with the requirements of law by public service
companies, including requirements with respect to financial condition,
capitalization, franchises, plant, manner of operation, rates, and service.
(2) In supervising and regulating public service companies, the Commission
shall consider:
(i) the public safety;
(ii) the economy of the State;
(iii) the maintenance of fair and stable labor standards for affected
workers;
(iv) the conservation of natural resources;
(v) the preservation of environmental quality, including protection of
the global climate from continued short-term and long-term warming
based on the best available scientific information recognized by the
Intergovernmental Panel on Climate Change; and
(vi) the achievement of the State's climate commitments for reducing
statewide greenhouse gas emissions, including those specified in Title 2,
Subtitle 12 of the Environment Article. 2
PU § 7-604(a) provides that âthe Commission shall adopt consumer protection
orders or regulations for gas suppliers,â which âprotect consumers from discriminatory,
2
This is the version of the statute in effect at the time the OPC filed its complaint
in November 2021. The General Assembly amended the statute, effective July 1, 2023, to
add (a)(2)(vii), which requires the PSC to consider the protection of a public service
companyâs infrastructure against cybersecurity threats in supervising and regulating public
service companies. Md. Code Ann., Public Utilities (âPUâ) § 2-113(a)(2)(vii) (Supp.
2023).
3
unfair, deceptive, and anticompetitive acts and practices in the marketing, selling, or
distributing of natural gas.â (Emphasis added.) Pursuant to this requirement, the
Commission promulgated regulations, which are codified at MD. CODE REGS.
20.59.07.07(A)(2) (âCOMARâ) (2023) and state, in pertinent part, that: âA supplier may
not engage in a marketing or trade practice that is unfair, false, misleading, or deceptive.â
These regulations do not apply to public service companies. See COMAR 20.59.01.02 &
20.54.01.02.
Washington Gas is a âpublic service company,â authorized to distribute natural gas
to Maryland customers as a utility regulated under the PUA. PU § 1-101(z). 3 WGL Energy
is a âcore service affiliateâ under COMAR 20.40.01.03(B)(4), and a gas supplier pursuant
to PU § 1-101(p)(1). It supplies gas to Maryland customers through its affiliation with
Washington Gas. The OPC asserts that both companies are subsidiaries of WGL Holdings
Inc.
3
PU § 1-101(m) provides:
(1) âGas companyâ means a public service company that:
(i) is authorized to install or maintain facilities in, over, or under
streets for furnishing or distributing gas; or
(ii) owns a gas plant and:
1. transmits, sells, supplies, or distributes artificial or natural
gas; or
2. manufacturers gas for distribution or sale.
(2) âGas companyâ includes a municipal corporation that is in the
business of supplying gas for other than municipal purposes.
4
II.
Complaint
On November 23, 2021, the OPC filed a complaint with the Commission. The OPC
is authorized under PU § 2-204 to represent residential and noncommercial users before
the Commission and request the initiation of proceedings to âprotect the interests of
residential and noncommercial users.â The OPC has statutory standing and is obligated to
âevaluate each matter pending before the Commission to determine if the interests of
residential and noncommerical users are affected.â PU § 2-204(a)(1)(i). In making this
determination, the OPC âshall consider . . . environmental interests of the State and its
residents, including the Stateâs progress toward meeting its greenhouse gas emissions
reductions goals.â PU § 2-204(a)(1)(ii).
The complaint alleged that Washington Gas and WGL Energy violated the PUA and
COMAR by including the following marketing statements in certain customer bills:
Natural gas is a clean, efficient, and reliable energy. Converting an all
electric home to natural gas is the equivalent of planting 2.75 acres of trees
or driving 26,520 fewer miles each year. In addition, natural gas cost[s] 1/3
less than electric, which makes it a smart decision for the environment and
your wallet.
The complaint asserted that these billing statements included âbroad and misleading
claims of environmental benefits from natural gas use,â which could âdeceive and mislead
utility customers about the emissions attributes of natural gas.â
The complaint alleged that the bills included âat least three unfair and deceptive
statements.â First, the statement that â[n]atural gas is a clean . . . energyâ falsely implied
that natural gas use does not result in significant greenhouse gas emissions and was
5
misleading about âother emissions attributes of natural gas.â Second, the statement
comparing conversion of an all-electric home to planting 2.75 acres of trees or driving
26,520 fewer miles each year was deceptive because it lacked context regarding the term
âall electric,â overstated the environmental attributes of natural gas use, and could confuse
consumers regarding the âactual environmental benefits of converting to natural gas.â
Third, the statement claiming that â[n]atural gas costs 1/3 less than electric, which makes
it a smart decision for the environment and your wallet,â was deceptive because it was
unqualified and could âconfuse customers into thinking that natural gasâ was âgenerally
environmentally friendly and âgreen.ââ
The complaint asserted that Washington Gasâ actions in including these statements
on its bills violated PU § 2-113 because deceptive marketing claims were contrary to the
public interest. The actions violated PU § 5-303 because they failed to âaccount for the
quality of the environment through misleading and deceiving customers about the true
environmental cost of increased natural gas consumption.â
The complaint alleged that Washington Gas had advised that the billing statements
were sent by WGL Energy, and the statements were unique to bills issued to customers
supplied by WGL Energy. This âraise[d] significant issuesâ about whether Washington
Gas âengages in joint marketing with its affiliates and whether it treats its affiliates
preferentially, in violation of the utility code of conductâ set forth in COMAR
20.40.02.01(B)(2) & (4).
The OPC attached to the complaint customer bills issued on October 8, 2021, and
November 8, 2021, which contained the marketing statements at issue. The customer bills
6
were on Washington Gas letterhead and included distribution charges from Washington
Gas and supply charges from WGL Energy.
The OPC requested that the Commission grant the following relief:
a. direct Washington Gas and WGL Energy to immediately remove the
billing statement at issue from further customer bills;
b. direct Washington Gas to satisfy this complaint within 30 days by:
1. answering the allegations contained in this complaint;
2. responding to the data requests included in Appendix B;
3. showing cause as to why it should not be subject to civil penalties
under PUA § 13-201 for engaging in deceptive marketing practices
contrary to the public interest and for failing to meet the standard of
safe, adequate, just, reasonable, economical and efficient service and
for not considering the quality of the environment, as required under
PUA §§ 2-113 and 5-303;
c. direct WGL Energy to satisfy this complaint within 30 days by:
1. answering the allegations contained in this complaint;
2. responding to the data requests included in Appendix B;
3. showing cause as to why it should not be subject to civil penalty under
PUA §§ 7-603 and 13-201 for (a) engaging in deceptive marketing
practices and (b) failing to comply with the Commissionâs consumer
protection regulations as contained in COMAR 20.59.07;
d. issue an order levying civil penalties against Washington Gas for at least
$500,000 and WGL Energy for at least $500,000, subject to revision
resulting from further investigation; and
e. issue an order opening an investigation into the transactions of
Washington Gas and WGL Energy to determine whether Washington Gas
is violating the utility code of conduct.
7
III.
Comments Submitted to Commission
On November 24, 2021, in response to the complaint, the Commission initiated a
new docket, Case No. 9673, and it requested comments from interested parties. The Office
of the County Attorney, the Staff of the Maryland Public Service Commission
(âCommission Staffâ), and Sierra Club all submitted comments.
The Office of the County Attorney for Montgomery County filed a letter in support
of the complaint, stating that the complaint raised concerns that merited a thorough
investigation. Noting disputed factual issues, Commission Staff requested the
establishment of a schedule to conduct discovery and the opportunity to respond to
comments from Washington Gas and WGL Energy (the âGas Companiesâ). 4 Commission
Staff indicated that it could not adequately respond without answers to questions, such as:
which [c]ompany was responsible for sending the bill, which [c]ompany was
responsible for the development of the language in question, the analysis and
research that informed the bill messaging in contention, the process by which
other suppliers can send unique bill messaging on the Washington Gas [ ]
bill, and whether the bill message in question was included on any other
supplier and utility consolidated bills.
With regard to the deceptive marketing claims, Commission Staff agreed with the
OPC that, âby not qualifying the bill message regarding environmental benefits, potentially
misleading statements are being made to customers on a nuanced subject.â It noted that
the contentions were dependent on a myriad of fluctuating circumstances, such as spikes
4
Commission Staff asked that parties be given at least 60 days to conduct discovery
and provide written comments.
8
in natural gas prices, the efficiency of customer-specific appliances, and the achievement
of legislative goals over the next decade to reduce greenhouse gas emissions. Without
âcontext or qualifiers,â customers may not be able to make an informed decision on
whether switching to gas would reduce their emissions or result in a cost savings, leading
to potential violations of law governing misleading or deceptive statements. 5
Sierra Club agreed with the OPC that the billing statements were misleading and
deceptive. It characterized the marketing statements in the utility bills as greenwashing,
i.e., âthe act of misleading consumers regarding the environmental benefits of a product or
serviceâ to trick customers who want to make environmentally conscious choices into
âbuying products based on [an] erroneous belief that the products have some environmental
benefit.â Sierra Club agreed that civil penalties should be imposed, but it also asked the
Commission to institute a proceeding requiring Washington Gas to: (1) fund an âeducation
program to inform the public of the negative effects of fossil fuel useâ; and (2) âinstitute a
rulemaking proceeding to developâ regulations governing environmental claims.
Sierra Club argued that the Commission should look to the Maryland Consumer
Protection Act (âMCPAâ) and the Federal Trade Commissionâs Green Guidelines to
determine if the Gas Companies were operating âin the interest of the publicâ when
including the marketing statement in customer bills. It asserted that, under the MCPA, an
5
Commission Staff noted concerns regarding reference to the Maryland Consumer
Protection Act (the âMCPAâ), noting that, pursuant to Md. Code Ann., Com. Law (âCLâ),
§13-104(2) (2013 Repl. Vol.), the MCPA did not apply to a public service company to the
extent its services and operations were regulated by the Commission. Commission Staff
stated that, because âbilling by a gas company is regulated by the Commission, a violation
of the [MCPA] could not be sustained.â
9
âunfair or deceptive trade practice includes any false or misleading statement or
representation which has the capacity, tendency, or effect of deceiving or misleading
consumers.â
Sierra Club then addressed the specific statements. It argued that the Gas
Companiesâ assertion that natural gas is clean energy falsely implied that its use did not
result in any harmful emissions. Sierra Club cited to various studies alleging that emissions
of harmful gases from burning natural gas contribute to climate change and are detrimental
to human health. It also claimed that âresidential GHG emissions are overwhelmingly from
burning gas in homes,â and âgas stoves release toxic pollutants that can damage human
health.â
Sierra Club asserted that the Gas Companiesâ claim that natural gas costs 1/3 less
than electricity was a false and misleading comparison. Relying on a recent Maryland
Department of Environment collaborative study (âE3 Maryland Studyâ), Sierra Club
alleged that, given the improved efficiency of electric equipment and the projected natural
gas rate increases, âall-electric homes cost less to construct and operate than mixed-fuel
homes.â 6 Sierra Club contended that, as consumers move away from gas consumption,
those who transition to natural gas could end up paying more due to rate increases, and
they would not recoup their investment.
Sierra Club also challenged the Gas Companiesâ claim that conversion of an all-
electric home to natural gas is the equivalent of planting 2.75 acres of trees or driving
6
One exception in the cited study was for large existing mixed-fuel commercial
buildings. Retrofitting these buildings for electric could result in increased costs.
