Vermont Public Power Supply Authority, In re, 64-81

• Decision Date: 16 November 1981
• Docket Number: No. 64-81,64-81
• Citation: 140 Vt. 424,440 A.2d 140
• Parties: In re VERMONT PUBLIC POWER SUPPLY AUTHORITY.
• Court: Vermont Supreme Court

Page 140

440 A.2d 140

140 Vt. 424

In re VERMONT PUBLIC POWER SUPPLY AUTHORITY.

No. 64-81.

Supreme Court of Vermont.

Nov. 16, 1981.

Motion for Reargument Denied Jan. 4, 1982.

Paul, Frank & Collins, Inc., Burlington, and Sarah E. Vail, Chester, for appellants.

John D. Paterson and Jon Anderson of Paterson, Gibson, Noble & Goodrich, Montpelier, for appellee.

Before BARNEY, C. J., BILLINGS, HILL and UNDERWOOD, JJ., and LARROW, J. (Ret.), Specially Assigned.

UNDERWOOD, Justice.

This case involves an appeal of a Public Service Board decision to deny intervenor status in a contested case decided by the Board to Seven Ratepayers who purchase electricity from the Village of Ludlow Electric Light Department. The case concerned a six-million-dollar loan taken out by the Vermont Public Power Supply Authority (VPPSA) without the prior approval of the Board. VPPSA is a political subdivision of the State of Vermont and was formed in 1979 to plan, develop, and finance new electrical sources for its members, which include the Village of Ludlow, ten other municipalities and one electric co-operative. The Seven Ratepayers are the Town of Cavendish, Cavendish Town School District, the Castle Inn, Inc., and four individual residents, all from Cavendish.

The Seven Ratepayers contend that they were entitled to intervene as a matter of right, or in the alternative, that the Board abused its discretion when it denied them permissive intervention. We hold that they were entitled to intervene as a matter of right, and therefore do not reach the issue of permissive intervention.

VPPSA negotiated a six-million-dollar loan with the Chase Manhattan Bank of New York City to carry out its mission, and on July 21, 1980, executed its promissory note to the Bank. VPPSA intended to use the proceeds from this loan to finance 30% of the research and development costs for the City of Burlington Electric Department's woodchip plant; to finance 40% of the research and development costs for the Town of Springfield's proposed hydroelectric project on the Black River; to finance research and development costs for a series of hydroelectric facilities on the Missisquoi River in northwestern Vermont; and to finance development of hydroelectric projects on the Saxtons River near Bellows Falls and on the Connecticut River near Windsor, and of nuclear plants in New Hampshire and Connecticut.

VPPSA is not authorized to and does not intend to use any portion of the loan on construction at any of these sites, only for research and development.

VPPSA says that it did not seek or obtain the approval of the Board, pursuant to 30 V.S.A. § 108, before it negotiated the loan and signed the six-million-dollar note because it did not believe that statute applied to VPPSA. VPPSA waited until October 17, 1980, nearly three months after the note was executed, to notify the Board by letter of the July 21, 1980, loan. The letter described the terms of the loan agreement and told the Board, "The underlying security for the note to Chase is provided by participation agreements between the (VPPSA) members and (VPPSA)," entered into only after an affirmative vote of the qualified voters of each municipality in accordance with 30 V.S.A. § 5017.

The Board treated the letter from VPPSA's attorney as a petition for a declaratory ruling to determine whether the loan was subject to regulation under 30 V.S.A. § 108(a), and if so, as a petition for consent of the Board, pursuant to 30 V.S.A. § 5031(a)(4), to VPPSA's execution of the note. Hearing before the Board was noticed for November 18, 1980. VPPSA contested the Board's jurisdiction to conduct such a hearing.

To intervene as a matter of right, the Seven Ratepayers had to claim an interest relating to the transaction which is the subject of VPPSA's "petition" to the Board. V.R.C.P. 24(a).

The Seven Ratepayers claim as their interest their obligation to pay a portion of the principal and interest on the loan by way of the electric rates they pay to the Village of Ludlow Electric Light Department. The Town of Cavendish and the Cavendish Town School District offer an additional ground. They claim that the significant economic and geographic consequences to them of the Town of Springfield's project on the Black River, which the loan will advance, also satisfies the "interest relating to" requirement.

In opinions filed January 6, 1981, and February 18, 1981, the Board declared that it had jurisdiction to approve or disapprove the note, gave its approval, but found that the interests of the Seven Ratepayers were inadequate to support intervention as a matter of right. The Board said their interests were too remote or contingent, and not direct, substantial and significantly protectible. The Board cited United States v. Carrols Development Corp., 454 F.Supp. 1215, 1219 (N.D.N.Y.1978); Schott v. Baker, 132 Vt. 564, 326 A.2d 157 (1974); In re Estate of Callahan, 114 Vt. 252, 44 A.2d 162 (1945); as well as one of its own prior decisions, Petition of New England Tel. & Tel. Co., Docket No. 3806 (June 3, 1974), as authority for its decision.

The Vermont Administrative Procedure Act gives all parties to a contested case the opportunity "to respond and present evidence and argument on all issues involved." 3 V.S.A. § 809(c). The opportunity is important because the Board's decisions must be based on the evidence. 3 V.S.A. § 809(g). "Party" is defined by the act to include "each person ... properly seeking and entitled as of right to be admitted as a party." 3 V.S.A. § 801(5).

The act does not define the circumstances which entitle a would-be intervenor to intervention as of right, nor has the Board promulgated rules on the subject. The parties to this appeal and the Board agree, however, that V.R.C.P. 24 provides appropriate criteria for deciding this issue. Without expressing an opinion as to whether the Board may, by rule, adopt more restrictive criteria, we hold that in the absence of other standards, V.R.C.P. 24 controls.

V.R.C.P. 24(a) provides:

Upon timely application anyone shall be permitted to intervene in an action ... when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

The Board's precedents dealt with the "relating to" requirement. In United States v. Carrols Development Co., supra, intervenor status was denied to the lessor of property occupied by movies theaters who sought intervention to oppose a proposed consent agreement in a civil antitrust action. The interest he asserted were possible losses he would suffer if the theater chain was unable to divest itself of several theaters, and the United States then refused to exercise its discretion to permit continued operation of the theaters. The interest asserted was thus contingent on the nonoccurrence of two events.

In Schott v. Baker, supra, intervention was not denied because no interest existed. This Court freely conceded that the would-be intervenors in fact had the necessary interest. Rather, we refused to reverse a trial court which had properly denied intervention where an interest which should have been demonstrated below was not.

In re Estate of Callahan, supra, concerned permissible intervention, and antedated the Administrative Procedure Act. Petition of New England Tel. & Tel. Co., supra, one of the Board's own decisions which it cited as precedent, considered the question of whether intervention would aid a prompt decision. While this may be an adequate ground to deny permissive intervention, it is no basis for denying intervention of right. V.R.C.P. 24(a).

None of the precedents cited by the Board are applicable. The Seven Ratepayers are each directly interested in the outcome of the hearing. Their source of electricity, the Village of Ludlow Electric Light Department, is contractually obligated to pay for its portion of the loan. In the event that some other participant defaults, Ludlow's obligation will be further increased. VPPSA Note Case, PSB No. 4497, Finding 12 (Jan. 6, 1981).

The municipal utility's liability to VPPSA is required by the Legislature...