In Re Investigation Regarding the Approval & Closing of the Business Combination of Duke Energy Corp. & Progress Energy, Inc.

NO. COA13-880
NORTH CAROLINA COURT OF APPEALS
Filed: 20 May 2014
IN THE MATTER OF
INVESTIGATION REGARDING THE North Carolina
APPROVAL AND CLOSING OF THE Utilities Commission
BUSINESS COMBINATION OF DUKE No. E-7, SUB 1017
ENERGY CORPORATION AND PROGRESS
ENERGY, INC.
Appeal by proposed intervenor from orders entered 13 July
2012, 12 December 2012, and 29 April 2013 by the North Carolina
Utilities Commission. Heard in the Court of Appeals 11 December
2013.
No brief filed on behalf of appellee State of North
Carolina ex rel. Utilities Commission.
Chief Counsel Antoinette R. Wike for appellee Public Staff
-- North Carolina Utilities Commission.
Law Offices of F. Bryan Brice, Jr., by Matthew D. Quinn;
and John D. Runkle, for proposed intervenor-appellant North
Carolina Waste Awareness and Reduction Network, Inc.
Womble Carlyle Sandridge & Rice, LLP, by James P. Cooney
III; Allen Law Offices, PLLC, by Dwight W. Allen; and Duke
Energy Corporation, by Deputy General Counsel Lawrence B.
Somers, for appellees Duke Energy Corporation, Duke Energy
Carolinas, LLC, and Duke Energy Progress, Inc. (formerly
Carolina Power & Light Company d/b/a Progress Energy
Carolinas, Inc.).
GEER, Judge.
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Proposed intervenor North Carolina Waste Awareness and
Reduction Network, Inc. ("NC WARN") appealed two orders of the
North Carolina Utilities Commission (1) denying NC WARN's motion
to intervene in an investigation conducted by the Commission and
(2) approving a settlement agreement by the parties to the
investigation and closing the investigation. The Commission
entered an order dismissing that appeal on the grounds that NC
WARN lacked standing to appeal. NC WARN has appealed the
dismissal order.
We hold that the Commission acted in excess of its
jurisdictional authority in dismissing NC WARN's appeal for lack
of standing, and we, therefore, vacate that order as void ab
initio and address the merits of NC WARN's first appeal. We
hold that the Commission properly denied NC WARN's motion to
intervene and, therefore, affirm the order denying intervention.
Since NC WARN was not a party to the Commission's investigation
and had no standing to appeal from the settlement order, we also
affirm that order.
Facts
On 4 April 2011, Duke Energy Corporation and Progress
Energy, Inc. filed an application requesting that the Commission
approve their proposed merger (the "merger docket"). The
companies indicated in the application that William D. Johnson
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would be named president and CEO of the merged company ("Duke")
for a three-year term. Mr. Johnson filed written testimony in
the merger docket stating he would be president and CEO of Duke,
and James Rogers filed testimony stating he would be the
executive chairman of Duke's board of directors. On 29 June
2012, the Commission entered an order approving the merger
subject to regulatory conditions and code of conduct. Duke
closed the merger on 2 July 2012. The next day, on 3 July 2012,
Duke announced that Mr. Rogers would replace Mr. Johnson as
president and CEO of the company.
On 6 July 2012, the Commission opened an investigation,
pursuant to N.C. Gen. Stat. § 62-37 (2011), into the change in
leadership immediately following the merger. NC WARN filed a
motion to intervene in the investigation on 10 July 2012,
alleging it was a non-profit corporation, with approximately
1,000 individual members, established for the purpose of
"reduc[ing] hazards to public health and the environment from
nuclear power and other polluting electricity production through
energy efficiency and renewable energy resources."
The motion alleged that most of NC WARN's members resided
in North Carolina and were customers of Duke, and its members
were "concerned about the merger's potential impacts on the cost
of their electricity." NC WARN stated that it had intervened in
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the merger docket, and that if allowed to intervene in the
investigation, it would "assist and support the Commission."
Attached to the intervention motion were NC WARN's "initial
scoping comments to assist the Commission in defining the
investigation."
On 13 July 2012, the Commission entered an order denying NC
WARN's motion to intervene. The order explained that the
proceeding was "an investigation pursuant to the Commission's
supervisory authority under Article 3 of Chapter 62 [of the
General Statutes], rather than an application or rate case being
conducted pursuant to the Commission's authority under Article
4." The Commission also found that "NC WARN is not a party
affected within the meaning of G.S. 62-37, requiring the
Commission to 'make no order without affording the parties
affected thereby notice and a hearing.'"
Relying on State ex rel. Utils. Comm'n v. Carolina Util.
