Public Service Commission v. Maryland People's Counsel

COLE, Judge. This case involves a constitutional challenge to COMAR subtitle 31, which sets forth the minimum procedural requirements that must be followed before a utility may terminate service to a residential customer. The parties would have us address six issues in this appeal: (1) Does People’s Counsel have standing to challenge regulations promulgated by the Public Service Commission (Commission)? (2) Does the mere promulgation of discretionary regulations present a ripe issue for review?

(3) Does a. utility’s termination of service constitute state action? (4) Do the Commission’s regulations violate due process because they fail to require a hearing before utility service is terminated? (5) If a hearing is required, is due process satisfied by a hearing before an employee of the utility? and (6) Did the circuit court exceed its power by ⁵ ordering the Commission to adopt new termination regulations? The disposition we make in this case, however, only requires us to address the first two issues.

The parties stipulated to the following facts. On January 16, 1980, the Commission instituted Case No. 7413 to investigate “the reasonableness of existing procedures governing the termination of gas and electric service.” Regulations were drafted and comments were solicited from interested members of the public. The regulations became final and effective on October 12, 1981. See COMAR 20.31.01 through .04.

The regulations provide, inter alia, a step by step procedure for handling a dispute between a customer and a utility regarding the termination of service. This procedure, however, is only the “minimum” procedure required, and a utility is free to provide additional safeguards to protect its customers. COMAR 20.31.01.04.B. Chapter 04 of the subtitle states that a utility is required to investigate any disputed bill and report its findings to the customer, who must then be given the opportunity to dispute or correct the reason or reasons for termination. The utility must then re-examine the dispute, make a decision regarding termination, and notify the customer of that decision.

If the customer is still dissatisfied, he may file a complaint with the Consumer Assistance Section of the Commission. The Commission may dismiss the complaint if it determines that the customer has not negotiated in good faith with the utility or has failed to comply with subtitle 31. The regulations do not require the Commission to provide the customer with a hearing before dismissing his complaint. If a complaint is dismissed by the Commission, the utility is not required to terminate service, but may do so at its discretion.

COMAR 20.31.04.03.1; see also id. 20.31.01.04.A. On October 22, 1981, People’s Counsel filed suit against the Commission in the Circuit Court for Baltimore City pursuant to Maryland Code (1957, 1980 Repl.Vol.), Art. 78, ⁶ §§ 90 and 91. 1 People’s Counsel sought a declaratory judgment “that certain regulations promulgated by the [Commission] are unconstitutional in that they fail to provide minimum due process safeguards to Maryland ratepayers.” The circuit court found that People’s Counsel lacked standing, and the case was dismissed without prejudice. The Court of Special Appeals, in an unreported opinion, affirmed the trial court’s decision and granted leave for' People’s Counsel to amend his pleadings. People's Counsel v. Public Service Commission, September Term, 1982, No. 869 (1983) (per curiam). People’s Counsel then brought suit under Maryland Code (1957, 1980 Repl.Vol., 1983 Cum.

Supp.), Art. 78, § 89 and Maryland Code (1980), § 3-401 et seq. of the Courts and Judicial Proceedings Article. Again, People’s Counsel’s only claim was that the regulations were unconstitutional. On remand, the circuit court held, inter alia, that termination of residential utility service constitutes state action and that due process requires a pretermination hearing. The circuit court therefore found the regulations to be unconstitutional and ordered the Commission to revise its regulations.

The parties filed cross-appeals in the Court of Special Appeals, but we granted certiorari before the intermediate appellate court reviewed the case. I The first issue we must address is whether People’s Counsel has standing to bring suit under Art. 78, § 89. People’s Counsel argues that the principles of res judicata bar us from reviewing this question. He argues that the question of his standing under § 89 was settled between the parties when, on the first appeal, the Court of Special Appeals remanded the case stating that “[s]ection 89 specif ⁷ ically provides the appellate course a party must follow in challenging the validity of the regulations.” The Commission responds by arguing that the issue of standing under § 89 was not before the Court of Special Appeals in the first appeal, and thus res judicata does not bind this Court.

