BEFORE THE
PUBLIC SERVICE COMMISSION
OF MARYLAND
IN THE MATTER OF THE MID-ATLANTIC *
PETROLEUM DISTRIBUTORS
ASSOCIATION AND THE MID-ATLANTIC *
PROPANE GAS ASSOCIATION’S REQUEST
FOR DECLARATORY ORDER REGARDING *
UNLAWFUL AND UNFAIR TRADE
PRACTICES OF SOUTHERN MARYLAND * CASE NO. 8899
ELECTRIC COOPERATIVE, CHOPTANK *
ELECTRIC ELECTRICAL COOPERATIVE, *
AND CHOPTANK ELECTRIC HOME AND *
BUSINESS SERVICES, INC. *
MID ATLANTIC PETROLEUM DISTRIBUTORS ASSOCIATION
AND
MID ATLANTIC PROPANE GAS ASSOCIATION
RESPONSE TO MOTION TO QUASH OR LIMIT NOTICES OF DEPOSITION
By and through its counsel Gary R. Alexander, Chantel R. Ornstein and the Law Offices of Alexander & Cleaver, P.A., the Mid Atlantic Petroleum Distributors Association (“MAPDA”) and the Mid Atlantic Propane Gas Association (“MAPGA”) (collectively “Complainants”) hereby submit this Response to the Motion to Quash or Limit Notices of Deposition (“Motion to Quash”) filed on February 15, 2002 jointly by Southern Maryland Electric Cooperative, Inc. (“SMECO”) and Choptank Electric Cooperative, Inc. (“Choptank”) (collectively the “Cooperatives”).
BACKGROUND
On February 11, 2002 the Complainants served counsel to the Cooperatives with Notices of Depositions seeking to schedule depositions on February 22, 2002 and February 25, 2002 with specifically named officers and directors of SMECO and Choptank and directing each witness to bring “any and all documents pertaining to the investment in Mid-Atlantic Cooperative Services, L.L.C. d/b/a AERO Energy (“MACS”) [i]ncluding, but not limited to all correspondence, documents, communications, etc., financial or otherwise, among Board members, cooperative management and all other parties relating to the decision to invest and the actual investment in MACS.” The Cooperatives argue in their Motion to Quash that the “request to produce documents is burdensome, overbroad, and seeks documents that are privileged, confidential, competitively sensitive, and not relevant to any legitimate issue in this proceeding”; and that “the oral questioning at any deposition must be limited to matters that are relevant to the issues in this proceedings”. (Motion to Quash, p. 2). The Complainants offer the following in response to the Cooperatives arguments:
ARGUMENT
1. The Commission has the Authority to Review Evidence Relating to the Cooperatives Investment in MACS
The Cooperatives incorrectly assert that the Commission lacks “any proper regulatory role as enforcer of the private corporate bylaws of a cooperative or any other utility”; and further argue that “[i]t would be an unwarranted intrusion into management decision-making for the Commission to attempt to second guess the wisdom of the actual investment decisions made or not made by Cooperative management”. (Motion to Quash, p. 3-4).
As discussed extensively by the Complainants Opposition to Motions to Dismiss filed on December 17, 2001 in this proceeding (“Opposition to Motions to Dismiss”), the Cooperatives are considered public service companies as referenced in PUC § 3-102(a)(2)[1] PUC § 2-113 states:
(a) In general. – 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 the public safety, the economy of the State, the conservation of natural resources, and the preservation of environmental quality.
(b) Construction. – The powers and duties listed in this title do not limit the scope of the general powers and duties of the Commission provided for by this article. (Emphasis added).
The regulatory oversight of the Cooperatives use of funds and compliance with their own bylaws is unquestionably within the jurisdiction of the Commission and necessary to enable the Commission to ensure that the Cooperatives are acting within the public interest. As also addressed in the Opposition to Motions to Dismiss (page 8) and restated below, the Commission’s extensive regulatory authority over public service companies is well recognized by the courts:
With the task of providing justice for consumers clearly set forth, the General Assembly enacted the Public Service Commission Law on April 5, 1910. The statute set forth a regulatory scheme and created the PSC in order “to provide for the regulation and control of public service corporations and public utilities, and making appropriations therefore.” 1019 Md. Laws, ch. 180… It also gave the Commission broad authority and discretion to monitor and regulate corporate behavior. (emphasis added). 1910 Md. Law, ch, 180 § 40, as quoted in Bell Atlantic of Maryland, Inc. v. Intercom Systems Corp., 366 Md. 1, 15-17, 782 A.2d 791 (2001).