Customers Ass'n, 163 N.C. App. 1, 592 S.E.2d 277 (2004)
(hereinafter "CUCA"), the Commission further found that its
"order in this proceeding will have only a generalized effect on
NC WARN's members, no more and no less than it will have on all
of Duke's and Progress' ratepayers." In addition, the Public
Staff of the North Carolina Utilities Commission ("Public
Staff") and the Attorney General were parties to the
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investigation, and the Commission found that those parties
"represent the interest of all consumers who will be affected by
the Commission's investigation."
On 29 November 2012, the Staff of the North Carolina
Utilities Commission, the Public Staff, and Duke entered into a
settlement agreement regarding the investigation. The agreement
provided that Mr. Rogers, Mr. Johnson, and other individuals had
testified before the Commission during the investigation; that
Duke had filed thousands of pages of documents with the
Commission pursuant to orders during the investigation; and that
the parties desired to resolve "all matters and issues . . .
without further litigation and expense and to move forward in a
positive manner." The terms of the settlement agreement
included that: (1) Duke maintain certain staff in Raleigh; (2)
Duke create a board committee for regulatory compliance; (3)
Duke provide retail ratepayers an "additional $25 million in
fuel and fuel-related cost savings" and contribute "an
additional $5 million to workforce development and low-income
assistance," each on top of amounts provided for in the merger
order; (4) Duke make certain executive-level staffing changes;
(5) Duke bring in two new outside board members and retire
current board members in a certain manner; (6) Mr. Rogers retire
in December 2013 and the new top executive be hired from outside
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the company; and (7) Duke "issue a statement of acknowledgement
to the Commission that its activities have fallen short of the
Commission's understanding of Duke's obligations under its
regulatory compact that frame the duties for a regulated utility
in this state."
Although denied intervention, NC WARN continued to file
comments in the investigation docket during the investigation,
and NC WARN filed a motion opposing the settlement agreement on
3 December 2012. The Commission entered an order approving the
settlement agreement and closing the investigation on 12
December 2012. The order provided that the "integrity of the
Commission to carry out its statutory mandate relies on the
openness and honesty of the regulated public utilities . . . ."
The order further provided, however, that the settlement
agreement "restore[d] the balance between legacy Duke and legacy
Progress in the merged company . . ., reaffirm[ed] the
regulatory compact and continued public confidence in the
integrity of utility regulation, and allow[ed] the merged
company to focus on its mission to provide affordable, reliable
electric service to North Carolina consumers."
On 9 January 2013, NC WARN timely appealed the intervention
order and the settlement order. Prior to NC WARN's service of
the proposed record on appeal, Duke filed a motion to dismiss NC
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WARN's appeal with the Commission on 7 March 2013. The
Commission entered an order dismissing NC WARN's appeal for lack
of standing on 29 April 2013.
The majority of the Commission concluded that NC WARN had
no right to intervene in the investigation under CUCA, and, as a
non-party, NC WARN had no right to appeal. The majority further
determined that it had jurisdiction to dismiss NC WARN's appeal
for lack of standing. It reasoned that under N.C. Gen. Stat. §
62-90(c) (2011) and Farm Credit Bank of Columbia v. Edwards, 121
N.C. App. 72, 464 S.E.2d 305 (1995), the Commission retained
certain jurisdiction over appealed orders until the appeal is
docketed in the appellate court, including jurisdiction to
dismiss an appeal by a non-party.
Commissioner ToNola D. Brown-Bland concurred in the result.
Commissioner Brown-Bland reasoned that because the investigation
was pursuant to the Commission's Article 3 powers and was wholly
separate from the Commission's Article 4 judicial function, the
only party affected by the investigation was necessarily Duke,
the party investigated, since there was no assertion by any
party during the investigation that the public's interests were
not adequately protected. Accordingly, only Duke could appeal
the settlement order. Commissioner Brown-Bland, like the
majority, believed the Commission could dismiss NC WARN's
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appeal, an appeal by an unaffected non-party, as a nullity,
although she additionally concluded that the Commission could
dismiss the appeal under Rule 25 of the Rules of Appellate
Procedure.
Commissioner Bryan E. Beatty dissented because, while he
agreed that the Commission properly denied NC WARN's
intervention motion, he disagreed that the Commission had the
authority to dismiss NC WARN's appeal from the intervention
order. Commissioner Beatty reasoned that N.C. Gen. Stat. § 62-
90(a) did not limit NC WARN, a non-party, from appealing since
that statute was limited to a "'final order or decision'" and
the intervention order was an interlocutory procedural order.
He further reasoned that Rule 25 of the Rules of Appellate
Procedure did not give the Commission authority to dismiss the
appeal for lack of standing because that rule was limited to
dismissals for failure to take timely action, and there was no
allegation NC WARN had not timely taken and perfected its
appeal.