We find that res judicata does not apply. It is fundamental that the doctrine of res judicata only applies when there has been a final adjudication of the case. Arundel Asphalt Products, Inc. v. Morrison-Johnson, Inc., 256 Md. 170, 173 , 259 A.2d 789, 790-91 (1969). That is, the litigation must be complete and not merely interlocutory.

People’s Counsel’s case was not finally adjudicated when the Court of Special Appeals granted People’s Counsel leave to amend his pleadings. Rather than putting an end to the litigation, the mandate by the Court of Special Appeals permitted People’s Counsel to continue his action. As such, the principles of res judicata cannot apply to the decision by the Court of Special Appeals. Moreover, the law of the case doctrine does not preclude us from considering the standing issue.

In Loveday v. State, 296 Md. 226, 234 , 462 A.2d 58, 61-62 (1983), we held that a judgment of the Court of Special Appeals, on an earlier appeal in the same case, does not become the law of the case for this Court on review of a second judgment in the same case where the first judgment was not appealed. In the case at bar, the circuit court dismissed People’s Counsel’s suit under Art. 78, §§ 90 and 91 for lack of standing. On appeal, the Court of Special Appeals agreed that People’s Counsel lacked standing under §§ 90 and 91, but granted People’s Counsel leave to amend his suit and proceed under § 89. Although the decision of the Court of Special Appeals became the law of the case for the circuit court on remand, the intermediate appellate court’s decision does not become the law of the case for this Court.

Therefore, we must address People’s Counsel’s standing to bring suit under § 89. ⁸ People’s Counsel asserts that as the representative of all Maryland residential utility customers, he has standing to bring suit under § 89. The Commission argues that People’s Counsel has limited authority to bring suit and cannot institute an action under § 89 because no right of People’s Counsel has been impaired. We find that People’s Counsel has standing to proceed under § 89. 2 We explain. Initially, a review of Bosley v. Dorsey, 191 Md. 229 , 60 A.2d 691 (1948), is helpful.

There, the Commission approved a gas rate increase and ordered a uniform rate base rather than a separate rate base for each of Consolidated Gas, Electric Light and Power Company’s three lines of service. People’s Counsel claimed that the Commission’s order deprived residential consumers of due process and equal protection of the laws. People’s Counsel attempted to appeal the order under Maryland Code (1939), Art. 23, §§ 359 and 415, which granted any “person in interest” the right to appeal a Commission order to the appropriate trial court. People’s Counsel did not contend that he was personally injured by the Commission’s order, but instead asserted that he had the right to appeal as an agent of the persons affected.

The Bosley Court was thus forced to decide whether People’s Counsel was a “person in interest” under Art. 23, §§ 359 and 415. The Court noted that under Maryland Code (1939), Art. 23, § 353, People’s Counsel had a duty to defend the public’s interests before the Commission. This duty, however, did not “prevent ‘any party or interest’ in any proceeding before the Commission from appearing in person or from being represented by counsel.” Bosley v. Dorsey, 191 Md. at 237 , 60 A.2d at 694 . The Court traced the history of People’s Counsel and concluded that his duties were the same as the former Assistant Attorney ⁹ General.

The Court held that although People’s Counsel was authorized to represent the people at Commission hearings, he was not authorized to represent the people at court trials. The Court also noted that People’s Counsel lacked the power to appeal a Commission order because it was the Commission’s practice to “call upon People’s Counsel to support its orders.” Id. at 239 , 60 A.2d at 695 (emphasis added). The Court therefore found that People’s Counsel lacked standing to appeal the Commission’s order. Id. at 240 , 60 A.2d at 696 ; accord State v. Burning Tree Club, Inc., 301 Md. 9, 37 , 481 A.2d 785, 799 (1984) (because the Attorney General has the duty of defending the validity of Maryland statutes, he cannot seek a court declaration that a Maryland statute is unconstitutional).

The role and powers of People’s Counsel have changed since the Bosley decision. In 1955, the General Assembly created a General Counsel of the Commission and redefined the responsibilities and powers of People’s Counsel. See 1955 Md.Laws, ch. 441. General Counsel was given the duty of defending the Commission’s rulings, and People’s Counsel was given the duty of representing residential consumers.

