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In re Petition of Conservation Law Foundation

Supreme Court of Vermont

April 20, 2018

In re Petition of Conservation Law Foundation

          On Appeal from Public Utility Commission James Volz, Chair

          Sandra Levine, Vermont Advocacy Center, Montpelier, for Appellant. Craig S. Nolan and Owen J. McClain of Sheehey Furlong & Behm P.C., Burlington, for Appellee Vermont Gas Systems, Inc.

          Daniel C. Burke, Department of Public Service, Montpelier, for Appellee Vermont Department of Public Service.

          PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

          ROBINSON, J.

         ¶ 1. The question in this case is whether steep increases in project cost estimates for the Addison Natural Gas Project, combined with changes in energy markets, create a "substantial change" such that Vermont Gas System, Inc. (VGS) must secure an amended certificate of public good under Public Utility Commission Rule 5.408. In ruling on Conservation Law Foundation's (CLF) separate petition for declaratory relief, distinct from post-judgment review of the Commission's certificate of public good, the Commission held that increased cost estimates for VGS's natural gas pipeline project, coupled with changes in the energy markets, were not a "substantial change" under Rule 5.408. We defer to the Commission's reasonable interpretation of Rule 5.408 and accordingly affirm.

         ¶ 2. The relevant, undisputed facts and procedural history are as follows. In December 2013, under docket 7970, the Commission[1] approved a certificate of public good (CPG) for VGS's forty-one-mile natural gas pipeline traversing Addison and Chittenden Counties (the Project). Considering the criteria in 30 V.S.A. § 248, the Commission concluded that the Project "will promote the general good of the State of Vermont, " subject to a condition (among others) that:

Construction, operation, and maintenance of the proposed Project shall be in accordance with plans and evidence submitted in this proceeding. Any material deviation from these plans or a substantial change to the Project must be approved by the [Commission].

         ¶ 3. In July 2014, while an appeal of the CPG was pending before this Court, VGS, pursuant to Commission Rule 5.409, filed an updated capital cost estimate with the Commission. The updated estimate reflected a 41% net change in estimated cost, from $86.6 million at the time of the CPG award to $121, 655, 000. In September 2014, this Court granted the Commission's request for a remand of the CPG proceeding so that it could determine whether to reopen the CPG proceedings under Vermont Rule of Civil Procedure 60(b)[2] due to the estimated Project cost increases.

         ¶ 4. On remand, the Commission held a hearing and CLF filed a post-hearing brief arguing that the Commission should reopen the CPG proceedings. In a thirty-page decision released in October 2014, the Commission ruled that the Project cost estimate increase was "not of such a material and controlling nature so as to change [the Commission's] previous determination that approval of the Project pursuant to the criteria of 30 V.S.A. § 248 will promote the general good of Vermont."

         ¶ 5. In December 2014, VGS filed a second update of the estimated capital costs of the project. By that time, estimated project costs had risen to $153.6 million, representing a 78% increase over the original estimate at the time of the CPG award. In February 2015, this Court granted the Commission's request for a second remand in docket 7970 to enable the Commission to again consider whether to reopen the CPG proceedings under Rule 60(b).

         ¶ 6. After an opportunity for discovery, the Commission held evidentiary hearings. The Commission considered the revised cost estimates as well as arguments that the CPG did not serve the public good in light of changes in energy markets. CLF filed a post-hearing brief. On January 8, 2016, the Commission held that the new evidence-"the most significant of which" being "the much higher estimated cost of the Project"-did not alter its previous conclusion that the Project "promot[ed] the general good and is in the best interest of the state" under § 248 criteria.

         ¶ 7. Meanwhile, in July 2014, during the pendency of proceedings in docket 7970, CLF filed a separate petition (docket 8330) seeking a declaratory ruling from the Commission that the Project cost increases and changes in energy markets represented a "substantial change" under Commission Rule 5.408, thus requiring an amended CPG. Commission Rule 5.408 states:

An amendment to a certificate of public good for construction of generation or transmission facilities, issued under 30 V.S.A. ยง 248, shall be required for a substantial change in the approved proposal. For the purpose of this subsection, a substantial change is a change in the approved proposal that has the potential for significant impact with respect to any ...

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