PUC’s ‘legislative’ docket raises procedural alarm bells

REGULATIONS

Welcome to the remote learning edition of this column. Today’s topic: administrative law.

For most folks, administrative law is all of the law. You’re unlikely to be the party to a lawsuit, but you probably have a driver’s license, you might need a building permit someday and you will certainly want to collect Social Security. Bureaucracy and its processes are administrative law.

So, too, if you care about your utility bills and what your electric, natural gas or water company is up to. In that case, all the action is at the New Hampshire Public Utilities Commission.

PUCs are examples of what administrative law professors refer to as “independent regulatory agencies.” In this context, “independent” means that PUC commissioners don’t report to the governor once they’ve been appointed by her or him and have been confirmed by the Executive Council.

But independent regulatory agencies are still considered part of the executive branch, at least according to recognized administrative law experts like U.S. Supreme Court Justice Stephen Breyer, who taught administrative law at Harvard.

Why am I going on about independent regulatory agencies? Because of a bizarre ruling issued by the New Hampshire PUC on Oct. 8.

According to the PUC, when the agency conducts a rate proceeding, the case is what the PUC referred to on Oct. 8 as a “legislative” docket. Much turns on the PUC’s use of the word “legislative.”

If there really is such a thing as a “legislative” docket at the PUC, it means the state’s Administrative Procedure Act (APA) does not apply. The APA is an important statute because it lays out how administrative agencies adopt rules (which apply to everyone) and conduct adjudications (which are decisions made on a case-by-case basis, usually about specific utilities or specific rates).

As to adjudications in particular, the limitations of the APA are the reason such administrative proceedings are not free-for-alls — the way, frankly, the process of passing actual legislation in New Hampshire is.

The Legislature has its own elaborate set of procedures and limitations, of course. But anyone can say anything she wants at a legislative hearing — nobody has to swear to tell the truth when testifying — and legislators are free to consult with anyone they want in the hallways or anywhere else as the lawmakers decide what bills to adopt.

That’s what I mean by “free-for-all.”

If rate cases and other PUC proceedings are allowed to go forward in such fashion, the PUC is literally reserving the right to make up the rules of the game as it goes.

And how would the New Hampshire Supreme Court ever review a decision made via a “legislative” docket?

If rate-setting is really just legislating by another name, how could the court ever enforce the traditional appellate guardrails? I refer to established notions like agencies not being able to make arbitrary and capricious decisions and having to base their rulings on actual facts in evidence.

The PUC’s ruling about “legislative” dockets relies on prior court rulings to the effect that rate-setting is a legislative act. But that’s anathema to administrative law professors, who point out that all authority of regulatory agencies (especially independent ones) is power that has been delegated by the Legislature.

It was also anathema to the late Marion P. Opala, who served from 1978 until his death in 2010 as a justice of the Oklahoma Supreme Court. In 1994, he penned a vigorous dissent (joined by three colleagues) when his tribunal ruled that the Oklahoma Corporation Commission — the utility regulator in the Sooner State — is legislating rather than adjudicating when deciding rate cases, and thus commission members need not be impartial.

Justice Opala compared his court to “an ostrich that hides its head in the sand to escape the unpleasant consequences of reality.” (That particular case had to do with corrupt regulators of the sort we thankfully do not have in New Hampshire.)

Marion Opala, incidentally, surely knew a bit about the misguided exercise of governmental authority as well as ostrich-like behavior. He fled his native Poland when the Nazis invaded, served in the British Army during World War II, was captured during the Battle of Warsaw in 1944 and was liberated from a German prisoner-of-war camp in 1945.

No online course is complete without a final exam. Mine consists of one multiple-choice question:

Q. What action should the Office of the Consumer Advocate, as the representative of the interests of residential utility customers, take in response to the PUC’s determination that a rate proceeding is a “legislative docket?”

A. File a motion for rehearing to give the PUC a chance to reconsider its ill-conceived ruling.

B. Continue the relentless pursuit of all cost-effective energy efficiency, especially because the PUC’s pending energy-efficiency docket is the one the agency decided is “legislative.”

C. Ask the Legislature to pass a statute clarifying that the Administrative Procedure Act applies to PUC ratesetting.

D. All of the above. As final exams go, this one is pretty easy.

D. Maurice Kreis is New Hampshire’s consumer advocate, representing the interests of residential utility customers.