10
26,520 fewer miles each year, asserting that this âcomparative statementâ was âdeceptive
and misleading.â It argued that the Commission should require the Gas Companies to show
that they had a reasonable basis for the claim before it was disseminated to customers.
IV.
Briefing Before the Commission
A.
Washington Gasâ Motion to Dismiss
Washington Gas requested that the Commission dismiss the complaint as meritless.
It alleged that the OPC failed to conduct âeven minimal due diligenceâ to determine
whether its claims were warranted by existing law or whether its factual contentions had
or were likely to have evidentiary support.
Washington Gas first clarified that the customer bills at issue were not supplier
consolidated bills as it originally had stated. Instead, they were utility consolidated bills,
issued not by WGL Energy, but by Washington Gas.
Washington Gas argued that it had not engaged in deceptive marketing practices,
asserting that its bill statements were consistent with Maryland energy policy promoting
the expansion of natural gas to support economic growth. It stated that its environmental
statements were accurate and verifiable. Washington Gas addressed each of the claims that
the statements were misleading and cited studies and research to support its claims.
With respect to the characterization of natural gas as âclean energy,â Washington
Gas argued that this was an accurate statement compared to electricity. It stated that the
OPCâs analysis wrongly presumed that alternative forms of energy are cleaner than natural
11
gas. Noting the ongoing national and international debate concerning the impact of
different energy sources, Washington Gas stated that âevery source of energy consumed
by humans causes adverse impacts to the environment,â including renewable energy.
Washington Gas asserted that commercial-scale wind and solar farms cause erosion,
sediment accumulation, and water pollution that can harm animals and ecosystems. It
stated that â[w]ind turbines kill millions of migratory birds and bats each year;
hydroelectric dams block fish migration routes,â which adversely affects their breeding
cycles, and solar panels âincinerate insects and birds.â Washington Gas identified air,
water, and soil pollution risks associated with batteries, chemicals, heavy metals, and other
materials used in wind and solar power farms.
With respect to the OPCâs reliance on the National Association of Attorneys
General (âNAAGâ) Guide to Environmental Marketing Claims for Electricity, which
narrowly defined âclean energyâ as âany energy source that does not cause significant
emissions,â Washington Gas argued that reliance on this definition was misplaced. It stated
that the NAAG Guide was not binding on the Commission and differed from other federal
guidelines assessing environmental benefit claims. Washington Gas cited comments by
Staff to the Federal Trade Commission (âFTCâ), which noted that the terms âcleanâ and
âgreenâ were unlikely to be found âinherently misleading.â
To substantiate its claims that the conversion of an âall-electric home to natural gas
is the equivalent of planting 2.75 acres of trees or driving 26,520 fewer miles per year,â
Washington Gas presented an Energy Solutions Center (âESCâ) model using the most
current data available. Based on this model, Washington Gas claimed that it actually
12
understated the benefits in its marketing statements because switching to natural gas
equates to the planting of 4.6 acres of trees or driving 42,250 fewer miles per year. The
most recent model, therefore, demonstrates that it âhad and continues to have a reasonable
basis for those statements.â
Washington Gas next presented support for its claims that â[n]atural gas costs 1/3
less than electric, which makes it a smart decision for the environment and your wallet.â
Washington Gas contended that, using the ESC Residential Energy Calculator, residential
customers using only natural gas spend 50% less on energy costs than those in an all-
electric home. Although ESC is comprised of energy utilities and equipment
manufacturers promoting the use of natural gas, Washington Gas claimed that the Energy
Calculator is a ârobust, transparent and reliable tool to compare the cost of energy sources,â
and its region-based methodology provides an accurate analysis of energy use and cost.
Washington Gas also argued that, in a previous case, the Commission decided that
electric companies and electricity providers were permitted to self-certify and verify their
environmental statements. It argued that it also should have been offered the opportunity
to self-certify and verify the marketing claims at issue before âbeing subjected to a
groundless complaint.â
Washington Gas denied engaging in a joint marketing venture with WGL Energy
and provided a sworn affidavit in support of its position. Washington Gas stated that it did
not engage in preferential treatment in violation of the utility code of conduct regulations
because the marketing statements appear on âUCBs [utility consolidated bills] of all CSPs
[competitive service providers] utilizing the Company billing option, as well as the bills of
13
Washington Gas customers.â 7 It acknowledged its initial âmiscommunicationâ that the
billing statements were sent by WGL Energy, but it noted that, had the OPC been more
transparent in its inquiry, Washington Gas would have asked for a copy of the bill at issue
and âpossibly avoid[ed] OPCâs error in naming WGL Energy in its Complaint.â
Washington Gas claimed that, âwith minimal due diligence,â the OPC could have easily
discovered that its allegations were false.
B.
WGL Energyâs Motion to Dismiss
WGL Energy moved to dismiss the OPCâs complaint against it for failure to state a
claim upon which relief could be granted. It stated that â[t]he environmental message is
not WGL Energyâs to explain or remove. WGL had nothing to do with any decision to
insert the message in [Washington Gasâ] consolidated bills.â WGL Energy denied that
there was any uncertainty as to the source of the marketing statements and stated that the
customer bills at issue âwere indisputably issued by Washington Gas.â WGL Energy
clarified that it, along with other retail gas suppliers, had used Washington Gasâ
consolidated billing services for more than twenty years, but the billing services were
âthose of Washington Gas, not of WGL Energy.â WGL Energy denied ever engaging in
joint marketing or having any role in the placement of marketing messages on consolidated
7
Washington Gas attached UCBs and CSPs sent to customers in Maryland, DC, and
Virginia, which it alleged showed that the marketing statement was included on all
statements issued by Washington Gas, regardless of the gas supplier and with no preference
given to WGL Energy.
14
bills, explaining that it conducts its own marketing and âhas not, and does not,â utilize
Washington Gasâ consolidated bill services for marketing purposes.
WGL Energy acknowledged that the OPC received misinformation from
Washington Gas in response to its inquiry regarding the source of the messages, but it noted
that the OPC never reached out to WGL Energy to verify the source of the marketing
statements. In support of its motion to dismiss, WGL Energy attached a consolidated bill
sent to the customer of a different retail gas supplier, Dominion Energy Solution Services,
that also used Washington Gasâ billing services. That bill contained the exact same
marketing statement as the one in dispute, but it was from a different supplier, which WGL
Energy asserted confirmed that the OPCâs claims of improper joint marketing were
âpatently falseâ and âmust be summarily rejected.â
Finally, WGL Energy argued that the OPCâs allegations involved âthe inherent
environmental attributes of natural gasâ and broad âissues facing the entire natural gas
industry.â WGL Energy suggested that an inquiry regarding the broader implications of
natural gas use âmight require much of the Commissionâs valuable resources and should
not be limited to one narrow complaint case.â
C.
OPC Response to Motions to Dismiss
The OPC opposed the Gas Companiesâ motions to dismiss, citing studies and
authority that it alleged discredited the Gas Companiesâ claims regarding the
environmental and economic benefits of natural gas. The OPC also argued that there were
15
still genuine issues of material fact as to whether the marketing statements were used in all
UCBs issued to retail supply customers or just to customers of WGL Energy.
The OPC characterized Washington Gasâ claim regarding the OPCâs due diligence
in investigating the source of the customer bills as an attempt to âsmearâ its organization
and distract from its own culpability for the misinformation. The OPC asserted that, once
Washington Gas advised that it had âno control or connectionâ to the marketing claims and
that the billing message was attributable to WGL Energy, the OPC had no reason to further
investigate or contact WGL to confirm. The OPC argued that its pre-filing investigation
âexceededâ its due diligence obligations, and Washington Gasâ âshifting representationsâ
highlighted its own due diligence failures. The OPC asserted that this ongoing uncertainty
as to which customers received the marketing message created a dispute of fact
necessitating discovery and precluding dismissal. 8
The OPC next alleged that Washington Gas improperly attempted to transform a
complaint for deceptive marketing under the PUA into an energy and climate change policy
debate. The OPC urged the Commission to focus on the narrow question of whether the
statements âtend to deceive customersâ and not wade into the ongoing debate over energy
policy and the reduction of greenhouse gas emissions.
The OPC also argued that Washington Gas incorrectly applied consumer protection
law instead of analyzing the OPCâs claim under the PUA. The OPC explained that, in its
8
Although Washington Gas stated that the claims appeared on all USBs, regardless
of affiliation, the OPC identified and attached examples of customer bills from Dominion
Energy, a retail gas supplier not affiliated with Washington Gas, that did not contain the
marketing statements.
16
complaint, it alleged a violation of the public interest provision of the PUA, which
mandates that the Commission shall operate in the interest of the public and
consider . . . the preservation of environmental quality, including protection
of the global climate from continued short-term and long-term warming
based on the best available scientific information recognized by the
Intergovernmental Panel on Climate Change . . . [and] the achievement of
the Stateâs climate commitments for reducing statewide greenhouse gas
emissions.
PU §§ 2-113(a)(1)(i), (a)(2)(v)(vi). The OPC clarified, however, that Maryland consumer
protection law was instructive in analyzing whether the marketing materials violated the
PUAâs public interest provision. The OPC contended that, under the FTC Policy Statement
on Substantiation and Green Guide regulations, the Gas Companiesâ failure to include
qualifying language in the marketing statement constituted an omission of âmaterial
information likely to mislead the customer to their detriment.â It noted that, even the
support provided by Washington Gas included claims that natural gas was cleaner than
other fossil fuels or that it was relatively clean. The OPC argued that, in failing to include
qualifying language when asserting that ânatural gas is clean,â Washington Gas violated
state and federal law prohibiting deceptive marketing. 9
The OPC challenged Washington Gasâ data on the efficiency and cost-savings
related to natural gas use, as well as its claims that natural gas is a âsmart decision for the
environment,â alleging that Washington Gas based its analysis on past circumstances
9
The OPC also contended that Washington Gas failed to acknowledge negative
health impacts associated with nitrogen oxide (âNOxâ) emissions from natural gas use,
such as respiratory issues, as well as environmental and health concerns related to the
extraction process, leaks, and fire and explosions.
17
where electricity was powered âalmost exclusivelyâ with fossil fuels. In 2022, however,
33.5% of all electricity produced in Maryland had to come from âqualifying renewable
sources, such as solar and wind,â and by 2030, that percentage would increase to 50%.
Without this qualifying information, the statements were deceptive and misleading
because, although natural gas use may be more cost-effective under certain circumstances,
that is not always the case.
The OPC next argued that Washington Gas failed to âsubstantiate all reasonable
interpretationsâ of its marketing statement. It asserted that several of the studies relied on
by Washington Gas were outdated and inaccurate. For example, although the 2019 NIST
study stated that âa natural gas HVAC system is currently more economical overall than
an electric one,â that study was based on data from 2008, when renewable sources
accounted for only 5% of the regionâs electric grid fuel.
