Link to PDF file
647 S.E.2d 879
No. 33201 Jerome E. Burch, Levi Miller, Frank Fitzpatrick, Charles E. Thomas, Richard
Fiedler, Robert F. Hurley, and John T. Mitchell v. NedPower Mount Storm,
LLC and Shell Windenergy, Inc.
Benjamin, Justice, dissenting:
The appellant landowners conceded, and the Court apparently agreed, that if
appellee NedPower (See footnote 1)
were a public utility with the power of eminent domain, they could not
have the construction and operation of its wind-turbine facilities enjoined as a private
nuisance. Rather, they would be limited to a claim for money damages in an eminent domain
or inverse condemnation proceeding (See footnote 2)
for noise, unsightliness, and any diminution in the
value of their property caused by the facilities. (See footnote 3)
The explicit or implicit assumptions of the appellants and apparently of the
Majority in this appeal is that: (1) NedPower must be subject to the full range of regulation
by the PSC as provided in Chapter 24 of the West Virginia Code with respect to its rates and
practices in order to be classified as a real public utility; and (2) that only such real
public utilities have the power of eminent domain under W. Va. Code § 54-1-2(a)(2)(2006). (See footnote 4) In my opinion, both of these premises are incorrect.
A. NedPower is a Public Utility
The appellees describe NedPower time and again as being an EWG and its
PSC certificated wind-powered electric generating facilities as being an EWG project. (See footnote 5)
EWG, the first letters of exempt wholesale generator, is derived from the Energy Policy
Act adopted by Congress in 1992. According to National Association of Regulatory Utility
Commissioners v. Security & Exchange Commission,
63 F.3d 1123 (D.C. Cir. 1995), the
Energy Policy Act's
purpose was to encourage stead[y] increases [in] U.S. energy
security in cost effective . . . ways by us[ing] the market rather
than government regulation wherever possible both to advance
energy security goals and to protect consumers. In order to
facilitate the development of a competitive market for wholesale
electric power, Congress amended the [Public Utility Holding
Company Act of 1935] to make it easier for holding companies
to invest in an exempt wholesale generator or EWG, which
is defined as any person . . . exclusively in the business of
owning or operating . . . all or part of one or more
eligible facilities and selling electric energy at
An eligible facility is in turn defined to mean a facility that is
either used for the generation of electric energy exclusively for
sale at wholesale, or . . . used for the generation of electric
energy and leased to one or more public utility companies
. . . .
Because Congress viewed the [Public Utility Holding Company
Act's] limitations on corporate structures as stifling [to] the
growth of independent power, the 1992 amendments exempted
EWGs from all provisions of [the Public Utility Holding
Company Act]. The amendments also ease the restrictions on
companies that wish to invest in EWGs.
National Assoc. of Reg. Commr's, 63 F.3d at 1125 (internal citations omitted) (emphasis
This is not the first time that an EWG has been before the Court, yet neither
parties nor the Court made any reference to the earlier case, that of Affiliated Construction
Trades Council Foundation v. Public Service Commission of West Virginia, 211 W. Va. 315,
565 S.E.2d 778 (2002). While there are a number of facets to that case, the most significant
holding of the majority for purposes of this case was that Big Sandy, the corporation at issue
therein, was, a public utility despite the fact that the PSC had decided that it was not. Big
Sandy, like NedPower, intended to generate electricity solely for the wholesale market. The
majority in Affiliated Trades disagreed with the PSC's and Big Sandy's contentions that Big
Sandy was not a public utility, stating:
Big Sandy has represented that it will produce electricity which
which will be transmitted to AEP for eventual sale to the public.
West Virginia Code § 24-2-1 specifically states that one
engaged in the generation of electric power is subject to PSC
jurisdiction, whether the service is provided directly or through
a distributing utility. We note also that any entity engaged in
any business, whether herein enumerated or not, which is, or or
shall hereafter be held to be, a public service constitutes a
public utility under West Virginia Code § 24-1-2, as quoted
above. That is an inclusive definition. We conclude that electric
generation and transmission facilities intended solely for the sale
of electricity on the wholesale market are within the statutory
definition of a public utility set forth in West Virginia Code §
24-2-1 whenever it appears that the electricity produced will, in
the course of distribution, ultimately be sold to the public.
Accordingly, we find that the PSC determination that Big Sandy
is not a public utility was erroneous as a matter of law.
Affiliated Trades, 211 W. Va. at 322; 565 S.E.2d at 785 (footnote omitted) (emphasis added).
To the majority in Affiliated Trades, if the electricity generated by a facility will
ultimately be sold to the public, the facility is a public utility. It was of no consequence to
the majority that the public may be situate entirely out of State. Furthermore, the extent
of the PSC's regulation of the facility did not enter into the Court's decision.
Thus, by operation of the Affiliated Trades case, upon receipt of its certificate
of convenience and necessity from the PSC on April 2, 2003, NedPower became a public
utility subject to the full jurisdiction of the PSC to regulate its service, practices and rates
under the provisions of Chapter 24 of the West Virginia Code.