The Bell Atlantic Court also references the Commission’s broad jurisdictional powers in PUC § 2-112 over “(a)… each public service company that engages in or operates a utility business in the State… (b) General powers – (1) The Commission has the powers specifically conferred by law. (2) The Commission has the implied and incidental powers needed or proper to carry out its functions under this article. (c) Liberal construction. – The powers of the Commission shall be construed liberally. Id. at 18-19.
2. Depositions of Board Members and Cooperative Management and the Production of Documents Pertaining to the Cooperatives Decision to Invest and Actual Investment in MACS are Relevant to the Issues in this Proceeding
As argued above, the Commission clearly has the duty to oversee the actions of the Cooperatives to ensure that they are acting in manner that protects the public interest. Such oversight cannot occur without access to adequate information relating to the Cooperatives operations. The Commission cannot make a determination as to the legality of the Cooperatives investment in MACS or whether and to what extent the Cooperatives may have violated certain regulatory provisions without appropriate information. To date, the Cooperatives have refused to provide adequate information, although the Complainants have requested such documents throughout the discovery process. Attached are the responses to certain data requests relating to the investment in MACS in which the Cooperatives have refused to provide information to the Complainants. This Commission, as argued above, has the responsibility of ensuring that public service companies are acting in the interest of the public. (See PUC § 2-113). This duty cannot be preformed without insuring that the Cooperatives are operating responsibly and upholding all regulatory and legal requirements imposed upon them.
For these reasons, it is necessary that any and all documents pertaining to the investment in MACS be provided as such documents are legitimately related directly to the issues in this proceeding, and we respectfully request that your Honor require the Cooperatives to produce the documents during the course of the depositions. The parties have worked together on the scheduling of depositions and subject to your Honor’s ruling, the depositions for the Choptank representatives are tentatively scheduled for March 4,5,6 or after the 13th; and the depositions for the SMECO representatives are tentatively scheduled for March 7,8 or after the 15th. The Complainants have agreed to depose witnesses at the Cooperatives’ offices or at any other reasonable location convenient to the individuals.
Further, the Cooperatives request of an order to quash the depositions is without basis and should be denied. The Cooperatives have provided no justification for their Motion to Quash the depositions of Cooperative representatives. The Cooperatives have only offered the expert testimony of outside witnesses in this proceeding and have failed to make available the members of the Cooperative Boards or management personnel that were directly involved in the MACS investment. PUC § 3-107 grants parties in a proceeding the right to take depositions and the Complainants wish to exercise that right, as it is the only means of obtaining relevant information relating to the Cooperatives in MACS. Further as discussed in Bell Atlantic, the Court in referencing the Commission’s broad jurisdictional powers, finds that the powers of the Commission shall be construed liberally (Id. at 18-19); and PUC § 3-101(b) provides that the “Commission is not bound by the rules of evidence or procedure of any court”. For these reasons, the Complainants respectfully request that your Honor deny the Cooperatives request to quash the depositions of the individuals named in the Notice of Deposition served by the Complainants on February 11, 2002.
III. CONCLUSION
For the aforementioned reasons, the Complainants respectfully request that the Motion to Quash or Limit Notices of Deposition filed in this proceeding be denied.
Respectfully submitted,
______
GARY R. ALEXANDER
CHANTEL R. ORNSTEIN
Alexander & Cleaver, P.A.
54 State Circle
Annapolis, MD 21401
410-974-9000
410-974-9002 (fax)
Counsel to MPADA and MAPGA
1
[1] Opposition to Motions to Dismiss, Sec. B: The Commission Has Jurisdiction to Adjudicate the Alleged Violations of the Corporations and Associations Article and the Electric Cooperative Act.