See Maryland Code (1957, 1980 Repl. Yol.), Art. 78, §§ 12-15. Thus, People’s Counsel is no longer required to support the Commission’s regulations. Instead, People’s Counsel is charged with the duty of opposing the Commission’s regulations whenever they adversely affect residential consumers.

Consequently, the rationale of Bosley no longer prevents People’s Counsel from challenging actions of the Commission and appearing in court on behalf of residential consumers. The Commission finds it significant that following the Bosley decision, the General Assembly amended the predecessor to § 90 to specifically allow People’s Counsel to appeal a Commission decision and order, but did not make a similar amendment to the predecessor of § 89, which controlled challenges to Commission rules and regulations. See 1949 Md.Laws, ch. 675. The Commission argues that the legislature’s failure to amend § 89 demonstrates the ¹⁰ legislature’s intent to preclude People’s Counsel from proceeding under that section.

This argument, however, fails to consider the broad powers and duties given to People’s Counsel when the Code was amended in 1955. People’s Counsel is charged with evaluating all matters pending before the Commission to determine if residential users of utility services are affected. Maryland Code (1957, 1980 Repl.Vol.), Art. 78, § 15(a). Moreover, People’s Counsel is given the power to “appear before the Commission and the courts on behalf of those users ” in all cases where People’s Counsel deems the interests of residential users are involved.

Id. (emphasis added). Furthermore, People’s Counsel is granted all the rights of counsel for a party to the proceeding. Id.

Therefore, People’s Counsel has standing to bring suit under § 89 to protect the interests of residential utility customers. 3 II We must next determine if this case presents a justiciable issue. More specifically, we must decide if People’s Counsel’s challenge to the regulations is ripe for review. People’s Counsel argues that the mere enactment of the utility termination regulations poses a threat to residential utility customers because they provide that a customer’s service may be terminated without a hearing. The Commission argues that the regulations are discretionary and the record does not disclose that any utility has actually applied, or ¹¹ threatened to apply, the regulations to terminate a customer’s service without a hearing.

We begin our analysis of the ripeness issue by reviewing the standard set forth in Art. 78, § 89. Section 89 states in pertinent part: The validity of any rule or regulation of the Commission may be determined upon petition for a declaratory judgment addressed to the Circuit Court for Baltimore City or to the circuit court for the county where the petitioner has its principal office in this State whenever it appears that the rule or regulation, or its threatened application, interferes with or impairs, or threatens to interfere with or impair, the legal rights or privileges of the petitioner. Section 89 on its face allows the validity of a regulation to be determined when its application is only threatened, and thus pre-enforcement review is permitted. Our task today is to determine whether the mere existence of COMAR 20.31.01 through .04 is itself sufficient to constitute a “threatened application” that will interfere with the legal rights or privileges of residential utility customers.

We begin by noting that we have not previously examined ripeness under § 89. Similarly, we have not addressed ripeness under § 10-125 of the Maryland Administrative Procedure Act, which contains language identical to § 89. 4 In contrast, we have often decided ripeness under the Maryland Declaratory Judgment Act. See Hatt v. Anderson, 297 Md. 42 , 464 A.2d 1076 (1983) and cases cited therein. The Declaratory Judgment Act, however, is a broad, general statute applying to all civil cases. 5 The Act ¹² sets forth the following standard for determining when a declaratory judgment action is ripe for review: [A] court may grant a declaratory judgment or decree in a civil case, if it will serve to terminate the uncertainty or controversy giving rise to the proceeding, and if: (1) An actual controversy exists between contending parties; (2) Antagonistic claims are present between the parties involved which indicate imminent and inevitable litigation; or (3) A party asserts a legal relation, status, right, or privilege and this is challenged or denied by an adversary party, who also has or asserts a concrete interest in it.

Id. § 3-409(a). The standards for ripeness under Art. 78, § 89 and the Declaratory Judgment Act are obviously different. So too are the types of cases governed by the two standards. Therefore, in determining ripeness under § 89, we find that our prior decisions under the Declaratory Judgment Act provide us with little guidance.

Instead, we shall look to a trilogy of cases decided by the Supreme Court. These cases collectively analyze the ripeness of pre-enforcement challenges to administrative