Commissioner Beatty noted that, although the Commission
properly exercised its discretion in denying NC WARN
intervention, "the majority's decision to dismiss NC WARN's
appeal of that ruling on that same basis gives the appearance
that the majority is acting as an appellate court in affirming
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its own exercise of discretion." Since Duke had cited no
authority directly stating the Commission had the power to
dismiss NC WARN's appeal from the intervention order,
Commissioner Beatty "would follow the more cautious route and
leave th[e] question to the appellate court."
On 16 May 2013, NC WARN timely appealed the order
dismissing its first appeal and, in the same notice of appeal,
again appealed the intervention order and settlement order. On
the same day, 16 May 2013, NC WARN filed a petition for writ of
certiorari in this Court seeking review of the order dismissing
its first appeal. This Court entered an order denying NC WARN's
petition on 4 June 2013. Duke filed a motion to dismiss NC
WARN's second appeal in this Court on 7 August 2013.
I
We first address the Commission's order dismissing NC
WARN's first appeal, including its appeal from the intervention
order, for lack of standing. NC WARN argues, both in its brief
and in response to Duke's motion to dismiss filed in this Court,
that the Commission did not have jurisdiction to dismiss its
first appeal for lack of standing. We agree.
In reviewing an order by the Commission, this Court "may
affirm or reverse the decision of the Commission, declare the
same null and void, or remand the case for further proceedings;
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or it may reverse or modify the decision if the substantial
rights of the appellants have been prejudiced because the
Commission's findings, inferences, conclusions or decisions are:
(1) [i]n violation of constitutional provisions, or (2) [i]n
excess of statutory authority or jurisdiction of the Commission,
or (3) [m]ade upon unlawful proceedings, or (4) [a]ffected by
other errors of law, or (5) [u]nsupported by competent, material
and substantial evidence in view of the entire record as
submitted, or (6) [a]rbitrary or capricious." N.C. Gen. Stat. §
62-94(b) (2013).
"The general rule is that an appeal takes the case out of
the jurisdiction of the trial court. Thereafter, pending the
appeal, the trial judge is functus officio." Estrada v. Jaques,
70 N.C. App. 627, 637, 321 S.E.2d 240, 247 (1984). This general
rule is, however, "subject to two exceptions and one
qualification[.]" Id."The exceptions are that notwithstanding the
pendency of an appeal the trial judge
retains jurisdiction over the cause (1)
during the session in which the judgment
appealed from was rendered and (2) for the
purpose of settling the case on appeal. The
qualification to the general rule is that
the trial judge, after notice and on proper
showing, may adjudge the appeal has been
abandoned and thereby regain jurisdiction of
the cause."
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Id. at 637-38, 321 S.E.2d at 247 (quoting Bowen v. Hodge Motor
Co., 292 N.C. 633, 635-36, 234 S.E.2d 748, 749 (1977)).
While it retains jurisdiction over an appealed matter, a
trial tribunal may dismiss an appeal under the circumstances
provided for in Rule 25 of the Rules of Appellate Procedure.
Rule 25 provides in relevant part:
(a) Failure of appellant to take timely
action. If after giving notice of appeal
from any court, commission, or commissioner
the appellant shall fail within the times
allowed by these rules or by order of court
to take any action required to present the
appeal for decision, the appeal may on
motion of any other party be dismissed.
Prior to the filing of an appeal in an
appellate court motions to dismiss are made
to the court, commission, or commissioner
from which appeal has been taken; after an
appeal has been filed in an appellate court
motions to dismiss are made to that court.
Motions to dismiss shall be supported by
affidavits or certified copies of docket
entries which show the failure to take
timely action or otherwise perfect the
appeal, and shall be allowed unless
compliance or a waiver thereof is shown on
the record, or unless the appellee shall
consent to action out of time, or unless the
court for good cause shall permit the action
to be taken out of time.
This Court interpreted the scope of Rule 25 in Estrada,
where the trial court dismissed an appeal on the grounds that
the appealed order was interlocutory. 70 N.C. App. at 639, 321
S.E.2d at 248. The Court explained: "Taken out of context, the
second sentence of the Rule might provide the trial court with
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authority to dismiss interlocutory appeals. However, elementary
principles of construction require that words and phrases be
interpreted contextually and in harmony with the underlying
purposes of the whole." Id. The Court reasoned: "The title and
first and third sentences clearly indicate that the motions
described in the second sentence are only those for failure to
comply with the Rules of Appellate Procedure or with court
orders requiring action to perfect the appeal." Id.In Estrada, the plaintiff appealed "various orders" prior
to final judgment being entered as to all claims and parties,
and the trial court dismissed the plaintiff's appeal as
interlocutory. Id. at 637, 321 S.E.2d at 247. This Court then
reviewed on appeal whether the trial court had jurisdiction to
dismiss the plaintiff's appeal. Id. This Court laid out the
above rules for a trial court's continued jurisdiction over an
appealed matter and determined that the exceptions and
qualification did not apply. Id. at 638, 321 S.E.2d at 248.