The OPC dismissed Washington Gasâ assertion that converting an all-electric home
to natural gas is the equivalent of planting 2.75 acres of trees or driving 26,520 fewer miles
each year as an unsubstantiated comparison. The OPC claimed that Washington Gas relied
on an industry group tool calculation based on emissions from passenger vehicles, not
utility emissions, to conclude that conversion benefits are even greater than originally
stated. In addition, regarding its original marketing claim, Washington Gas improperly
relied on national, instead of regional, data when using the Energy Solutions Centerâs
Residential Energy Calculator. When Maryland-specific data was used, the results showed
only 0.3 fewer cars and 0.4 acres of trees planted. The OPC further argued that, when the
use of a high-efficiency electric heat pump for home and water heating is factored in,
18
conversion to natural gas would result in adding more car miles to the road and âremoving
trees from the environment.â The OPC asserted that the claims were thus deceptive
because all reasonable interpretations of the conversion comparison could not be
substantiated.
Finally, the OPC urged the Commission to reject Washington Gasâ argument that it
should have been permitted to self-certify its marketing message before being the subject
of a complaint. It argued that, in addition to Washington Gasâ initial denial of any
connection to the marketing content, this argument missed the point that the marketing
messages were âdeceptive on their faceâ because they were not true without qualification.
Because the message lacked context or qualification, self-certification âcould not save the
marketing messages from their inherently deceptive messaging.â
D.
Sierra Club Opposition
Sierra Club filed oppositions to each of the Gas Companiesâ motions to dismiss. It
contended that, because there was no statute or regulation providing the analysis for the
Commission to follow in considering a motion to dismiss for failure to state a claim upon
which relief should be granted, the Commission should apply the framework set forth under
Maryland Rule 2-322(b), addressing the failure to state a claim in courts. Using that
framework, the Commission was required to accept all facts alleged in the complaint as
true. Moreover, dismissal was inappropriate because WGL Energyâs contentions
âdemonstrate a factual dispute, not a failure to state a claim.â Sierra Club asserted that the
issue was not which company sent the bills, but rather, it was which company was
19
responsible for the marketing messages. Sierra Club dismissed evidence submitted by
WGL Energy showing that the bills at issue went to its customers as well as to other non-
affiliate service providers because the attached bill went to a Virginia customer, not a
Maryland one. Sierra Club thus argued that WGL Energy did not refute its claim that only
Maryland customers of WGL Energy received the bill at issue.
Sierra Club then addressed WGL Energyâs claim that the complaint involved broad
policy implications that should be addressed in a different forum. Sierra Club agreed that
the Commission should institute a proceeding to address the future of the natural gas
industry given Marylandâs emission reduction goals. Sierra Club emphasized, however,
that such a proceeding should be in addition to, not in the place of, the Commissionâs
determination on the merits of the claims set forth in the OPCâs complaint, which involved
specific accusations of deceptive and misleading marketing statements in violation of the
PUA.
In its opposition to Washington Gasâ motion to dismiss, Sierra Club challenged the
assertion that natural gas promotion is consistent with current Maryland energy policy,
citing the 2016 passage of the Greenhouse Gas Emissions Reduction Act (âGGRAâ), which
aims for a 40% reduction in greenhouse gas emissions by 2030. 10 Sierra Club explained
The commitments specified in Title 2, Subtitle 12 of the Environmental Article at
10
the time the complaint was filed included a reduction in statewide greenhouse gas
emissions of 25% from 2006 levels by 2020, and of 40% from 2006 levels by 2030. Md.
Code Ann., Environment (âENâ), §§ 2-1204, 2-1204.1 (2021 Supp.). EN § 2-1204.1 was
amended in 2022 to require a further reduction in statewide greenhouse gas emissions of
60% from 2006 levels by 2031. Md. Code Ann., Environment (âENâ), § 2-1204.1 (2023
Supp.) In addition, Section 2-1204.2 requires the state to âachieve net-zero statewide
greenhouse gas emissions by 2045.â
20
that, to achieve these goals, the Maryland Department of the Environment (âMDEâ)
created a Greenhouse Gas Reduction Plan, which called for a 50% reduction by 2030 and
proposed âincentivizing increased deployment of efficient electric heat pumps to heat
homes and businesses.â Sierra Club also noted that Marylandâs Renewable Portfolio
Standard calls for 50% of retail electricity sales to come from renewable energy sources by
2030.
Sierra Club next argued that Washington Gas could not substantiate all its marketing
claims because the studies on which it relied in its opposition did not âprovide a reasonable
basis for supporting [its] broad claimsâ and were insufficient âin light of the entire body of
relevant and reliable scientific evidence.â As did the OPC, Sierra Club identified
deficiencies in the studies relied on by Washington Gas.
V.
Commissionâs Order
On February 7, 2022, the Commission issued an order dismissing the OPCâs
complaint, without holding a hearing. The Commission first found that the record was
clear that Washington Gas, not WGL Energy, issued the utility-consolidated bills
containing the marketing statements at issue. Therefore, the Commission concluded that
WGL Energy âshould not have been a party to th[e] Complaint,â and it dismissed the
Complaint against WGL Energy. It stated that this rendered âthe claim of inappropriate
affiliate interaction moot.â
With respect to the deceptive marketing claims against Washington Gas, the
Commission stated:
21
[T]he complaint fails to adequately demonstrate a violation of state law or
regulation in support of its broad allegations regarding the environmental
attributes of natural gas.[n] As Washington Gas notes, Maryland has allowed
self-certification of marketing claims. If OPC had revealed its concerns with
the language included on gas bills to Washington Gas at the outset and
requested an explanation, modification or removal of the bill message, the
utility would have likely done so - or, at a minimum, a conversation would
have occurred. But that did not occur, and now a significant amount of time,
resources, and ratepayer dollars have been spent litigating a complaint that
fails as a matter of law.
[n] Public service companies regulated by the PSC are exempt from the
Consumer Protection Act. Comm. Law Art. §13-104(2).
Finally, the Commission stated that it:
agrees with WGL Energy and Washington Gas that a complaint against one
utility is an inappropriate forum to address the broader issues raised by
natural gas and its role in greenhouse gas emissions. The record establishes
that Washington Gas did not provide any special benefit to WGL Energy by
attaching this marketing language as Washington Gas provided numerous
bills from other natural gas suppliers that contained the same language.
Given that this was a utility-specific complaint that did not include the other
natural gas companies in the State, it is clear that this complaint is not the
proper forum in which to address such broader issues, even acknowledging
that the Commission now has a statutory obligation to consider climate
change.
Accordingly, the Commission ordered that the complaint be dismissed and the request for
an investigation was denied.
In dissent, Commissioner Michael T. Richard stated that he supported appellantsâ
request for an investigation into the billing relationship between Washington Gas and WGL
Energy, stating that Washington Gasâ own âverbal and written responsesâ raised legitimate
questions as to which entity was responsible for the marketing messages and left appellants
with âfew options other than to requestâ an investigation. Commissioner Richard also
agreed that Washington Gas should âcease using the gas-advertising messageâ at issue. He
22
noted that the majority did not address the OPCâs false advertising claims, which the
Commissionâs own staff supported, and it failed to âadequately addressâ Washington Gasâ
culpability for undermining its own credibility. Addressing the majorityâs conclusion that
the Commission was an inappropriate forum for a complaint against one utility,
Commissioner Richard stated that the Commission could expand the investigation to
include other utilities, instead of dismissing the complaint. He also questioned why the
company would not âsimply agree â voluntarily â to cease repeating the unqualified claim
that switching from an all-electric residence to one using natural gas necessarily results in
a cleaner environment and less expensive energy bills.â
VI.
OPCâs Request for Rehearing
The OPC requested a rehearing of the Commissionâs order on several grounds.
First, the OPC argued that the Commission misinterpreted the scope of its complaint, which
was limited to a specific advertisement on Washington Gasâ bills and did not require broad
findings that would impact the natural gas industry. 11 The OPC stated that its complaint
raised only the issue of âwhether Washington Gas violated the Public Utilities Article by
failure to qualify and contextualize its broad environmental marketing statements about
natural gas.â
The OPC next argued that the Commission erred in finding that it did not
demonstrate a violation of any state law or regulation. It alleged that the only support for
11
For example, the OPC stated that the unqualified statement that natural gas is a
clean energy could be changed to say it is âa relatively clean energy source.â
23
this conclusion was that âpublic service companies regulated by the PSC are exempt fromâ
the MCPA, but the complaint did not allege an MCPA violation. The OPC reiterated that
the legal basis for its claims was PU §§ 2-113 and 5-303, which govern the public interest
and the environmental policy goals in performing the Commissionâs regulatory functions.
It argued only that the MCPA was instructive on the assessment of deceptive marketing.
The OPC also argued the Commissionâs finding that gas companies may self-certify
their marketing claims was not supported by the record. It noted that the issue whether the
Commission should allow gas companies to self-certify their marketing statements, and
âwhat such a process would look like,â was not fully briefed by any party. Although the
Commission previously allowed for self-certification of environmental statements by
electric companies and providers, that authority followed the formation of a working group
and a lengthy deliberative process, which would be warranted on this issue. The OPC was
not aware of any similar proceeding for gas companies, and the Commissionâs decision to
dismiss the complaint, which alleges that the claims are false, left âno apparent avenue for
parties to challenge self-certification.â 12
Finally, the OPC contended there was still an issue of fact as to which customers
were receiving the marketing messages. Prior to filing the complaint, the OPC contacted
Washington Gasâ counsel regarding the marketing messages, and he advised that
Washington Gas had âno control over or connection toâ the statements. In its motion to
12
With regard to the Commissionâs finding that the OPC should have first reached
out to Washington Gas to express its concerns with the marketing statements, the OPC
noted that such efforts would be âat odds with the fact of this caseâ because âWashington
Gas denied having any âcontrol over or connection toâ the marketing content.â
24
dismiss, however, Washington Gas admitted that it was in fact responsible for issuing the
marketing statements. Washington Gas claimed that the message was on every utility-
consolidated bill issued. To support its claim, it provided samples of bills to customers
with third-party suppliers other than WGL Energy that contained the marketing statements.
In its response, the OPC challenged Washington Gasâ claim by providing nine utility-
consolidated bills that did not contain the marketing message, as well as an affidavit from
a retail supply customer of Dominion Energy stating that the marketing statement was not
on her utility-consolidated bill. The OPC asserted that not all customers with a third-party
supplier received the statements at issue, and therefore, âWashington Gasâs blanket claims
as to who receives th[e] message cannot be true.â
In response, Washington Gas argued that, although the Commission may consider
new facts pursuant to PU § 3-114(a)(1), the OPC failed to meet this standard for a rehearing
because it did not offer any new factual or legal grounds for modifying the Commissionâs
original decision. With respect to which customers received the marketing messages,
Washington Gas changed its position again, stating that only autopay customers received
the marketing messages. It explained that invoices to these customers do not include
remittance instructions, and therefore, there is room on the invoice for a bill message.
Based on this discovery, Washington Gas stated that the âreach of the marketing
statementsâ is nearly 80% less than previously understood.
The OPC replied, noting that Washington Gasâ concession regarding the reach of
its marketing statements constitutes a fact justifying a rehearing. The OPC also alleged
that this new discovery belied the Commissionâs finding that this issue could have been
25
resolved with better communication between the parties and demonstrated the existence of
an on-going factual dispute, which precluded dismissal of its complaint.
VII.
