United States v. State of Md.

• Citation: 471 F. Supp. 1030
• Decision Date: 12 June 1979
• Docket Number: Civ. No. H-78-1063.
• Parties: UNITED STATES of America, Plaintiff, v. STATE OF MARYLAND and Public Service Commission of the State of Maryland, Defendants, and People's Counsel of the State of Maryland, Defendant-Intervenor.
• Court: U.S. District Court — District of Maryland

471 F. Supp. 1030

UNITED STATES of America, Plaintiff, v. STATE OF MARYLAND and Public Service Commission of the State of Maryland, Defendants and People's Counsel of the State of Maryland, Defendant-Intervenor.

Civ. No. H-78-1063.

United States District Court, D. Maryland.

June 12, 1979.

William L. Shraberg, Tax Div., Dept. of Justice, Washington, D.C., and Edward M. Norton, Jr., Asst. U. S. Atty., Baltimore, Md., for plaintiff.

Gerald I. Langbaum, Asst. Atty. Gen., Baltimore, for defendant State of Md.

John B. Gontrum, Staff Atty., Baltimore, Md., for defendant Public Service Com'n of State of Md.

Philip S. Shapiro, Asst. People's Counsel, Baltimore, Md., for defendant People's Counsel of State of Md. ALEXANDER HARVEY, II, District Judge:

This case presents the question whether agencies of the federal government which purchase electricity from utility companies within the State of Maryland must pay an exaction imposed by State law and termed an "environmental surcharge." Presently before the Court are defendants' motion for summary judgment and plaintiff's cross-motion for partial summary judgment. The parties have filed briefs in support of and in opposition to the pending motions, and this Court has heard oral argument. For the reasons hereinafter stated, defendants' motion for summary judgment will be granted, and plaintiff's motion for partial summary judgment will be denied.

The United States of America, plaintiff, has named as defendants in this civil action the State of Maryland and the Public Service Commission of the State of Maryland. The federal government is here challenging the constitutional validity of the Maryland environmental surcharge imposed by Article 78, § 54B, of the Annotated Code of Maryland (1975 Repl. Vol.), as applied to purchases of electricity by various agencies of the United States.¹ Besides declaratory and injunctive relief, the plaintiff is seeking to recover a money judgment from defendants for the amounts previously paid by the agencies in question because of the imposition of this surcharge.

By Orders dated October 11, 1978, this Court granted the motion to intervene filed by People's Counsel of the State of Maryland pursuant to Rule 24(b), F.R.Civ.P., but denied this intervenor's motion to dismiss the complaint. In their answers, the defendants deny that the exaction in question amounts to the imposition of an unconstitutional burden on the United States. For the purposes of this opinion, the term "defendants" will refer to both the original defendants and the intervening defendant.

I

The exaction being challenged by the federal government was first made a part of the law of Maryland by Chapter 31 of the Acts of 1971, effective July 1, 1971. As the title of the Act indicated, the legislative purpose was to establish an environmental trust fund from a surcharge on generated kilowatt hours of electric energy. The fund was to be used to underwrite a power plant environmental research and site evaluation program and to insure long-range and timely planning for power plant site selection and acquisition in order to strengthen the State's capability to define and manage a power plant environmental research program. Chapter 31, Acts of 1971.

In a preamble to Chapter 31, the Maryland Legislature recited its reasons for establishing this environmental trust fund, as follows:

* * * The General Assembly of Maryland recognizes that electric power generation and distribution makes use of our environmental trust, including air, land and water and that the citizens of Maryland and other states benefit from the production of electric energy in Maryland and further recognizes that the electric companies * * * as holders of public service franchises serving the public's interest, must bear, with other industries and governmental agencies at all levels, a shared responsibility with the citizen in the protection of the public environmental trust; and

* * * For these several reasons, it is the intent of the Maryland General Assembly to involve the human, institutional and financial resources of the private sector and Local, State and Federal Government in a long-range, stably-funded, well-designed electric power plant environmental research program to protect the quality of the State's environment, including the Chesapeake Bay and its tributary waters, while also satisfying the electric energy needs of people and industry; and

* * * It is the intent of the Maryland General Assembly to insure orderly governmental process without requiring the citizens of Maryland to pay excessive costs, either as taxpayers or as consumers.