The Court concluded that, given its interpretation of Rule 25,
the trial court did not have jurisdiction under Rule 25 to
dismiss the appeal on the grounds that the appeal was
interlocutory. Id. at 639, 321 S.E.2d at 248. Consequently,
the Court held, the trial court "acted beyond [its] authority in
dismissing the appeal." Id.-13-
Here, there is similarly no contention that NC WARN
abandoned its first appeal or that the order dismissing NC
WARN's first appeal was in any way related to settling the
record on appeal. However, with respect to the "exception" in
which a trial court maintains jurisdiction over an appealed
matter during the session in which the appealed order was
rendered, the Commission's order provided that "[i]n contrast to
a Superior Court judge, the Utilities Commission never loses
jurisdiction over its cases before appeals are docketed in the
appellate court due to termination of a term of court." The
order cited N.C. Gen. Stat. § 62-90(c) in support of that
distinction. See id. ("The Commission may on motion of any
party to the proceeding or on its own motion set the exceptions
to the final order upon which such appeal is based for further
hearing before the Commission."). The Commission further
reasoned that its jurisdiction over appealed orders was "more
pervasive than the General Court of Justice, especially in its
investigation determinations under Article 3."
The Commission's order additionally provided: "North
Carolina recognizes an exception to the rule that a lower
tribunal loses jurisdiction upon notice of appeal so as to
permit the lower tribunal to modify its judgment thereby also
permitting it to retain jurisdiction to dismiss an appeal."
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(Emphasis added.) In support of this latter proposition, the
Commission cited Farm Credit Bank as support for its position
that "[e]ven where the retention by the trial court of
jurisdiction after notice of appeal may be circumscribed for
settling the record on appeal, the courts have permitted the use
of this limited jurisdiction to dismiss an appeal."
However, Farm Credit Bank does not stand for the
proposition that simply because a trial tribunal retains
jurisdiction over a matter in order to settle the record on
appeal, the trial tribunal is empowered to dismiss the appeal
for reasons unrelated to settling the record during that time.
Rather, the Farm Credit Bank Court held that the trial court had
jurisdiction over a motion to dismiss an appeal as being
unauthorized because (1) that issue was expressly made an
objection to the proposed record on appeal, (2) the plaintiff
consented to the trial court addressing the matter, and (3) the
plaintiff waived any objection to the jurisdictional issue by
requesting affirmative relief from the trial court on other
matters. 121 N.C. App. at 77, 464 S.E.2d at 307-08.
We note that Farm Credit Bank's reasoning is directly
contrary to the well-established principle that "[s]ubject
matter jurisdiction 'cannot be conferred upon a court by
consent, waiver or estoppel, and therefore failure to . . .
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object to the jurisdiction is immaterial.'" In re T.R.P., 360
N.C. 588, 595, 636 S.E.2d 787, 793 (2006) (quoting In re Sauls,
270 N.C. 180, 187, 154 S.E.2d 327, 333 (1967)). Nevertheless,
the validity of the Farm Credit Bank Court's reasoning aside,
that opinion's holding simply does not support the Commission's
assertion that the Commission's continuing jurisdiction over
certain matters, such as jurisdiction to hold a further hearing
on exceptions set out in a notice of appeal under N.C. Gen.
Stat. § 62-90(c), necessarily gives the Commission the authority
to dismiss an appeal for reasons unrelated to the specific
nature of that continued jurisdiction.
Moreover, the Commission's broad reading of Farm Credit
Bank conflicts with the analysis in Estrada. In Estrada, the
Court explained that since the session of the term of the
appealed order had ended and there was no allegation that the
plaintiff had abandoned the appeal or failed to timely take
action with respect to the appeal, "the Superior Court had
jurisdiction on [the day the defendants moved to dismiss the
appeal] only for the purpose of settling the case on appeal."
70 N.C. App. at 638, 321 S.E.2d at 248.
The Court went on to hold that because the trial court's
order dismissing the appeal as interlocutory had nothing to do
with settling the record on appeal, the order went beyond the
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court's authority. Id. at 638, 639, 321 S.E.2d at 248. Since
Farm Credit Bank could not overrule Estrada, see In re Civil
Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989), we do not
read Farm Credit Bank as providing a trial tribunal jurisdiction
to dismiss an appeal during a time of continued jurisdiction for
a reason unrelated to that continued jurisdiction apart from the
trial tribunal's limited power to dismiss appeals as provided in
Rule 25.
Thus, the Commission was correct that it had some continued
jurisdiction over the orders at issue in NC WARN's first appeal,
N.C. Gen. Stat. § 62-90(c). However, that continued
jurisdiction allowed the Commission to dismiss NC WARN's appeal
only based on the grounds specified in Rule 25.