Commission Order
On April 20, 2022, the Commission issued an Order Denying Rehearing. It
reiterated its earlier conclusion that the âcomplaint regarding a bill messageâ is not âthe
proper forum to address broad environmental and economic issues relating to the use of
natural gas.â The Commission found that the OPC âdid not provide any new or persuasive
reason to reconsiderâ its order dismissing the complaint. 13
In a concurring statement, Commissioner Odogwu Linton stated that he concurred
with the Commissionâs decision that the denial of the OPCâs request for rehearing is
âlegally supported,â but he noted that the decision did not approve or endorse the message,
which he found to be âmisleading because of its lack of context and specificity.â He stated
that, if Washington Gas intended to continue to use this bill message, and if the
Commission became aware of any harm to customers, Washington Gas would bear âthe
burden and risk for any negative impacts on customers attributable to this message.â
VIII.
Judicial Review in Circuit Court
Both the OPC and Sierra Club filed in the Circuit Court for Montgomery County
petitions for judicial review of the Commissionâs order dismissing the complaint and its
13
Because Commissioner Richard filed a dissenting opinion, he did not participate
in the Order Denying Rehearing.
26
order denying the OPCâs request for rehearing. The court consolidated the appeals, the
parties fully briefed the issues, and the court held a hearing on November 3, 2022.
The OPC argued that the Commissionâs decision lacked a reasoned analysis, noting
that the Commission admitted in its papers in the circuit court that it âsimply has no interest
in opening a proceeding to investigate a short statement on Washington Gasâ residential
bill[s].â The OPC compared the Commissionâs statement to a âtrial court saying, you
know what? Maybe they stated a claim, maybe they didnât, but I donât have any interest
in hearing this, so Iâm going to dismiss the case.â Although the Commission âis entitled
to a lot of deference . . . they donât get deference to decide not to do their job.â The OPC
also argued that the existence of a policy issue does not authorize a court to abstain from
addressing the merits. It asserted that affirming the Commissionâs decision would render
the complaint provision in the PUA âimpotent, useless, [and] meaningless.â Because the
PUA is a âconsumer protective statuteâ itself, âthe default has to be in favor of the
customers.â 14
With respect to self-certification, the OPC pointed out that Washington Gas âbacked
off from thatâ issue in its brief. The OPC argued that giving an âirrebuttable presumption
to the utilities to marketâ through the self-certification process âwould be an abdication of
[the Commissionâs] responsibility to supervise and regulate.â The OPC also claimed that
the self-certification process governing electric suppliers does not apply to gas suppliers or
gas companies.
14
Counsel for the OPC spoke on behalf of the OPC and Sierra Club.
27
The OPC next argued that the Commission could rule on its deceptive marketing
claims without implicating broader policy issues related to natural gas use by simply ruling
on whether Washington Gasâ unqualified statements violated the PUA. The OPC stated
that the Commission, in its Memorandum of Law filed in response to its petition for judicial
review, claimed that âall energy is dirty . . . thereâs no such thing as clean energy,â while
seemingly defending Washington Gasâ unqualified marketing statement that natural gas is
âclean.â The OPC alleged that this concession illustrated precisely why the unqualified
statements were potentially harmful to consumers and how they violated the PUAâs public
interest provision.
The OPC then addressed Washington Gasâ assertion in circuit court that it had
removed the statement at issue from its bill. It argued that this did not render the claim
moot because it also sought civil penalties in its complaint.
Regarding WGL Energy, the OPC noted that, contrary to the Commissionâs finding,
the OPC did attempt to identify the source of the message before filing its complaint but
was told that Washington Gas had no connection to or control over the marketing
statement. Acknowledging that WGL Energy may not be involved in the marketing
message, the OPC stated that they âdid not know for sureâ because of Washington Gasâ
changing story and because there had been no discovery.
Finally, when questioned by the Court regarding other available avenues to address
the marketing issues, the OPC stated that the Commission could address the issues in a
rule-making or hold that the advertising should be stopped pending further evaluation of
the claims. The OPC explained that the Commission âdeals with far more complicated
28
issues than this all the time,â and it often will address complex issues in a contested case
in addition to opening a broader proceeding to address industry-wide ramifications.
The Commission argued that it âabstainedâ from ruling on the deceptive marketing
claims because it did not want to address âgeneral policy issues that would affect other gas
companies.â Counsel stated that he believed the Commission would âbe more than happy
to open up a rule-making or work group or . . . general proceeding for all stakeholdersâ to
address âhow they should characterize their product in light of the environmental concernsâ
mandated by the legislature. The Commission conceded that it has âhandled plenty of
deceptive marketing claims,â issuing civil penalties and show cause orders against one
party, âusually a third party supplier . . . [b]ut it could be anything.â The Commission then
asserted that it is not required to issue a show cause order, and it has discretion to âeither
exercise or not exercise jurisdictionâ in a particular case.
Washington Gas argued that, because the Commission articulated its reasoning for
dismissing the complaint, including an âimproper procedural posture,â self-certification,
and inapplicability of the MCPA, its decision was not arbitrary and capricious. Washington
Gas claimed that an agencyâs ruling on whether natural gas is clean would âencroach[ ] on
the authority of the legislature.â
On December 22, 2022, the court affirmed the Commissionâs decision to dismiss
the OPCâs complaint. The court stated that, under PU § 3-203, Commission decisions are
considered prima facie correct and âshall be affirmedâ unless they are arbitrary and
capricious or legally incorrect. When an agency acts in its discretionary capacity, its
actions âhave a non-judicialâ nature and are, therefore, owed a higher level of deference.
29
The court explained that the Commissionâs determination was âlike a form of [abstention]
in a senseâ and noted that it seemed better to address policy issues in a forum where all
stakeholders could be involved. The court concluded that, although âreasonable minds
could disagree,â the Commissionâs decision that a policy decision on clean energy claims
would not be appropriate in a âsingle utility caseâ was not arbitrary and capricious and did
not violate any other laws. 15
This appeal followed. 16
STANDARD OF REVIEW
The standard of review of Commission decisions is set forth in PU § 3-203:
Every final decision, order, or regulation of the Commission is prima facie
correct and shall be affirmed unless clearly shown to be:
(1) unconstitutional;
(2) outside the statutory authority or jurisdiction of the Commission;
(3) made on unlawful procedure;
(4) arbitrary or capricious;
(5) affected by other error of law; or
(6) if the subject of review is an order entered in a contested proceeding
after a hearing, unsupported by substantial evidence on the record
considered as a whole.
15
The court noted that Washington Gas filed âa significant amount of information .
. . which would support their positionâ that the standards were accurate. It noted that the
viewpoint of what constitutes clean energy âcan be in the eye of the beholder.â
16
This Court has jurisdiction to hear this appeal pursuant to PU § 3-209, which
provides: âA party aggrieved by a final judgment in any proceeding under this subtitle
may appeal the judgment to the Appellate Court of Maryland in the manner provided by
law for appeals in other civil cases.â PU § 3-209 (2023 Supp.).
30
Accord Md. Office of Peopleâs Counsel v. Maryland Pub. Serv. Commân, 461 Md. 380, 391
(2018).
This Court has explained the scope of our review as follows:
Because a final decision of the Commission is prima facie correct, it âwill
not be disturbed on the basis of a factual question except upon clear and
satisfactory evidence that it was unlawful and unreasonable.â Office of the
Peopleâs Counsel v. Maryland Public Service Commission, 355 Md. 1, 14
(1999). Indeed, if reasoning minds could reasonably reach the Commissionâs
decision from the facts in the record, then the decision is based upon
substantial evidence, and we will not reject that conclusion. Liberty Nursing
Center, Inc. v. Department of Health and Mental Hygiene, 330 Md. 433,
442-43(1993). Maryland Office of Peopleâs Counsel v. Maryland Pub. Serv. Commân,226 Md. App. 176, 190-91
(2015) (quoting Mid-Atl. Power Supply Assân v. Maryland Pub. Serv. Commân,143 Md. App. 419, 432
(2002)). The Commission must, however, articulate the basis for its decision; it is not the courtâs responsibility to âsearch the record before the Commission to determine if there exists evidence to support its conclusions.â Baltimore Gas and Elec. Co. v. Pub. Serv. Commân of Md.,75 Md. App. 87, 97-100
(1988) (remanding to
Commission when it failed to state with particularity why the company failed to establish
required procedures for awareness, alertness, and diligence).
On legal questions, however, PU § 3-203 ârequires no greater deference to the
Commission than any other agency.â Md. Office of Peopleâs Counsel, 461 Md. at 394. Issues of law âare completely subject to review by courts.âId.
(quoting Commcân Workers of America v. Pub. Serv. Commân,424 Md. 418, 433-34
(2012)).
Finally, as we have explained:
31
in reviewing a decision of an agency, our role âis precisely the same as that
of the circuit court.â Department of Health & Mental Hygiene v. Shrieves,
100 Md. App. 283, 303-04 (1994). Consequently, we âdo not evaluate the
findings of fact and conclusions of law made by the circuit court.â Consumer
Protection Division v. Luskinâs, Inc., 120 Md. App. 1, 22 (1998), revâd in
part on other grounds, 353 Md. 335 (1999). This Court is not concerned with
whether the circuit court applied the correct standard of review so long as we
are satisfied that the agency decision is proper. Giant Food, Inc. v.
Department of Labor, Licensing and Regulation, 124 Md. App. 357, 363
(1999), revâd on other grounds, 356 Md. 180, 183(1999). Maryland Office of Peopleâs Counsel,226 Md. App. at 191
.
DISCUSSION
The OPC contends that the Commissionâs decision to dismiss the complaint should
be reversed because it was made on unlawful procedure, arbitrary and capricious, and
affected by an error of law. See PU § 3-203(3)-(5). It challenges the decision on several
grounds. First, it argues that the dismissal of the complaint was unlawful because the
Commission does not have âdiscretion to dismiss a procedurally lawful complaint within
the Commissionâs jurisdiction without addressing whether the alleged conduct violates the
Public Utilities Article.â It notes that the Commission dismissed the marketing claim on
the ground that a complaint proceeding was not the right âforum,â but pursuant to COMAR
20.07.03.03A(3), the Commission may dismiss a complaint only when it âfails to state a
claim upon which relief can be granted.â Second, the OPC argues that the âdismissal of
WGL Energy was unlawful because it assumed the truth of Washington Gasâs factual
assertions,â instead of properly assuming the truth of the facts âpleaded in the complaint.â
Third, the OPC contends that the dismissal order is arbitrary and capricious because (a) it
did not address the OPCâs claims under the PUA in dismissing the complaint and (b) it did
32
not consider how the marketing impacted greenhouse gas emission reductions and climate
goals. 17
Sierra Club contends that dismissal of the complaint was unlawful and arbitrary and
capricious, raising several of the points argued by the OPC. It argues that the
âCommissionâs unexplained conclusion that OPCâs [c]omplaint fails to demonstrate a
violation of state law or regulation is arbitrary and capricious.â It asserts that PU § 2-113
required the Commission to investigate whether the statements were deceptive and
misleading and inconsistent with the Stateâs ability to achieve its climate commitments.
Sierra Club argues that the âunsupported conclusionâ that Washington Gas had a right to
self-certification was arbitrary and capricious, and the denial of the OPCâs request for a
rehearing was arbitrary and capricious because Washington Gas presented new facts.
The Commission argues that it has broad authority to âset its own docket, initiate its
own investigations, and decide which issues . . . are worthy of [its] time and resources.â It
asserts that it may âdecide not to entertain [a] complaint,â as long as the order dismissing
the complaint âarticulate[s] its reasoning,â which it did in finding that the âbroader issues
of the role of natural gas . . . were not appropriate for a complaint proceedingâ against one
gas company.
