Present: Hassell, C.J., Koontz, Lemons, Goodwyn, and
Millette, JJ., and Carrico and Lacy, S.JJ.
APPALACHIAN VOICES, ET AL.
v. Record No. 081433 OPINION BY JUSTICE DONALD W. LEMONS
April 17, 2009
STATE CORPORATION COMMISSION, ET AL.
FROM THE STATE CORPORATION COMMISSION
In this appeal, we consider whether certain provisions of
Code § 56-585.1(A)(6) violate the Commerce Clause of the
United States Constitution. For the reasons stated below, we
will affirm the order of the State Corporation Commission
holding that there is no such violation.
I. Facts and Proceedings Below
On July 13, 2007, Virginia Electric and Power Company
(“Dominion”) applied to the State Corporation Commission
(“Commission”) for “approval, certification, and rate
adjustment under § 56-585.1, § 56-580(D), and § 56-46.1 of the
Code of Virginia with regard to a carbon capture compatible,
clean-coal powered electric generation facility to be located
in the coalfield region of the Commonwealth in Wise County,
Virginia.” In its application, Dominion asserts that the
proposed coal plant will cost approximately “$1.62 billion
including the interconnection facilities necessary to
interconnect the Plant.” Dominion also contends in its
application that
[t]he coal plant will be a “carbon capture
compatible, clean-powered” 585 megawatt
(nominal) coal-fueled generating plant. The
Plant’s design will incorporate clean-coal
powered mechanisms from its in-service date in
2012. It will use circulating fluidized bed
(“CFB”) technology, which is recognized by the
Department of Energy as a Clean-Coal
Technology. The Plant will also be built so
that it is compatible with carbon capture
technology when such technology becomes
commercially available, and the site in Wise
County has been designed to accommodate future
installation of such equipment.
After receiving Dominion’s application, the Commission
gave notice of a public hearing on the application for January
8, 2008. Thereafter, the Virginia Committee for Fair Utility
Rates, the Southern Environmental Law Center, the Sierra Club,
Chesapeake Climate Action Network, Southern Appalachian
Mountain Stewards, Appalachian Voices, the Attorney General’s
Division of Consumer Counsel, Competitive Bidding Group,
Apartment and Office Building Association of Metropolitan
Washington, and MeadWestvaco Corporation all gave notice of
participation as respondents.
Dominion then filed a motion to continue the hearing from
January 8, 2008 until the week of January 21, 2008 and
suggested either February 5, 6, or 7, 2008 for evidentiary
hearing dates. By an order, the Commission set a hearing on
January 8, 2008 “for the sole purpose of receiving testimony
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of public witnesses” and then reconvene on February 5, 2008
“to receive evidence on the application of [Dominion].”
During the January 8, 2008 hearing, the Commission heard
testimony from over 100 public witnesses. On February 5, 2008
through February 8, 2008 the Commission reconvened to hear
evidence on Dominion’s application. The Commission, after
hearing testimony and evidence, requested post-hearing briefs.
The Competitive Bidding Group, Staff of the State Corporation
Commission, Southern Environmental Law Center (on behalf of
itself, the Sierra Club, Chesapeake Climate Action Network,
Southern Appalachian Mountain Stewards, and Appalachian
Voices), Dominion, the Office of the Attorney General Division
of Consumer Counsel, and the Virginia Committee for Fair
Utility Rates all filed post-hearing briefs in support of
their positions.
Upon consideration of the evidence including public
witnesses and post-hearing briefs, the Commission approved
Dominion’s application, subject to some requirements not
germane to the appeal. Significantly for this appeal, the
Commission rejected the argument that Dominion’s application
was premised upon statutory provisions that violated the
Commerce Clause of the United States Constitution. The
Commission held that because Code § 56-585.1(A)(6) “does not
require that the Coal Plant use only Virginia coal, and the
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Commission’s approval of the application herein is not subject
to such an exclusive requirement,” the provision of Code § 56-
585.1(A)(6) passes constitutional scrutiny. Additionally, the
Commission held that because Code § 56-585.1(A)(6) establishes
that a coal-fueled generating facility that utilizes Virginia
coal and is located in the Commonwealth “is in the public
interest” the Commission was not required independently to
analyze whether the proposed coal plant was in the public
interest.
Appalachian Voices, Chesapeake Climate Action Network,
Sierra Club, and Southern Appalachian Mountain Stewards
(“Appalachian Voices”) appeal as matter of right, pursuant to
Code § 12.1-39, upon three assignments of error:
1. The Commission Erred As A Matter of Law In Rejecting
Petitioners’ Claim That Va. Code § 56-585.1(A)(6) Is Per
Se Unconstitutional; The Statute Violates The Commerce
Clause of The United States Constitution, U.S. CONST. Art.