We initially observe that because NC WARN's first appeal
had not yet been docketed with this Court, Duke's motion to
dismiss the appeal was properly made to the Commission. N.C.R.
App. P. 25(a). Estrada held that Rule 25 gives a trial court
authority to dismiss an appeal, prior to docketing in the
appellate court, "only . . . for failure to comply with the
Rules of Appellate Procedure or with court orders requiring
action to perfect the appeal." 70 N.C. App. at 639, 321 S.E.2d
at 248. There is no dispute in this case that NC WARN's first
notice of appeal was timely filed, that NC WARN timely complied
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with all appellate rules concerning its appeal, and that NC WARN
properly perfected its appeal. Consequently, the Commission's
order dismissing NC WARN's first appeal was not properly based
upon Rule 25.
The Commission determined, however, that it nonetheless had
jurisdiction to dismiss NC WARN's appeal under the rule stated
by our Supreme Court in State ex rel. Utils. Comm'n v. Edmisten,
291 N.C. 361, 365, 230 S.E.2d 671, 674 (1976) that "an attempted
appeal from a nonappealable order is a nullity and does not
deprive the tribunal from which the appeal is taken of
jurisdiction." That rule does not support the Commission's
order, however, because the authority to ignore an appeal from a
nonappealable order and proceed as if no appeal had been taken
is not equivalent to authority to dismiss the appeal itself. In
Edmisten, the Supreme Court held that the intervenor's appeal
from a nonappealable order did not divest the Commission of
jurisdiction over the appealed order, and, therefore, the
Commission "was not deprived of authority later to modify this
order." Id. Notably, however, the Commission in Edmisten did
not attempt to dismiss the appeal, and it was this Court that
held, in a different opinion, that the appealed order was
interlocutory and, therefore, nonappealable. Id. at 363-64, 230
S.E.2d at 673.
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Finally, the Commission's order was based on the reasoning
that it could dismiss the appeal of any non-party to the
proceeding, including NC WARN, since a non-party has no
statutory right to appeal. This Court has, however, recognized
a non-party's right to appeal from an order denying the non-
party's motion to intervene, despite the fact that the non-party
is, by virtue of the appealed order, not a party to the case.
See Procter v. City of Raleigh Bd. of Adjustment, 133 N.C. App.
181, 184, 514 S.E.2d 745, 747 (1999) (holding proposed
intervenors had standing to appeal order denying motion to
intervene under Rule 24 of Rules of Civil Procedure, reversing
intervention order, and remanding for entry of order allowing
intervention). See also State ex rel. Easley v. Philip Morris
Inc., 144 N.C. App. 329, 334-35, 548 S.E.2d 781, 784 (2001)
(reviewing merits of proposed intervenor's appeal from order
denying motion to intervene and affirming denial of
intervention).
If sustained, the Commission's position that it should be
permitted to dismiss NC WARN's appeal from its order denying NC
WARN's motion to intervene since NC WARN was a non-party would
deprive NC WARN of appellate review of the denial of its motion
to intervene. The Commission's decision would be insulated from
review. We do not believe the General Assembly intended that
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result. We, therefore, hold that the Commission exceeded its
authority in dismissing NC WARN's appeal for lack of standing.
In Estrada, after holding that the trial court had no
authority to dismiss the plaintiff's appeal as interlocutory,
the Court noted: "Depending on our interpretation of the legal
basis of the order [dismissing the plaintiff's appeal], we could
either: (1) treat [the plaintiff's] appeal as an application for
certiorari, grant same, and consider the merits; or (2) treat
the order as in excess of authority and void ab initio, and
consider the purported appeal, assuming the substantial right
doctrine applies [to the interlocutory appeal], as properly
before us." 70 N.C. App. at 640, 321 S.E.2d at 249 (internal
citations omitted).
The Court held, however, that it was unable to treat the
plaintiff's appeal as a petition for writ of certiorari because
the plaintiff had already petitioned the Court for a writ of
certiorari to review the order dismissing his appeal, a separate
panel of the Court had previously denied that petition, and the
Estrada Court was bound by the prior decision denying the
petition to review the same order. Id. at 640-41, 321 S.E.2d at
249. The Court further held that although it could treat the
order dismissing the appeal as void ab initio and consider the
merits of the appeal, the appeal at issue was interlocutory and,
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since a prior panel of the Court had also denied the plaintiff's
separate petition for writ of certiorari to review the orders
underlying the first appeal, the Estrada Court was unable to
conclude that the appeal affected a substantial right. Id. at
641, 321 S.E.2d at 249. Consequently, the Court dismissed the
plaintiff's appeal of the interlocutory orders. Id.In this case, as in Estrada, NC WARN has already filed a
petition for writ of certiorari in this Court seeking review of
the Commission's order dismissing its first appeal. A separate
panel of this Court has denied that petition. We may not,
therefore, treat NC WARN's appeal as a petition for writ of
certiorari and allow it in order to reach the merits of NC
WARN's appeal from the underlying orders. There is no
impediment, however, to our treating the Commission's order "as
in excess of authority and void ab initio, and consider[ing] the
purported appeal . . . as properly before us." Id. at 640, 321
S.E.2d at 249.