17
Appellants conceded at oral argument that the marketing statement had been
removed from the customer bills a few months after the Commissionâs decision.
Appellants argued, however, that the claim is not moot because the complaint requested
civil penalties and an investigation, in addition to removal of the statements from the bills.
We agree.
33
Washington Gas contends that the Commissionâs decision to dismiss the complaint
based on the âinappropriateness of the forumâ was a reasonable exercise of its âbroad
discretion to dismiss complaints.â It asserts that the Commissionâs finding that âthe
complaint failed to adequately demonstrate a violation of state law or regulationâ was
reasonable because the complaint, among other things, did not specifically allege how the
marketing statements violated the PUA, and it relied on statutes, such as the MCPA, that
did not apply to Washington Gas. It contends that the Commissionâs reasoning is âclear
and easy to follow,â and there are alternative procedural and administrative mechanisms
available to appellants to address their concerns, including a petition for a regulatory
rulemaking procedure to establish guidelines for those types of statements. Finally,
Washington Gas asserts that the dismissal of WGL Energy was not arbitrary and capricious
because the OPC âdoes not actually dispute that the [marketing] statements were not
printed on any WGL customersâ bills.â 18
I.
Dismissal of Complaint Against Washington Gas
A.
Authority to Dismiss
We begin our analysis with the authority of the Commission to dismiss a complaint.
The OPC contends that the PUA sets the limits of the Commissionâs discretion, and it does
18
WGL Energy filed a line joining and adopting the arguments contained in
appelleesâ briefs. WGL Energy did not participate in oral argument.
34
not grant âdiscretion to dismiss complaints alleging harm in violation of the PUA without
addressing the complaintâs legal sufficiency.â The OPC asserts that dismissal for failure
to state a claim is proper if the Commission determines the conduct alleged is not contrary
to the public interest and does not otherwise violate the PUA, but the Commission does not
have discretion to dismiss a complaint that states a legal claim for which it can grant relief.
The Commissionâs response in this case has been that it can dismiss a complaint
when it has âno interestâ in addressing the complaint or if it decides that the issue is not
âworthy of [its] time or resources.â In the circuit court, the Commission stated in its
memorandum of law that it âsimply has no interest in opening a proceeding to investigate
a short statement on Washington Gasâs residential bills and using Washington Gasâs
arguably true claims to initiate a broad proceeding involving national energy policy.â In
its appellate brief, counsel for the Commission asked this Court to rule that it had the
authority to decide which issues were âworthy of the time and resourcesâ to examine
violations. At oral argument, counsel for the Commission challenged this Courtâs ability
to provide a remedy, asking if the Court was âgoing to remand and order us to care about
this complaint.â
We disagree with the Commissionâs position that it has an unfettered right to dismiss
a complaint, including because it has âno interestâ in deciding the complaintâs merits. As
indicated, PU § 2-113(a) provides that the Commission âshall supervise and regulate the
public service companies subject to the jurisdiction of the Commission to,â among other
things, âensure their operation in the interest of the public.â PU § 2-113(a)(1)(i). A holding
that the Commission has unbridled discretion to dismiss a complaint would undermine the
35
statutory mandate that the Commission hear complaints to ensure that utilities act in the
public interest. See Md. Office of Peopleâs Counsel, 461 Md. at 403 (âIt is true that the
public interest is important to nearly everything a utility does.â); Bell Atlantic of Md., Inc.,
366 Md. at 20 (âThe [PUA] allows the Commission to serve as a forum to address
consumer complaints.â).
The procedure for handling complaints filed with the Commission is governed by
PU § 3-102 and COMAR 20.07.03.03. PU § 3-102(a) provides that â[a]ny person may file
a complaint with the Commission,â and â[t]he complaint shall be in writing and set forth
circumstances that allege a violation of this division by a public service company.â PU §
3-102(f) provides:
Unless a complaint is voluntarily satisfied, the Commission shall take final
action on each complaint by issuing an order that:
(1) dismisses the complaint;
(2) directs full or partial satisfaction of the complaint; or
(3) directs any action that the Commission considers to be warranted.
The Commission relies on the authority in PU § 3-102(f)(3), allowing it to direct
âany action that the Commission considers to be warranted,â which it argues includes âthe
authority to decide not to entertain the complaint at that time.â Washington Gas agrees,
but it also argues that the Commission was authorized to dismiss the complaint under PU
§ 3-102(f)(1), asserting that the statute does not limit the basis for dismissing a complaint.
We agree that PU § 3-102(f) does not limit the grounds for dismissing a complaint.
COMAR 20.07.03.03, however, which addresses complaint procedures, does limit the
36
grounds on which the Commission may dismiss a complaint. 19 Specifically, COMAR
20.07.03.03A provides that:
When a complaint is received, the Commission may:
(1) Conduct an ex parte investigation;
(2) Issue a satisfy or answer order to the public service company
complained of, in a manner prescribed by the Commission; or
(3) Dismiss the complaint if it fails to state a claim upon which relief
can be granted.
Thus, pursuant to COMAR 20.07.03.03A, the Commissionâs discretion to dismiss a
complaint is limited to situations where it finds that the complaint fails to state a claim
upon which relief can be granted.
The OPC argues that dismissal of a complaint on a ground other than a failure to
state a claim violates the Accardi doctrine. See United States ex rel Accardi v.
Shaughnessey, 349 U.S. 260, 268 (1954). This doctrine, which the Supreme Court of Maryland adopted, in a modified form, provides that âan agency of the government generally must observe rules, regulations or procedures which it has established and under certain circumstances when it fails to do so, its actions will be vacated and the matter remanded.â Pollock v. Patuxent Inst. Bd. of Review,374 Md. 463, 503
(2003). This doctrine is âconsistent with Marylandâs body of administrative law, which generally holds that an agency should not violate its own rules and regulations.âId.
The Commission does not dispute the general rule that agencies must follow their
own regulations. It notes, however, that there is an exception for certain procedural rules.
19
Pursuant to PU § 3-101(a), â[a] proceeding before the Commission shall be
governed by the regulations and practices of the Commission in conformity with this title.â
37
To be sure, the Supreme Court of Maryland has adopted an exception to the Accardi
doctrine, âwhich provides that the doctrine does not apply to an agencyâs departure from
purely procedural rules . . . [that] are adopted for the orderly transaction of agency
business.â Id. If an agency rule or regulation âaffects individual rights and obligationsâ
or âconfers important procedural benefits,â however, the Accardi doctrine requiring the
agency to follow its regulations applies. Id.
Here, we conclude that the exception to the Accardi doctrine does not apply because
COMAR 20.07.03.03A(3) impacts the rights of residential customers, whom the OPC is
statutorily obligated to protect. Accordingly, the Commission is required to follow
COMAR 20.07.03.03A, and dismissal of a complaint is warranted only if it fails to state a
claim upon which relief can be granted. The Commission cannot dismiss a complaint
simply because it is ânot interestedâ or does not want to address it.
B.
Failure to State a Claim
We thus turn to the grounds cited in the Commissionâs Order for dismissing the
OPCâs deceptive marketing claims. The Commission stated that the OPC âfail[ed] to
adequately demonstrate a violation of state law or regulation in support of its broad
allegations regarding the environmental attributes of natural gas.â This indicates a
dismissal based on the failure to state a claim upon which relief may be granted. 20
20
The Commission referenced in a footnote COMAR 20.07.03.03(A), and the
authority to dismiss a complaint if it failed to state a claim upon which relief may be
granted.
38
The OPC and Sierra Club contend that the Commissionâs finding that the Complaint
failed to âadequately demonstrate a violation of state law or regulationâ was erroneous
and/or arbitrary and capricious. They assert that the ruling failed to address the legal
insufficiency of the complaint and failed to address the PUA at all, in violation of PU § 3-
113. 21 They argue that an agencyâs decision cannot be sustained âif the legal basis of that
decision is uncertain or if the decision avoids the facts and law at issue.â
The Commission Order discussed three points in support of its finding that the OPC
complaint failed to state a claim for which relief can be granted: (1) public service
companies regulated by the PSC are exempt from the Consumer Protection Act; (2)
Maryland has allowed self-certification of marketing claims; and (3) the OPCâs complaint
against one utility was an âinappropriate forum to address the broader issuesâ relating to
natural gasâs role in greenhouse gas emissions. We analyze each of those statements, in
turn.
21
PU § 3-113(a) provides:
(a) A decision and order of the Commission in a contested proceeding shall:
(1) be based on consideration of the record;
(2) be in writing;
(3) state the grounds for the conclusions of the Commission; and
(4) in the case of a complaint proceeding between two public service
companies, be issued withing 180 days after the close of the record.
(Emphasis added.)
39
1.
Maryland Consumer Protection Act
After stating that the complaint failed âto adequately demonstrate a violation of state
law or regulation,â the Commission dropped a footnote stating that â[p]ublic service
companies regulated by the PSC are exempt from the Consumer Protection Act.â
Appellants argue that this footnote, coupled with the lack of any citation to the PUA,
implies that the Commissionâs ruling was premised on the MCPA exemption for public
service companies. The problem, appellants assert, is that the complaint did not allege a
violation of the MCPA; rather, it cited to the MCPA only as instructive in the evaluation
of whether the marketing messages were deceptive and misleading in violation of PU §§
2-113(a) and 5-304. They allege that the Commission erred in failing to address the PUA
claims and in âsimplistically statingâ that the MCPA did not apply to its claims.
Washington Gas argues that the OPCâs complaint was âvague as to whether it was
alleging a violation of the [M]CPA,â and it was reasonable for the Commission to interpret
the complaint to allege a violation of the MCPA. 22 It argues that the footnote in the order
merely clarified that the MCPA was not applicable to Washington Gas, but the decision
was not based on the MCPA.
A review of the complaint reveals that it clearly alleged violations of the PUA.
Although the complaint stated that the MCPA âis instructive on the Commissionâs
22
The Commission does not address the specific claims raised by appellants in this
regard, other than its assertion that it can decide which cases âare worthy of its time and
resources.â
40
assessment of deceptive marketing and consumer protection violations,â the complaint was
based on violations of: (1) PU § 2-113, on the ground that deceptive marketing claims were
âcontrary to the public interest and the adequate, economical and efficient delivery of
utility services in the Stateâ; and (2) PU § 5-303, because the claims did not âmeet the
standard of safe, adequate, just, reasonable, economical and efficient service and fail to
account for the quality of the environment through misleading and deceiving customers
about the true environmental cost of increased natural gas consumption.â The relief
requested included that the Commission order appellees to show cause why they should
not be subject to civil penalties pursuant to the PUA.
Although the complaint clearly asserted violations of the PUA, the Commissionâs
Order did not refer to the PUA. Rather, its statement that the complaint failed âto
adequately demonstrate a violation of state law or regulationâ is followed immediately by
the footnote that the MCPA did not apply to public service companies. It is, therefore,
unclear whether the finding that the complaint failed to state a claim was based on a finding
that the MCPA did not apply to Washington Gas. To the extent the Commission made
such a finding, it was erroneous or arbitrary and capricious because the complaint was not
based on a violation of the MCPA.
2.