I, § 8, cl. 3.
2. The Commission Erred As A Matter of Law In Considering
The Application of Virginia Electric and Power Company,
Which Was Prematurely Filed Before The Expiration of
Capped Rates; The Application Was Not Properly Before The
Commission And Should Have Been Dismissed.
3. The Commission Erred As A Matter of Law In Relying On Va.
Code § 56-585.1(A)(6) To Rule That The Proposed Coal-
Fired Electricity Generating Station Would Be In The
Public Interest And Refusing “To Make a Separate Public
Interest Determination.”
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II. Standing Challenge
Initially, we observe that Dominion challenges the
standing of Appalachian Voices to oppose the application and
to maintain this appeal. However, Dominion did not raise the
issue of standing during the proceeding before the Commission.
In Martin v. Ziherl, 269 Va. 35, 607 S.E.2d 367 (2005), we
held that “[a] basic principle of appellate review is that,
with few exceptions not relevant here, arguments made for the
first time on appeal will not be considered.” Id. at 39, 607
S.E.2d at 368. Accordingly, we need not consider Dominion’s
challenge to Appalachian Voices’ standing for the first time
on appeal.
Furthermore, “[w]hile we will not entertain a standing
challenge made for the first time on appeal, the Court will
consider, sua sponte, whether a decision would be an advisory
opinion because the Court does not have the power to render a
judgment that is only advisory.” Id. at 40, 607 S.E.2d at
369. The record of this case clearly presents a real
controversy, the resolution of which does not constitute an
advisory opinion.
III. Constitutional Challenge
A. Standard of Review
When an appeal is from the Commission, we have stated:
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It is firmly established that a decision
by the Commission
comes to this court with a presumption of
correctness. The Constitution of
Virginia and statutes enacted by the
General Assembly thereunder give the
Commission broad, general and extensive
powers in the control and regulation of a
public service corporation. The
Commission is charged with the
responsibility of finding the facts and
making a judgment. This court is neither
at liberty to substitute its judgment in
matters within the province of the
Commission nor to overrule the
Commission’s finding of fact unless we
can say its determination is contrary to
the evidence or without evidence to
support it.
Campbell County v. Appalachian Pow. Co., 216
Va. 93, 105, 215 S.E.2d 918, 927 (1975).
Additionally, the Commission’s decision “is
entitled to the respect due judgments of a
tribunal informed by experience,” and we will
not disturb the Commission’s analysis when it
is “ ‘based upon the application of correct
principles of law.’ ” Lawyers Title Insurance
Corp. v. Norwest Corp., 254 Va. 388, 390-91,
493 S.E.2d 114, 115 (1997) (quoting Swiss Re
Life Co. Am. v. Gross, 253 Va. 139, 144, 479
S.E.2d 857, 860 (1997)). However, the
Commission’s decision, if based upon a mistake
of law, will be reversed. First Virginia Bank
v. Commonwealth, 213 Va. 349, 351, 193 S.E.2d
4, 5 (1972).
Northern Virginia Elec. Coop. v. Virginia Elec. & Power Co.,
265 Va. 363, 368, 576 S.E.2d 741, 743-44 (2003). We have
“frequently said that the practical construction given to a
statute by public officials charged with its enforcement is
entitled to great weight by the courts and in doubtful cases
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will be regarded as decisive.” Commonwealth v. Appalachian
Elec. Power Co., 193 Va. 37, 45, 68 S.E.2d 122, 127 (1951).
However, “constitutional arguments are questions of law that
we review de novo.” Shivaee v. Commonwealth, 270 Va. 112,
119, 613 S.E.2d 570, 574 (2005).
B. Constitutional Analysis
Appalachian Voices asserts a challenge to Code § 56-
585.1(A)(6) based upon the Commerce Clause, which declares
that “The Congress shall have power . . . To regulate Commerce
with foreign nations, and among the several states.” U.S.
CONST. art. I, § 8, cl. 3. The United States Supreme Court has
expressed a corollary rule known as the “dormant” or
“negative” Commerce Clause, providing implicit restraints upon
the states. “The bounds of these restraints appear nowhere in
the words of the Commerce Clause, but have emerged gradually
in the decisions of this Court giving effect to its basic
purpose.” City of Philadelphia v. New Jersey, 437 U.S. 617,
623 (1978). The doctrine of the dormant Commerce Clause is
intended to prevent the various states from engaging in
economic protectionism and protects both consumers and out-of-
state competitors. Appalachian Voices maintains that Code
§ 56-585.1(A)(6) purports to permit what the dormant Commerce
Clause declares unconstitutional.