We, therefore, hold that the Commission's order dismissing
NC WARN's first appeal is void ab initio and we treat NC WARN's
first appeal, from the intervention order and settlement order,
as properly before us. In light of our holding, we need not
address the sufficiency of NC WARN's second appeal from the
intervention order and the settlement order.
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II
We next address NC WARN's appeal from the order denying its
motion to intervene. We initially observe that NC WARN does not
substantively challenge, in its brief, the Commission's order
denying NC WARN's motion to intervene as of the time the order
was entered. Although NC WARN makes an unsupported assertion
that "the Commission's denial of NC WARN's Motion to Intervene
was improper because NC WARN had standing to participate in this
case," that bare contention, without any supporting authority or
argument, is insufficient to raise the issue of the merits of
the intervention order at the time it was entered. N.C.R. App.
P. 28(b)(6).
Rather than arguing that the intervention order was
erroneous when entered, NC WARN contends that the Commission's
subsequent settlement order affected NC WARN, thereby giving
rise to NC WARN's standing to intervene in this investigation
docket. Since NC WARN has abandoned its right to substantively
challenge the intervention order, we affirm that order.
We now turn to NC WARN's argument that it had standing to
intervene after entry of the settlement order. The Commission's
investigation in this case was an investigation pursuant to N.C.
Gen. Stat. § 62-37, which provides:
(a) The Commission may, on its own
motion and whenever it may be necessary in
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the performance of its duties, investigate
and examine the condition and management of
public utilities or of any particular public
utility. In conducting such investigation
the Commission may proceed either with or
without a hearing as it may deem best, but
shall make no order without affording the
parties affected thereby notice and hearing.
(Emphasis added.)
NC WARN contends that it was a "party affected" by the
Commission's settlement order because the settlement order
"directly modified the underlying merger order in the merger
docket" since it "goes outside the scope of investigation and
attempts to . . . resolve matters in the merger dockets." NC
WARN was a party to the merger docket, and it contends that it
"cannot be a party affected in the merger dockets and somehow no
longer affected when the merger order is modified in another
docket."
We note that NC WARN never filed a second motion to
intervene with the Commission, after entry of the settlement
order, presenting the argument it now raises on appeal.
However, NC WARN did argue in its first notice of appeal that
the settlement order "approved a settlement agreement that had
the intent and effect of significantly modifying the
Commission's [merger order] in the other dockets relating to the
merger of the two electric utilities . . . in which NC WARN was
an intervening party." This is essentially the same basis upon
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which NC WARN now contends that it had standing to intervene in
this investigation.
In its order dismissing NC WARN's first appeal, the
Commission determined that NC WARN was properly denied
intervention and that "the Commission's order in this docket
does not modify its order in the merger docket as NC WARN
alleges." We assume, without deciding, that NC WARN's
assertions in its first notice of appeal, and the Commission's
ruling in its order dismissing that appeal, sufficiently
preserve for appeal NC WARN's standing argument.
This Court addressed a similar standing issue in CUCA.
There, the Commission and a South Carolina agency initiated a
joint investigation of Duke Power under N.C. Gen. Stat. § 62-37regarding accounting irregularities at Duke alleged by a
whistleblower. CUCA, 163 N.C. App. at 2, 592 S.E.2d at 278.
Carolina Utility Customers Association, Inc. ("CUCA"), an
association representing many of North Carolina's largest
industrial manufacturers, sought permission to "participate in"
the investigation "to insure that the interests of its rate-
paying manufacturers who may have suffered disproportionately
from any excessive charges for electrical power were protected."
Id.
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The Commission denied CUCA's request to participate, and
during the investigation it was determined that Duke had,
through accounting practices, "'inappropriately reduced'" its
"'pre-tax utility operating income'" for several years by
millions of dollars. Id. at 3, 592 S.E.2d at 279. The
Commission Staff and Duke then negotiated a settlement agreement
whereby Duke would be required, among other things, to correct
erroneous accounting entries, "'make a one-time $25 million
credit in 2002 to its deferred fuel amounts in North Carolina
and South Carolina . . . to be incorporated into the next fuel
cost proceedings in the respective states[,]" implement certain
remedial actions, and "'acknowledge and regret that
communications with the two State Commissions failed to
adequately detail significant changes to prior accounting
practices[.]'" Id. at 4, 592 S.E.2d at 279.