Self-Certification
After the statement that the complaint failed to demonstrate a violation of state law
or regulation, the next statement is: âAs Washington Gas notes, Maryland has allowed self-
41
certification of marketing claims.â Sierra Club correctly points out that this âbald
assertionâ was made without explanation or factual support.
The Commission did not cite to, and the PUA does not provide, any authority for
gas companies to self-certify environmental marketing claims. The parties cite to one
previous instance where the Commission permitted self-certification and verification. This
did not, however, involve gas companies. Rather, it involved electric companies and
electricity producers, which, pursuant to PU § 7-505(b)(4), were required to provide
customers with information regarding the fuel mix of the electricity. After an in-depth
rule-making process, including the formation of an Emissions Disclosure Working Group,
comments from multiple industry stakeholders, and a hearing, the Commission adopted the
initial proposed Environmental Information Disclosure Rules, noting that âit is imperative
that emissions and fuel mix information be provided in an easy to understand and consistent
format.â Provision, Regul. of Elec. Serv., Order No. 76241, 2000 WL 1283749 (Md.
P.S.C.) (Case No. 8738, June 15, 2000).
In a subsequent order, Provision, Regul. of Elec. Serv., Order No. 77412, 2001 WL
1824061(Md. P.S.C.) (Case No. 8738, December 11, 2001), the Commission considered whether third-party verification or self-certification would be the best approach to ensuring accuracy in disclosure of fuel mix and emissions data.Id.
After considering stakeholder
comments, the Commission concluded that a third-party emissions and fuel mix tracking
system would ensure accurate information and best serve the public interest, but it allowed
self-certification if: (1) the provider demonstrated that use of the third-party verification
system was too burdensome; (2) the party documented that it had sufficient controls to
42
assure that the disclosures met the accuracy standards; and (3) the standards adopted were
âsubject to audit by the Commission when necessary.â Id.The Commission stated that, with respect âto electric companies and electricity providers making environmental claims,â the Commission would permit self-certification and verification, but it reserved the right to audit reports âto ensure adequacy and accuracy,â and it stated that it could âimpose civil penalties for any willful or negligent error made by any provider in reporting fuel mix and emissions data.âId.
The Commissionâs summary statement here is markedly different from the
extensive process undertaken, and the controls in place, regarding self-certification in the
electricity industry. The OPC contends that âany irrebuttable âself-certificationâ of a
marketing claim would be an abdication of the Commissionâs statutory obligation to
âregulate and superviseâ public utilities under [the] PUA.â Appellees do not dispute this
assertion, and they do not rely on the statement regarding self-certification as a proper basis
to affirm the dismissal of the complaint.
Indeed, the Commission has taken the position in these proceedings that the
sentence on self-certification is not a basis for affirming its decision to dismiss the
complaint. At the hearing in the circuit court, counsel for the Commission stated that â[w]e
mentioned self-certification in our order . . . [but] [t]hat really had nothing to do with it.â
Similarly, in this Court, the Commission did not rely on self-certification as a basis to
uphold its Order, asserting instead that the basis for the decision was that it did not want to
make a ruling on the broad issue of what constitutes clean energy. At oral argument in this
43
Court, neither the Commission nor Washington Gas maintained that self-certification alone
could justify upholding the Commissionâs decision.
We agree with the parties that this bald statement, regarding a prior instance of self-
certification in very different circumstances, is not a basis to uphold the decision to dismiss
the complaint. We turn, therefore, to the basis for the decision argued by appellees, i.e.
that a complaint was an inappropriate forum to address the claim of deceptive marketing.
C.
Inappropriate Forum
The Commissionâs third finding was that dismissal was warranted because âa
complaint against one utility is an inappropriate forum to address the broader issues raised
by natural gas and its role in greenhouse gas emissions . . . , even acknowledging that the
Commission now has a statutory obligation to consider climate change.â Appellees argue
that this was the primary basis for the dismissal of the complaint.
The OPC asserts that its complaint alleged that âa specific marketing message on
Washington Gas customer bills was deceptive and misleading,â and it sought a
Commission determination on that specific message, âan end to that marketing, and civil
penalties.â The complaint was not âagainst the gas industry generally or . . . the future of
gas in the state.â The OPC asserts that the question raised in the complaint could âbe
answered narrowly without (or at least without necessarily) addressing broader policy
matters, or by addressing broader issues of energy policy.â Regardless, the complaint
could be dismissed only if it âfails to state a claim upon which relief can be granted.â The
44
OPC argues that, by dismissing the complaint for a different reason, the Commission
âviolated its own procedural rules.â
The OPC contends that, even if the complaint required âresolving broad issues,
dismissal for that reason would be improper,â asserting that âan agency cannot ignore the
legal basis of a valid complaint simply because the complaint may implicate policy.â The
OPC acknowledges that the Commission has discretion to determine how to resolve a
complaint raising broad issues. It asserts, however, that âwhat the Commission cannot do
is abdicate its statutorily mandated responsibility for determining whether a public utility
is violating the PUA.â We agree.
Initially, we agree with the OPC that the complaint did not, as Washington Gas
suggests, ask the Commission to declare âthe role of natural gas in the Stateâs energy
future.â Nor did it require, as the dissent concludes, that the Commission âadopt broad
policy pronouncements regarding natural gas and climate change.â Rather, the OPC asked
the Commission to consider whether three specific statements contained on a Washington
Gas bill violated the PUA because the unqualified claims â[in]accurately portray[ed] the
impacts of their services.â 23 The issue whether the three statements were deceptive because
23
The dissent notes that Washington Gas provided documentation to support its
contention that the statements were not deceptive or misleading, and therefore, there was
no remaining dispute. Although it is true that Washington Gas provided support for its
marketing statements, the OPC and Sierra Club challenged this documentation, arguing,
among other things, that the studies that Washington Gas relied on were outdated and
inaccurate. The Commission did not decide whether Washington Gas had shown that its
claims were substantiated, or whether they could not be substantiated. Rather, it declined
to make any findings on these disputed claims regarding whether the three specific
statements were false or misleading.
45
they were not substantiated, not qualified, or lacked context was a legal issue, and a finding
on that legal issue could be issued in a way that did not amount to a policy rule of
widespread application. The Commission could have decided that the statement regarding
natural gas being clean energy needed to be qualified, to say, for example, that it was
relatively clean. Similarly, it could have decided whether the specific statements, i.e.
whether converting an all-electric home to natural gas was the equivalent of planting 2.75
acres of trees, was or was not substantiated.
We note that the Commission itself characterized the OPC complaint as ânarrowâ
because it involved the âinclusion of a message printed on certain customer bills of a single
natural gas utility company operating in Maryland.â And the Commission has
acknowledged in this litigation that it has adjudicated deceptive marketing claims in the
past, that it has jurisdiction over the deceptive marketing claims in this case, that it could
have decided if the specific statements here were deceptive, and that is has the authority to
issue civil penalties âagainst a utility or a third party supplier for deceptive marketing.â
Even if a Commission decision regarding the marketing statements could affect
other utility companies, that is not a proper ground for dismissal. See Delmarva Power &
Light Co., 370 Md. at 34-35 (â[A]gencies are not precluded from announcing new
principles in adjudicative proceedings,â and agencies must have authority to address issues
on a case-by-case basis in fulfillment of their administrative obligations.). As indicated,
the regulations provide that the only basis to dismiss a claim is on the ground that it fails
to state a claim upon which relief can be granted. See COMAR 20.07.03.03A(3). The
46
ground given by the Commission, that the complaint involved broad issues that might
affect other natural gas companies, is not an authorized basis to dismiss a complaint.
By dismissing the complaint on a ground other than that it failed to state a claim
upon which relief can be granted, the Commission violated COMAR 20.07.03.03A(3) and
the Accardi doctrine. To vacate the agency decision under the Accardi doctrine, however,
the party alleging a violation must show that the violation resulted in prejudice. Baltimore
Police Depât v. Antonin, 237 Md. App. 348, 369-70, cert. denied461 Md. 459
(2018), cert. denied139 S. Ct. 1214
(2019). Dismissing a complaint on a ground not authorized
certainly results in prejudice to the party filing the complaint, and appellees do not argue
to the contrary. Accordingly, we hold that the Commission erred as a matter of law and/or
was arbitrary and capricious in dismissing the complaint against Washington Gas regarding
the deceptive marketing claims.
II.
Dismissal of Claims Involving WGL Energy
The complaint alleged that the OPC talked to Washington Gas about the marketing
statements, and Washington Gas advised that the statements were on a bill issued by WGL
Energy, and Washington Gas had âno control or connection toâ the marketing contents.
Based on that conversation, the complaint alleged that Washington Gas âappear[s] to
violate the utility code of conduct,â codified in COMAR 20.40.02.01, 20.40.02.02, and
20.59.07.07, by engaging in marketing with a core service affiliate, WGL Energy, and
failing to afford non-affiliate suppliers with a similar marketing opportunity. The
47
complaint also alleged that WGL Energy violated the consumer protection regulations
governing gas suppliers set forth in COMAR 20.59.07.
Washington Gas responded with varying statements. In response to the complaint,
Washington Gas said that, contrary to its initial response, it was responsible for the
marketing statement, which it said was on every utility consolidated bill regardless of the
customerâs retail supplier. After the OPC provided information to the contrary,
Washington Gas explained, in response to the OPCâs request for a hearing, that the
statements were included only on bills sent to âautopayâ customers.
In the Commissionâs order dismissing the complaint and denying the request to open
an investigation into the transactions of Washington Gas and WGL Energy, the
Commission stated that â[t]he record is clear that Washington Gas generated the utility-
consolidated billsâ at issue. Based on this conclusion, the Commission stated that âWGL
Energy should not have been a party to this Complaint,â and it dismissed the claim against
WGL Energy. It further stated that this rendered the OPCâs âclaim of inappropriate affiliate
interaction moot.â
Appellants argue that the dismissal of the claims involving WGL Energy was
unlawful and/or arbitrary and capricious. They assert that the complaint raised issues of
material fact regarding which company was responsible for the bill message and which
customers received the message, and the issues were not resolved by Washington Gasâ
âever-changing explanations concerning the bill message.â They argue that the
Commissionâs dismissal of the complaint, in light of these âdifferent storiesâ and the
absence of any evidence, was arbitrary and capricious.
48
Appellants assert that, even if Washington Gas was responsible for sending the bills,
WGL Energy still could have been involved in decisions to include the marketing message.
Counsel for the OPC stated at oral argument that they still do not know the source of the
message. If Washington Gas worked with WGL Energy to get the message on the bill, that
would violate COMAR. The OPC has stated that it would be willing to dismiss its claim
against WGL Energy if it receives evidence that WGL Energy had no involvement in the
statement, but at this point it does not know the source of the marketing.
COMAR 20.40.02.01 governs prohibited utility conduct with an affiliate. It
provides, in pertinent part, as follows:
A utility may not:
* * *
(2) Give any preference to a core service affiliate, or non-core service
affiliate, or a customer of either in providing regulated utility service; or . . .
* * *
(4) Except as provided in Regulation .02 of this chapter, engage in
promotions, marketing, or advertising with a core or non-core service
affiliate.
COMAR 20.40.02.02 authorizes limited activities between a utility and an
affiliate. It states:
B. A utility may engage in a joint promotion with a core service affiliate if:
(1) It affords all similarly situated non-affiliated licensed electricity or gas
suppliers the opportunity to participate in the promotion; and
(2) The offer to participate is made in a manner designed to allow an equal
opportunity to utilize the promotion.