Code § 56-585.1(A)(6) provides in pertinent part:
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To ensure a reliable and adequate supply of
electricity, to meet the utility’s projected
native load obligations and to promote economic
development, a utility may at any time, after
the expiration or termination of capped rates,
petition the Commission for approval of a rate
adjustment clause for recovery on a timely and
current basis from customers of the costs of
(i) a coal-fueled generation facility that
utilizes Virginia coal and is located in the
coalfield region of the Commonwealth, as
described in § 15.2-6002, regardless of whether
such facility is located within or without the
utility’s service territory, (ii) one or more
other generation facilities, or (iii) one or
more major unit modifications of generation
facilities; however, such a petition concerning
facilities described in clause (ii) that
utilize nuclear power, facilities described in
clause (ii) that are coal-fueled and will be
built by a Phase I utility, or facilities
described in clause (i) may also be filed
before the expiration or termination of capped
rates. . . . The construction of any facility
described in clause (i) is in the public
interest, and in determining whether to approve
such facility, the Commission shall liberally
construe the provisions of this title.
The heart of this controversy focuses upon the phrase,
“utilizes Virginia coal.”
Appalachian Voices asserts that the statute in question
“unquestionably discriminates in favor of ‘Virginia coal’ at
the expense of out-of-state coal.” Consequently, they argue
that the statutory provision is discriminatory on its face and
must be declared unconstitutional pursuant to the decision of
the Supreme Court of the United States in City of
Philadelphia, 437 U.S. 617, as well as that Court’s decisions
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in Wyoming v. Oklahoma, 502 U.S. 437 (1992), and Granholm v.
Heald, 544 U.S. 460 (2005).
In City of Philadelphia, the Court considered a New
Jersey statute it characterized as “parochial,” 437 U.S. at
627, which prohibited the importation of most solid or liquid
waste which originated or was collected outside the
territorial limits of the state. Id. at 618. Holding that
the statute in question violated the Commerce Clause, the
Court observed that New Jersey had “overtly moved to slow or
freeze the flow of commerce for protectionist reasons.” Id.
at 628.
In Wyoming v. Oklahoma, the United States Supreme Court
considered the constitutionality of an Oklahoma law requiring
coal-fired electric utilities to burn a mixture containing at
least ten percent Oklahoma-mined coal. 502 U.S. 440. As a
consequence, utilities in Oklahoma reduced their purchases of
Wyoming coal and the state of Wyoming suffered reduced tax
revenues from the severance tax it imposed upon the mining of
coal in Wyoming. Id. at 447. Holding that the Oklahoma
statute “on its face and in practical effect, discriminates
against interstate commerce” and that Oklahoma was required to
but could not “justify it both in terms of the local benefits
flowing from the statute and the unavailability of
nondiscriminatory alternatives adequate to preserve the local
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interests at stake,” the Court declared the statute
unconstitutional. Id. at 455-56 (quoting Hunt v. Washington
State Apple Advertising Comm’n, 432 U.S.333, 353 (1977)).
In Granholm, the United States Supreme Court reviewed
Michigan and New York laws that permitted in-state wineries to
ship directly to in-state consumers, but “prohibit out-of-
state wineries from doing so, or, at the least, . . . make
direct sales impractical from an economic standpoint.” 544
U.S. at 465-66. The Court noted that the “details and
mechanics of the two regulatory schemes differ, but the object
and effect of the laws are the same,” and it held that the
laws of both states discriminated against interstate commerce
in violation of the Commerce Clause. Id. at 466. The Court
stated:
Time and again this Court has held that, in all
but the narrowest circumstances, state laws
violate the Commerce Clause if they mandate
“differential treatment of in-state and out-of-
state economic interests that benefits the
former and burdens the latter.” . . . States
may not enact laws that burden out-out-state
producers or shippers simply to give a
competitive advantage to in-state businesses.
Id. at 472 (internal citations omitted).
Appalachian Voices asserts that the case before us must
suffer the same declaration of unconstitutional infringement
of the Commerce Clause that occurred in the cases cited above.
But Appalachian Voices misses the critical distinction
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presented by the application of Dominion in this case– as
Dominion consistently maintained and as the Commission held,
no provision of Code § 56-585.1(A)(6) implicates interstate
commerce.