The Commission held a staff conference to discuss the
settlement agreement, and CUCA presented the Commission, at the
conference, with a "motion requesting further investigation and
hearing." Id. at 5, 592 S.E.2d at 279. The Commission denied
CUCA's motion and voted unanimously to approve the settlement
agreement, but the vote did not constitute a final order since
the South Carolina agency had not yet approved the agreement.
Id., 592 S.E.2d at 279-80.
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Prior to entry of a final order, CUCA and an individual
ratepayer, Wells Eddleman, filed petitions to intervene and
motions for further investigation and hearing. Id. at 2, 5, 592
S.E.2d at 278, 280. The Commission subsequently entered a final
order granting CUCA and Eddleman's motions to intervene after
concluding that "'as ratepayers, CUCA [and] Eddleman . . . are
affected by the level of Duke's rates and have an interest in
this matter.'" Id. at 5, 592 S.E.2d at 280. The Commission's
order, however, denied the motions for further hearing and
formally approved the settlement agreement. Id. On appeal,
CUCA and Eddleman "raise[d] issues regarding the investigation
of Duke and the Commission's subsequent order approving the
settlement agreement resulting from that investigation." Id. at
6, 592 S.E.2d at 280. Duke, in turn, cross-appealed and argued
that the Commission erred in granting CUCA and Eddleman
intervention since they were not "'parties affected'" by the
investigation. Id.
This Court in CUCA held that CUCA and Eddleman were not
"'parties affected'" by the order and, therefore, had no
standing to appeal the Commission's approval of the settlement
agreement. Id. The Court first noted that "the investigation
of Duke was conducted by the Commission pursuant to its powers
and duties defined under Article 3 of our General Statutes,
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particularly Section 62-37, and not pursuant to the Commission's
judicial functions outlined in Article 4." Id. The Court
observed that intervention under the Commission Procedural Rules
was permitted as follows: "'Any person having an interest in the
subject matter of any hearing or investigation pending before
the Commission may become a party thereto and have the right to
call and examine witnesses, cross-examine opposing witnesses,
and be heard on all matters relative to the issues involved . .
. .'" Id. at 7-8, 592 S.E.2d at 281 (quoting N.C.U.C. Rule R1-
19(a)). The Commission had, therefore, "concluded that CUCA and
Eddleman not only had an 'interest in the subject matter' but
were also 'parties affected' by the order . . . ." Id. at 8,
592 S.E.2d at 281.
With respect to whether CUCA and Eddleman were "parties" to
the investigation, the Court held that CUCA and Eddleman were
not "parties" under N.C. Gen. Stat. § 62-37 until the
Commission's final order granted their motion to intervene. 163
N.C. App. at 9, 592 S.E.2d at 282. The Court then addressed
whether CUCA and Eddleman were parties "affected" by the order,
and looked to a case interpreting the prior version of the
statute providing a right to appeal the Commission's orders for
"'any party affected thereby.'" Id. (quoting In re Hous. Auth.
of City of Charlotte, 233 N.C. 649, 657, 65 S.E.2d 761, 767
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(1951)). The Court observed that "'party affected'" had been
defined, under that statute, as follows: "'[A] party is not
affected by a ruling of the Utilities Commission unless the
decision affects or purports to affect some right or interest of
a party to the controversy and [is] in some way determinative of
some material question involved.'" Id. (quoting In re Hous.
Auth., 233 N.C. at 657, 65 S.E.2d at 767).
Further, with respect to whether a party is "affected," the
Court explained that the current appeals statute, which replaced
the statute construed in In re Housing Authority, used the
phrase "'party aggrieved'" instead of "'party affected.'" 163
N.C. App. at 10, 592 S.E.2d at 282 (quoting N.C. Gen. Stat. §
62-90(a) (2003)). The Court observed that, generally, "'[a]
"party aggrieved" is one whose rights have been directly and
injuriously affected by the judgment entered . . . .'" Id.(quoting Hoisington v. ZT-Winston-Salem Assocs., 133 N.C. App.
485, 496, 516 S.E.2d 176, 184 (1999)). In addition, "[t]his
Court's interpretation of 'party aggrieved' as it relates to an
appeal of an order by the Commission also suggests that more
than a generalized interest in the subject matter is required."
Id.-28-
Applying those interpretations of "'party affected'" and
"'party aggrieved'" to the facts before it, the Court in CUCA
reasoned:
Duke was the only party recognized by the
Commission throughout the investigation, as
well as the only party directly and
substantially affected by any subsequent
order arising therefrom in the sense
envisioned by the statute. As such, only
Duke was entitled to receive notice and
hearing pursuant to Section 62-37 to protect
its due process rights. While CUCA and
Eddleman may have had an interest in the
matter, their interest was only generalized
and unsubstantial -- not specific to them as
individual Duke customers.
Id., 592 S.E.2d at 283 (emphasis added).