49
We agree with appellants that dismissal of the OPCâs claims against WGL Energy
was premature. Although Washington Gas submitted an affidavit stating that it âdoes not
have, and has never had, a joint marketing agreement with WGL Energy Services, Inc.,â
and it conceded that the marketing statements on the bills âwere generated by and are the
responsibility of Washington Gas,â Washington Gas provided three separate explanations
regarding the issuance of the bills, two of which were proven inaccurate. 24
Moreover, appellants also claim that the absence of a joint marketing agreement
does not preclude improper affiliation, as the Gas Companies still could have worked
together. Because the record demonstrates that there are still facts in dispute regarding the
source of the marketing message, we hold that the Commission abused its discretion in
dismissing the claims relating to WGL Energy at that stage of the proceedings.
JUDGMENT OF THE CIRCUIT COURT
FOR MONTGOMERY COUNTY
REVERSED; CASE IS REMANDED TO
THAT COURT WITH INSTRUCTIONS TO
VACATE THE COMMISSIONâS ORDERS
AND REMAND TO THE COMMISSION
FOR FURTHER PROCEEDINGS
CONSISTENT WITH THIS OPINION.
COSTS TO BE PAID BY APPELLEES.
24
The Commission criticized the OPC for failing to use its best efforts to resolve
the issues at hand prior to filing a formal complaint. That conclusion, however, is belied
by the record. It is the inaccurate information provided by Washington Gas throughout
these proceedings that has resulted in the on-going dispute of facts here.
50
Circuit Court for Montgomery County
Case No. C-15-CV-22-001977
REPORTED
IN THE APPELLATE COURT
OF MARYLAND
No. 2033
September Term, 2022
______________________________________
IN THE MATTER OF MARYLAND OFFICE
OF PEOPLEâS COUNSEL, ET AL.
______________________________________
Graeff,
Leahy,
Getty, Joseph M.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Dissenting Opinion by Getty, J.
______________________________________
Filed: December 20, 2023
The legal issue in this case is whether or not natural gas is a source of âclean
energyâ?
In its quest for the Public Service Commission (âCommissionâ) to address this issue,
the Office of Peopleâs Counsel (âOPCâ) 1 filed an administrative law complaint before the
Commission challenging a marketing statement that was attached to certain bills sent out
by the Washington Gas Light Company (âWashington Gasâ). 2 The message added to these
bills read:
Natural gas is a clean, efficient, and reliable energy. Converting an all electric home
to natural gas is the equivalent of planting 2.75 acres of trees or driving 26,520 fewer
miles each year. In addition, natural gas cost 1/3 less than electric, which makes it
a smart decision for the environment and your wallet.
OPC claimed that the marketing statement was deceptive and misleading in
violation of the Public Utilities Article and the general responsibilities of the Commission
to regulate utilities. Further, OPC relied on new statutory language from Senate Bill 83 of
the 2021 legislative session of the Maryland General Assembly to argue that broad issues
of climate change policy must be addressed in this complaint. 2021 Md. Laws ch. 615
1
Both OPC and Sierra Club filed for review of the Commissionâs order in the circuit
court, and both parties filed for review in this Court. Sierra Clubâs arguments largely track
with those of OPC, with an additional emphasis on the policy issues of environmental and
climate impacts of natural gas in relation to Marylandâs climate goals. Because the
substance of Sierra Clubâs arguments mirror those of OPCâs, this dissent will refer only to
OPC in describing the Appellantsâ positions.
2
OPC argues that WGL Energy Services, Inc., was improperly dismissed from the
complaint, and the partiesâ briefs offer competing versions of communications concerning
which Washington Gas entity was responsible for the marketing statement. Because I
believe the Commissionâs dismissal of the OPC complaint was proper, I also dissent from
the majorityâs conclusion that WGL Energy was prematurely dismissed as a party.
(codified at Md. Code (1998, 2020 Repl. Vol.) Public Utilities Article (âPUAâ) § 2-113 et.
seq.).
Washington Gas responded by providing substantial documentation, including
studies by federal agencies, academic institutions, and energy industry stakeholders, to
prove that the exact language of the marketing statement was supported by extensive
studies and that the statement was not deceptive or misleading. Moreover, Washington
Gas questioned the underlying purpose of the complaint by responding that: (1) OPC did
not allege that any customer was actually deceived by the marketing statements; (2) OPC
did not allege that the statements were false; and (3) OPC grounded its âclean energyâ
argument on the Maryland Commission on Climate Change goals which are primarily
policy recommendations.
The Commission determined that the OPC complaint was not a proper legal issue
before the body. Whether or not natural gas is âclean energyâ is not a legal issue but instead
is a broad policy consideration best addressed in a different forum. Specifically, regarding
the deceptive marketing complaint, the Commission found that âthe complaint fails to
adequately demonstrate a violation of state law or regulation in support of its broad
allegations regarding the environmental attributes of natural gas.â It further explained that
a complaint against one utility is an inappropriate forum to address the
broader issues raised by natural gas and its role in greenhouse gas emissions.
. . . Given that this was a utility-specific complaint that did not include the
other natural gas companies in the State, it is clear that this complaint is not
the proper forum in which to address such broad issues . . . .
2
The Commissionâs order denying rehearing stated that Washington Gas âclarified
that only its automatic payment . . . customers received bills with the message that OPC
finds objectionable,â constituting about 20.5% of the Maryland customers of Washington
Gas. In its brief before this Court, the Commission noted that Washington Gas had
removed the marketing statement from its bills, a point which OPCâs counsel conceded at
oral argument. 3 As such, this case is now largely moot. Any remaining issues for this
Court to address are based only on OPCâs request for fines against Washington Gas. The
majority opinion, by deciding in OPCâs favor, remands this matter to require that the
Commission adopt broad policy pronouncements regarding natural gas and climate change
premised solely on a request that fines be levied against a single utility. For these reasons,
explained more fully below, I dissent.
A. The Commission was correct in determining that this is a policy issue and thus
had the discretion to dismiss the complaint as an improper forum.
The Commission retains broad discretion to address policy issues through either
rulemaking or adjudication. Although OPC argues that legal and factual issues remained
that precluded dismissal, the Commissionâs position that the issues for review implicated
only policy is justified.
OPC claimed that the marketing was deceptive because referring to natural gas as
âclean energyâ falsely implies that natural gas use results in no significant greenhouse gas
3
OPC did not concede that the message was removed immediately after it filed its
complaint with the Commission. The precise timing of when the language was removed
is largely irrelevant.
3
emissions. Washington Gas responded by supporting the factual basis for its marketing,
which the Commission could rely on, even when accepting as true the âallegations and
permissible inferencesâ in favor of OPC. Parks v. Alpharma, Inc., 421 Md. 59, 72 (2011).
In reviewing the complaint, the Commission determined that, because Washington
Gas had supported the veracity of the marketing statement, there was no remaining dispute.
If the Commission were to look beyond the studies provided by Washington Gas to support
the marketing, the Commission would necessarily have to take a stance on which studies
on natural gas it would accept as persuasive. Also, the Commission would have needed to
decide what statements about natural gas can and cannot be included in marketing
statements. Both of these issuesâwhich studies to accept as persuasive and what language
can be used in natural gas marketingâare clearly more related to policy than a discrete
legal issue about the Washington Gas marketing statement. Moreover, such policy
decisions would affect other natural gas companies without the procedural process for
public comment and deliberation including the opportunity for other utilities to provide
input.
Maryland courts have long emphasized the importance of ensuring that
administrative agencies have flexibility in determining whether to create policy through
rulemaking or adjudication. See Balt. Gas & Elec. Co. v. Pub. Serv. Commân of Md., 305
Md. 145, 168 (1986) (âIt is a well settled principle of administrative law that âthe choice
made between proceeding by general rule or by individual, ad hoc litigation is one that lies
primarily in the informed discretion of the administrative agency.ââ (quoting SEC v.
4
Chenery Corp., 332 U.S. 194, 203(1947))); CBS Inc. v. Comptroller of the Treasury,319 Md. 687, 694
(1990) (âOur cases support the proposition that the administrative process is
enhanced when an agency is allowed substantial flexibility to decide between establishing
policy by way of rule or by way of adjudication.â). Although most cases challenging
agency action primarily concern challenges to an agencyâs decision to adjudicate rather
than through rulemaking, the inverse remains true: an agency has the discretion to decline
to make policy through adjudication.
An agencyâs discretion to choose between adjudication and rulemaking is not
unfettered. In CBS Inc. v. Comptroller of the Treasury, the Supreme Court of Maryland
discussed various out-of-state cases that concluded rulemakings were required in those
instances. 319 Md. at 694â96. In summarizing those cases, the Court noted that
rulemaking
adds an aspect of fairness when an agency intends to make a change in
existing law or rule. That fairness is produced by prospective operation of a
new rule and by the public notice, public hearing, and public comment
processes that accompany rulemaking, but that are sometimes absent from
administrative adjudication.
Id. at 695.
The Supreme Court has upheld agency adjudications where the newly-stated policy
did not apply retroactively or was not a significant departure from the original policy.
Frederick Classical Charter Sch. v. Frederick Cnty. Bd. of Educ., 454 Md. 330, 408â10
(2017) (collecting cases). The Supreme Court has also previously ruled that the
Commission may not effectuate policy changes affecting âmost of the electric and gas
5
utilities regulated by the Commissionâ through âcase-specific adjudicatory proceedings.â
Delmarva Power & Light Co. v. Pub. Serv. Commân of Md., 370 Md. 1, 38 (2002).
Here, the Commission determined that proceeding with OPCâs complaint to address
the broader issues raised by natural gas and its role in greenhouse gas emissions would be
unfair to natural gas companies that were not parties to this case. The Commission was
well within its discretion to decide that a complaint against a single utility was not the
proper forum nor the inclusive procedural deliberative process for establishing the
statewide policy concerning natural gas in the context of climate change.