Simply stated, the statute in question does not require –
and the Commission did not order – that any amount of Virginia
coal be used in the proposed coal-fired plant. Unlike the
Oklahoma statute at issue in Wyoming v. Oklahoma which
prescribed use of a ten percent mixture of Oklahoma coal in
coal-fired plants in state, nothing in the Virginia statute
requires the use of Virginia coal. What is required is the
technology to be able to burn coal found in Virginia.
Consequently, the phrase “utilizes Virginia coal” is
descriptive and not prescriptive in content.
Virginia statutes require the plant, once operational, to
favor the use of the most economical coal or other energy
generating sources available, regardless of its source. Code
§ 56-249.6(D)(2) provides in pertinent part:
The Commission shall disallow recovery of any
fuel costs that it finds without just cause to
be the result of failure of the utility to make
every reasonable effort to minimize fuel costs
or any decision of the utility resulting in
unreasonable fuel costs, giving due regard to
reliability of service and the need to maintain
reliable sources of supply, economical
generation mix, generating experience of
comparable facilities, and minimization of the
total cost of providing service.
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Appalachian Voices did not assert and the Commission did not
find that Code § 56-585.1(A)(6) altered this statutory duty to
minimize fuel costs. Under this statute, the use of Virginia
coal is not favored at the expense of any other source. Not
only is there no economic incentive to use Virginia coal under
the Virginia statutory scheme, there is a statutory
disincentive to utilization of Virginia coal if use of out-of-
state coal is more economical. Consequently, there is no
prohibition upon importation such as was at stake in City of
Philadelphia, no specific prescription of use as in Wyoming v.
Oklahoma, and no economic burden imposed by a statutory scheme
upon out-of-state producers that favored in-state suppliers as
was the effect of the law reviewed in Granholm.
Additionally, even if the challenged provisions of Code
§ 56-585.1(A)(6) were found to violate the Commerce Clause,
severance of the allegedly impermissible language would save
the statute from invalidation. Virginia Code § 1-243 provides
that:
The provisions of acts of the General Assembly
or the application thereof to any person or
circumstances that are held invalid shall not
affect the validity of other acts, provisions,
or applications that can be given effect
without the invalid provisions or applications.
The provisions of all acts, except for the
title of the act, are severable unless (i) the
act specifically provides that its provisions
are not severable; or (ii) it is apparent that
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two or more acts or provisions must operate in
accord with one another.
Clearly, other provisions of Code § 56–585.1(A)(6) can be
given effect without the phrase, “utilizes Virginia coal,” the
statute itself does not specifically provide that its
provisions are not severable, and no other provision of Code
§ 56–585.1(A)(6) operates “in accord” with the phrase at
issue.
IV. Remaining Assignments of Error
Appalachian Voices’ remaining assignments of error are
predicated upon a successful constitutional challenge to Code
§ 56–585.1(A)(6) under the Commerce Clause. Because that
challenge fails, the remaining assignments of error also fail.
Specifically, Appalachian Voices argues that Dominion’s
application was premature and should not have been accepted by
the Commission. This argument is premised upon the contention
that the statute is unconstitutional and that the additional
provision of the statute allowing a “coal-fueled generation
facility that utilizes Virginia coal and is located in the
coalfield region of the Commonwealth” to apply for rate
adjustments before the expiration or termination of capped
rates is inapplicable. Consequently, Appalachian Voices
maintains that the Commission should not have considered
Dominion’s application until their capped rate expired in
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January of 2009. Of course, the premise for this argument is
faulty – the statute is constitutional, and even if it were
constitutionally infirm, it is subject to severance. In
either instance, Dominion’s filing would not be premature.
Finally, Appalachian Voices maintains that the Commission
erred in its “public interest” determination. The statute
itself provides that the construction and operation of such a
coal-fueled generation facility is “in the public interest.”
Code § 56-585.1(A)(6). Given the legislative declaration of
the public interest, it was not necessary for the Commission
to conduct an independent review of this issue. Like the
premature filing question raised by Appalachian Voices, the
assignment of error concerning the public interest
determination is dependent upon a successful challenge to the
constitutionality of the statute itself. Again, the premise
for this argument is faulty – the statute is constitutional,
and even if it were constitutionally infirm, it is subject to
severance. In either instance, the Commission would not be
required to conduct an independent review of the “public
interest” determination made by the General Assembly.
V. Conclusion
We hold that the Commission did not err in holding that
Code § 56–585.1(A)(6) does not violate the Commerce Clause of
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the United States Constitution. Accordingly, the Commission
did not err in approving Dominion’s application.
Affirmed.
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