To provide the necessary funds, an environmental surcharge was imposed by Chapter 31. Codified as § 54B(c) of Article 78 of the Annotated Code of Maryland (1969 Repl. Vol.), the original statutory provisions, insofar as they are pertinent to the pending dispute, were as follows:

(c) The Public Service Commission shall take cognizance of the mandate by the General Assembly to impose the surcharge per kilowatt hour of electric energy generated within Maryland by authorizing the electric companies to add the full amount of the surcharge to customers' bills. Revenues from the surcharge so required to be made by electric companies and collected by the Comptroller shall be placed into the special fund known as the Environmental Trust Fund. Commencing with 1972, the Secretary of Natural Resources will each year coordinate the preparation of a budget required to carry out the provisions of this act. Upon approval of the annual State budget, by the General Assembly of the State of Maryland, the Public Service Commission shall establish the amount of the surcharge per kilowatt hour for the fiscal year beginning July 1, 1972, and for each subsequent fiscal year thereafter, but in no event shall it continue beyond 1985 nor shall it ever exceed 0.3 mill per kilowatt hour. Prior to January 1, 1972, after consultation with the electric companies, the Comptroller shall establish the method of collection of the surcharge from the companies, provided that such collections shall accrue to the "Fund." In no event shall the utilities be required to pay into the fund a greater amount than that which has been collected less 1½ percent for expenses incurred in the collection thereof.

Similar provisions were enacted as Article 66C, § 763, Annotated Code of Maryland (1970 Repl. Vol.), which formerly read as follows:

763. Establishment of an Environmental Trust Fund

(a) The Environmental Trust Fund, hereafter known as the "Fund", is hereby created, effective January 1, 1972. For the purposes of this subtitle, there shall be established as an added cost of generation an environmental surcharge per kilowatt hour of electric energy generated in Maryland by any electric company as defined in Article 78 of the Annotated Code of Maryland. Such surcharge shall be initially assessed at 0.1 mill per kilowatt hour as of January 1, 1972.

The Public Service Commission shall take cognizance of the mandate by the General Assembly to impose the surcharge per kilowatt hour of electric energy generated within Maryland by authorizing the electric companies to add the full amount of the surcharge to customers' bills. Revenues from the surcharge so required to be made by electric companies and collected by the Comptroller shall be placed into the special fund known as the Environmental Trust Fund.

(b) Commencing with 1972, the Secretary of Natural Resources will each year coordinate the preparation of a budget required to carry out the provisions of this Act. Upon approval of the Annual State Budget, by the General Assembly of the State of Maryland, the Public Service Commission shall establish the amount of the surcharge per kilowatt hour for the fiscal year beginning July 1, 1972, and for each subsequent fiscal year thereafter, but in no event shall it continue beyond 1985 nor shall it ever exceed 0.3 mill per kilowatt hour.

Prior to January 1, 1972, after consultation with the electric companies, the Comptroller shall establish the method of collection of the surcharge from the companies, provided that such collections shall accrue to the "Fund". In no event shall the utilities be required to pay into the fund a greater amount than that which has been collected less 1½% for expenses incurred in the collection thereof.

Chapter 4 of the Acts of Maryland, Special Session 1973, reenacted and recodified, with changes, the above provisions of Article 66C as § 3-302, Natural Resources Article, Annotated Code of Maryland (1973 Ed.), which formerly provided:

(a) The Environmental Trust Fund is created and continued. For the purpose of this subtitle, there is established as an added cost of generation, an environmental surcharge per kilowatt hour of electric energy generated in the State to be paid by any electric company as defined in the Public Service Commission Law. This surcharge initially shall be assessed at 0.1 mill per kilowatt hour as of January 1, 1972. The Public Service Commission shall impose the surcharge per kilowatt hour of electric energy generated within the State by authorizing the electric companies to add the full amount of the surcharge to customers' bills. Revenues from the surcharge made by electric companies shall be collected by the Comptroller and placed in the Fund.

(b) The Secretary annually shall coordinate the preparation of a budget required to carry out the provisions of this subtitle. Upon approval of the budget by the General Assembly, the Public Service Commission shall establish the amount of the surcharge per kilowatt hour for the fiscal year beginning July 1, 1972, and for each subsequent fiscal year. The surcharge may not continue beyond 1985 nor may it ever exceed 0.3 mill per kilowatt hour. The Comptroller shall maintain the method of collection of the surcharge from the companies and the collections shall accrue to the "Fund." The utilities are not required to

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