As in cases where Maryland courts have ruled that administrative agencies were
required to address policy issues in a rulemaking, the policy implications of OPCâs
complaint would have altered the Commissionâs approach to regulating natural gas
marketing and natural gas companies more broadly than a specific marketing statement by
one company. 4
4
We take judicial notice of the fact that OPC has a multi-pronged strategy for the
development of a long-term policy on natural gas by either the Commission or the General
Assembly. On February 9, 2023, OPC filed a petition with the Commission calling for the
agency to engage in a public and transparent rulemaking process to realign state policies
on natural gas with Marylandâs greenhouse gas reduction goals. This petition underscores
the fact that pursuing adjudication of one natural gas providerâs marketing statement, as in
the case before us, is the improper forum for addressing broad policy issues concerning
climate change. See Petition of the Off. of Peopleâs Couns. for Near-Term, Priority Actions
and Comprehensive Long-Term Planning for Md.âs Nat. Gas Companies, Case No. 9707;
Md. Off. of Peopleâs Couns., Maryland Gas Utility Spending (Nov. 2023),
https://opc.maryland.gov/Portals/0/Files/Publications/Reports/GasUtilitySpending%2011
-5-23%20FINAL.pdf?ver=QdfdqphWg8P8SSpjtB29YQ%3d%3d
[https://perma.cc/2QHH-M67B]; Balt. Sun Ed. Bd., Staff Commentary, As rate decision
looms, a new warning about BGE gas plan, Balt. Sun (Dec. 12, 2023, 8:20 AM),
6
The Commissionâs orders clearly contemplated these implications. As the
Commission stated in its first order dismissing OPCâs complaint, âa complaint against one
utility is an inappropriate forum to address the broader issues raised by natural gas and its
role in greenhouse emissions.â The Commission further clarified in its order denying
rehearing that even a finding that required edits to the marketing statement to resolve
OPCâs concerns about misleading advertising âwould require an analysis of broader issues
involving greenhouse gasses and environmental policy.â
The fairness element of rulemaking, as defined by the Supreme Court in CBS Inc.â
the procedural protections of public notice, public hearing, and public comment processes
that accompany rulemaking but are absent from this particular adjudicationâare central to
the Commissionâs decision to dismiss this complaint as an improper forum. Ultimately,
the Commission decided that âsuch an analysis is far outside the scope of this narrow
complaint, i.e., the inclusion of a message printed on certain customer bills of a single
natural gas utility company operating in Maryland.â
The Commissionâs regulation limiting its power to dismiss complaints to those that
fail to state a claim upon which relief can be granted, Code of Maryland Regulations
20.07.03.03A(3) (2023), did not prohibit the Commission from dismissing OPCâs
complaint. As described above, any relief the Commission fashioned for OPCâs complaint
https://www.baltimoresun.com/2023/12/12/stranded-costs-bge/ [https://perma.cc/Z3UQ-
2M2R]; William Hettchen, Reader Commentary, General Assembly must set natural gas
policy, not PSC, Balt. Sun (Dec. 14, 2023, 2:44 PM),
https://www.baltimoresun.com/2023/12/14/general-assembly-must-set-natural-gas-
policy-not-psc-reader-commentary/ [https://perma.cc/4Z99-5Q6P].
7
would have broader implications beyond the scope of the complaint. There were no purely
legal issues before the Commission, only policy issues, which fell within the Commissionâs
discretion to address through either adjudication or rulemaking, and arguably should be
pursued as a change in Commission policy through rulemaking.
As clarified by Washington Gas after OPCâs request for rehearing, the marketing
language at issue appeared on the bills of 20.5% of Washington Gasâs Maryland customers,
at most. The Commission clarified before this Courtâand OPC agreedâthat the language
was removed from all bills. This case, therefore, withstands a mootness argument only
because OPC requested that fines be issued against Washington Gas. OPCâs other request
that the language be removed has been voluntarily satisfied by Washington Gas. By
remanding to the Commission, the majority opinion requires the Commission to issue a
broad policy determination regarding natural gas and climate change based only on a
complaint requesting fines against a single natural gas company.
For these reasons, the dismissal order by the Commission was not arbitrary or
capricious.
B. OPCâs reliance on recent climate change legislation is misplaced because it did
not substantively change the Commissionâs approach to climate issues.
The OPCâs reliance on Section 2-113(a) of the Public Utilities Article (âPUAâ) of
the Maryland Code (1998, 2020 Repl. Vol.) is misplaced given the legislative history of
the provision. Additionally, when the Commission dismissed OPCâs complaint, there were
no legal issues before the Commission. Instead, once Washington Gas demonstrated that
8
there were sufficient sources to substantiate the claims in the marketing statement, the only
remaining issues before the Commission were policy related. OPC therefore did not
adequately state a claim upon which relief could be granted given the legislative history of
PUA § 2-113(a) and the lack of legal issues before the Commission.
PUA § 2-113(a)(2) requires that â[i]n supervising and regulating public service
companies, the Commission shall consider,â inter alia:
(v) the preservation of environmental quality, including protection of the
global climate from continued short-term and long-term warming based
on the best available scientific information recognized by the
Intergovernmental Panel on Climate Change;
(vi) the achievement of the Stateâs climate commitments for reducing
statewide greenhouse gas emissions, including those specified in Title 2,
Subtitle 12 of the Environment Article . . . .
OPC places great emphasis on these provisions in arguing that the Commission
violated its statutory mandate by not investigating OPCâs complaint. The legislative
history behind these provisions, however, does not support OPC reliance on this section of
the PUA.
The specific language regarding climate change in subsections (v) and (vi) of PUA
§ 2-113(a)(2) derives from Senate Bill 83, Chapter 615, of the 2021 Legislative Session. 5
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In the brief from the Sierra Club, the legislation is referred to as House Bill 298.
In this case, identical bills were cross-filed during the 2021 legislative sessionâHouse Bill
298 (Chapter 614) and Senate Bill 83 (Chapter 615)âand both were signed into law.
When two bills are cross-filed in the General Assembly and both pass in the
House of Delegates and the Senate, the Governor has the choice to sign only
one bill or both. Traditionally, it has been good legislative practice to only
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The focus of Senate Bill 83 concerns Certificates of Public Convenience and Necessity
(âCPCNâ), which are required before an entity can construct a generating station, overhead
transmission line, or qualified generator lead line in the State. The Commission has the
final say in CPCN approvals, but the CPCN process involves other State agencies,
including the Department of Natural Resources and the Department of the Environment.
Senate Bill 83 added provisions to PUA § 7-207, the Environment Article, and the
Natural Resources Article that require the various agencies involved in the CPCN process
to consider climate change when reviewing CPCN applications. The Commission is also
specifically required to consider the impact of generating stations on greenhouse gas
emissions and whether CPCN approval for a generating station is consistent with
Marylandâs climate commitments for reducing greenhouse gas emissions.
Prior to the enactment of Senate Bill 83, PUA § 2-113(a)(2) did not contain express
inclusion of climate change as considerations for the Commission. Instead, the prior PUA
sign one bill. This is done for several reasons, such as to not clutter the
chapter laws with redundancy, to preserve resources of staff time and
printing (the printed Laws of Maryland for each legislative session would be
almost double in size, print, and paper due to the large number of cross-filed
bills), and to avoid legal confusion if, during the bill drafting and amendment
process, the two bills end up being not truly identical word-for-word. The
only reason to sign both involves the pride of the primary sponsors who each
want the benefit of having the Governor sign their bill. When both cross-
filed bills are signed by the Governor in succession, the first bill is superseded
by the second bill.
Wheeling v. Selene Fin., 473 Md. 356, 405 n.2 (2021) (Getty, J. concurring and dissenting).
Thus House Bill 298 (Chapter 614) was superseded by Senate Bill 83 (Chapter 615) when
both were signed into law.
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§ 2-113(a)(2) required that the Commission shall consider âthe preservation of
environmental qualityâ in its supervision and regulation of public service companies. The
language added by Senate Bill 83 adds consideration of climate change and Marylandâs
greenhouse gas reduction goals to this provision.
In its testimony by letter to the Senate Finance Committee about Senate Bill 83, the
Commission said that it âcurrently considers the preservation of environmental quality
pursuant to [PUA] 2-113(a)(2)(IV).â The Commission then elaborated that its
consideration of environmental quality [prior to Senate Bill 83] includes
promoting greenhouse gas reduction, energy conservation, energy
efficiency . . ., renewable energy, grid modernization, and reducing
natural gas leaks through target infrastructure investments . . . . Where
applicable, the Commission considers the Stateâs established climate
goals, as demonstrated by the Commissionâs January 2019 order
approving the implementation of a statewide electric vehicle charging
program.
The Commissionâs interpretation of a statute it administers (here, PUA § 2-113) is
entitled to a degree of deference. See Comptroller of Md. v. FC-GEN Operations Invs.
LLC, 482 Md. 343, 362 (2022). The Commission made clear in its comments that it was
already considering climate change and Marylandâs climate goals when needed even before
Senate Bill 83 added specific language about climate to PUA § 2-113. As such, Senate
Bill 83 did not create any obligations for the Commission that it did not already have.
Given the Commissionâs assertions that it had always considered climate change
under § 2-113(a)(2)âs âpreservation of environmental qualityâ language, the added
language of Senate Bill 83 on climate change does not contribute anything meaningful to
OPCâs position that the Commission violated its statutory mandate. OPC places improper
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emphasis on the new language in § 2-113 because there is nothing in the new language that
would require a different outcome under the facts of this complaint.
The Commissionâs comments to the Senate Finance Committee in response to
Senate Bill 83 further demonstrate the Commissionâs position that a proceeding against a
single utility was improper for considering the role of natural gas in climate considerations.
The Commission wrote to the Finance Committee that
[t]o the extent that the addition of climate change considerations to PUA § 2-
113 necessitates evidence in other proceedings (beyond CPCNs), input from
state agencies with the relevant expertise may allow the Commission to make
an informed decision. SB 83 does not require these agencies to participate
in such proceedings, however.
As applied in this matter, the Commission dismissed a non-CPCN case against a
single utility that would have resulted in broad considerations of climate change. This case
implicates the precise issue the Commission highlighted for the Senate Finance Committee:
input from other agencies would be necessary when making informed determinations
regarding climate issues. The Commission, within its discretion, declined to make such
determinations without input from agencies. Indeed, adopting new policy under this
adjudication would limit public comment and participation to only these partiesâOPC,
Sierra Club, Washington Gas, and WGL Energy.
Further, although it did add language to PUA § 2-113, the legislative history is clear
that Senate Bill 83 was primarily concerned with CPCN applications and approvals. The
law required that the Department of the Environment and the Department of Natural
Resources consider the climate impacts of electric power generation and generation siting
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in evaluating CPCN applications. Much of the same language added to PUA § 2-113(a)(2)
was also added to PUA §7-207(e), requiring that the Commission assess âthe impact of the
generating station on the quantity of annual and long-term statewide greenhouse gas
emissionsâ based upon methods in the Environment Article and the Intergovernmental
Panel on Climate Change and âthe consistency of the [CPCN] application with the Stateâs
climate commitments.â Many of the letters to the Senate Finance Committee reference a
specific case, Commission Case 9482, where the Commission approved a CPCN
application over challenges about the absence of climate change considerations in the
approval. In the Commissionâs order denying an appeal of the approval, it stated that PUA
§ 7-207 âdoes not specifically or generally require considerations regarding climate
change.â
Although several letters to the Finance Committee quote this language as
demonstrative of the Commissionâs failure to consider climate change in every plausible
proceeding, the order clearly refers only to PUA § 7-207 concerning CPCN applications,
not the Commissionâs overall regulatory authority in PUA § 2-113. These letters and other
components of the legislative history of Senate Bill 83 makes clear that the primary purpose
of the law was to resolve the issues surrounding CPCNs and climate change, like those in
Commission Case 9482.
CONCLUSION
The dismissal order by the PSC was not arbitrary and capricious. I would uphold
the decisions of the Commission that the matter involved broad policy considerations such
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that the administrative complaint was an improper forum to address the âbroader issues
raised by natural gas and its role in greenhouse gas emissions.â The Commission has
discretion to pursue policy goals through rulemaking or through adjudication, which it
exercised here. The changes in Commission policy that OPC seeks regarding natural gas
are better achieved through the rulemaking process, where all affected parties and the
public have a formal process for participation. Further, Senate Bill 83 is not a mandate that
requires a different outcome. The Commission made clear prior to the billâs passage that
the Commission already considered climate change under its existing mandate when
necessary. Senate Bill 83âs specification of climate change did not fundamentally change
the Commissionâs approach to regulating and supervising public service companies.
For the above reasons, I respectfully dissent.
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