The Court also rejected CUCA and Eddleman's argument that
there was no party in the investigation that adequately
protected their interests. Id. at 11, 592 S.E.2d at 283. In
fact, the Court pointed out, the Public Staff participated in
the investigation and recommended approving the settlement
agreement, and the Public Staff acts independently of the
Commission and was created "'to represent [the interests of] the
using and consuming public' in matters before the Commission."
Id. (quoting N.C. Gen. Stat. § 62-15(b) (2003)).
The Court in CUCA concluded that while CUCA and Eddleman
"may have had an interest in the matter sufficient for
intervention in a hearing or investigation pending before the
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Commission pursuant to Article 4, Article 3 requires the
prospective interveners to also be 'parties affected' pursuant
to Section 62-37." Id. at 11-12, 592 S.E.2d at 283-84. Since
"approval of the settlement agreement only had a generalized and
unsubstantial affect on CUCA and Eddleman, they were not
'parties affected[,]'" and the Commission abused its discretion
in granting their petitions to intervene. Id. at 12, 592 S.E.2d
at 284. Further, since CUCA and Eddleman had no standing to
appeal from the Commission's final order, the Court affirmed the
order. Id. at 6, 12, 592 S.E.2d at 280, 284.
Here, Duke was the only party investigated by the
Commission and, as in CUCA, the investigation was pursuant to
the Commission's Article 3 powers and not its Article 4 judicial
power. Like CUCA, NC WARN is an organization of ratepayer
members and sought to intervene in order to protect the
financial interests of its members. In other words, NC WARN's
interest was "only generalized and unsubstantial -- not specific
to [it] as [an] individual Duke customer[]." Id. at 10, 592
S.E.2d at 283. And, as in CUCA, the Public Staff, the party
protecting the interest of the consuming public, participated in
the investigation and recommended the Commission adopt the
settlement agreement. NC WARN's interest in this case is,
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therefore, materially indistinguishable from the interests of
the intervenors in CUCA.
NC WARN nonetheless tries to distinguish CUCA from the
present case by arguing that here, unlike in CUCA, the
settlement order modified the merger order and NC WARN, having
already been a party to the merger docket, was therefore
necessarily a party affected by the settlement order. In
support of its argument, NC WARN relies upon the following
specific provisions of the settlement agreement:
C. Duke will guarantee that Duke's North
Carolina retail ratepayers will receive
an additional $25 million in fuel and
fuel-related cost savings over and
above the amount Duke is obligated to
provide pursuant to the Merger Order.
D. Duke will contribute an additional $5
million to workforce development and
low-income assistance in North Carolina
on top of the amount provided in the
Merger Order.
NC WARN also points to the settlement agreement's statement
that the parties "desire to resolve all matters and issues
involved in the Commission's investigation and the Merger
Dockets without further litigation and expense and to move
forward in a positive manner." These provisions of the
settlement agreement were summarized in the Commission's
settlement order.
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Based on the provisions highlighted by NC WARN, however, we
believe that the settlement agreement does not modify the merger
order but, by its own terms, requires Duke to comply with
provisions that are "over and above" obligations placed on Duke
in the merger order. While we acknowledge that the parties'
assertion in the settlement agreement that they wanted to
resolve "all matters and issues involved in the . . . Merger
Dockets" unnecessarily blurred the otherwise clear distinction
between the two proceedings, the parties' loose statement does
not serve to alter the material terms of the settlement
agreement highlighted by NC WARN. Based on the face of the
agreement as to those terms, we cannot conclude that the
settlement order modified the merger order.
Further, even assuming that the settlement order dealt with
some of the same matters at issue in the merger order, CUCA
makes clear that there are different requirements for
intervention in an Article 4 judicial proceeding before the
Commission and intervention in an Article 3 investigation before
the Commission. While it appears that the Commission's
Procedural Rules permit intervention by "'[a]ny person having an
interest in the subject matter of any hearing'" before the
Commission, id. at 7, 592 S.E.2d at 281 (quoting N.C.U.C. Rule
R1-19(a)), the "party affected" standard under N.C. Gen. Stat. §
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62-37(a) is higher and does not permit intervention by a party
that merely has a "generalized and unsubstantial" interest in
the matter, CUCA, 163 N.C. App. at 10, 592 S.E.2d at 283. Thus,
under CUCA, even assuming NC WARN had an interest sufficient to
intervene in the merger docket, a non-Article 3 proceeding, NC
WARN's intervention in the merger docket does not show that it
was a party affected for purposes of the investigation docket.
Under CUCA, we hold that NC WARN was properly denied
intervention by the Commission and that the subsequent entry of
the settlement order did not change NC WARN's status and make NC
WARN a "party affected." Consequently, as in CUCA, NC WARN has
no standing to appeal from the settlement order, and we affirm
that order as well. In light of our disposition, we deny Duke's
motion to dismiss the appeal.
Vacated in part; affirmed in part.
Judges BRYANT and CALABRIA concur.