Some three months after the PSC order, specifically on July 1, 2003, legislation
was enacted, which, in amending W. Va. Code § 24-2-1, converted NedPower's certificate
of convenience and necessity (issued by the PSC on April 2, 2003), into a siting certificate
for its EWGs and declared in effect, insofar as here relevant, that except for certain
delineated continuing jurisdiction of the PSC over the certificate issued to it, NedPower's
wind-power-driven electric generators would not be subject to the jurisdiction of the [PSC]
or to the provisions of [Chapter 24 of the West Virginia Code] with respect to such
facilit[ies] except for the making or constructing of a material modification thereof as
provided in subdivision (5) of this subsection [(c) of W. Va. Code 24-2-1]. See W. Va.
Code 24-2-1(c)(1). Thus, according to the 2003 legislation, specifically W. Va. Code § 24-
2-1(c)(1) and (2), and W. Va. Code § 24-2-11c(e), (f) and (h), an EWG is subject to the
PSC's jurisdiction and regulation with respect to the siting of its electric generating facilities,
the making or constructing of a material modification thereof after the siting has been
certificated, and considering and resolving complaints relating to compliance with, and the
enforcing of, the material terms and conditions of the PSC order issuing the siting certificate.
Significantly, the 2003 legislation did not nullify the majority's holding in Affiliated Trades that an EWG is a public utility, and, in my opinion, it did not implicitly do
so. Rather, the legislation simply lessened the PSC's authority to regulate an EWG under the
provisions of Chapter 24 of the West Virginia Code. Whether an entity such as NedPower,
an EWG, is or is not a public utility is not determined by the extent of the PSC's statutory
authority to regulate it, but rather, as the Court held in Affiliated Trades, whether its sale of
electricity in the wholesale market will, in the course of distribution, ultimately be sold to the
public, regardless of where that public may be located.
It is therefore my opinion that NedPower is a public utility herein even though
the Majority and the parties assumed that it is not.
B. NedPower Has the Power of Eminent Domain Irrespective of Whether
It is or Is Not a Public Utililty Fully Regulated by the P.S.C.
The parties not only assumed that NedPower is not a public utility, but further
assumed that only a public utility which is fully regulated by the PSC (a real public utility
as the appellants put it) has the power of eminent domain. In other words, the parties linked
the power of eminent domain of an electric power generator to PSC regulation. It is not clear
that this assumption is correct.
West Virginia Code § 54-1-2(a)(2) declares, in part, that [t]he public uses for
which private property may be taken or damaged are as follows: . . . For the construction and
maintenance of . . . electric light, heat, and power plants, systems, lines, transmission lines,
conduits, stations . . . when for public use. These words are indifferent as to how the
electric power plant is driven, whether by coal, natural gas, water or wind. In my view, a
wind-driven electric power plant is an electric ... power plant under the provisions of
W. Va. Code § 54-1-2(a)(2), and eminent domain may be employed in the construction and
maintenance thereof if the plant is for public use. An electric power plant may be for
public use irrespective of the extent of its regulation by the PSC as indicated above. The
majority in Affiliated Trades
declared that Big Sandy was a public utility not because of the
extent of its regulation by the PSC, but because it generates electricity for ultimate sale to
the public. In Preston County Light & Power Co. v. Renick,
145 W. Va. 115, 126, 113
S.E.2d 378, 385 (1960), this Court stated that [t]he term 'public utility' properly designates
the owner or person in control of property devoted to the public use[.] As NedPower's
wind-driven generators are ultimately for for public use, NedPower is a public utility.
That public use, as that term is used in W. Va. Code § 54-1-2(a)(2), is not
linked to the extent of regulation by the PSC of the electric power generators is evidenced
by the fact that the Legislature bestowed the power of eminent domain upon electric power.
. . companies, when for public use in 1907, well before the Legislature created the PSC in
1913. The constitutionality of the 1907 legislation was upheld in Pittsburg Hydro-Electric
Co. v. Liston,
70 W. Va. 83, 73 S.E. 86 (1911).
Accordingly, I am of the opinion that NedPower, with respect to its EWGs,
possesses the power of eminent domain. The Court should, therefore, have denied the relief
sought by the appellant landowners because, as the appellants conceded, if NedPower were
a public utility with the power of eminent domain they could not enjoin the construction and
operation of its wind turbines as a private nuisance. Accordingly, I dissent.
NedPower has been deemed to be an exempt wholesale generator (EWG), which,
according to the P.S.C.'s order of April 2, 2003, is a status NedPower sought and received
from the Federal Energy Regulatory Commission (FERC).
Recently, this Court recognized the distinction between condemnation and inverse
condemnation proceedings, noting that:
The United States Supreme Court drew the following distinction
between inverse condemnation and condemnation proceedings
in U.S. v. Clarke
, 445 U.S. 253, 100 S.Ct, 1127, 63 L.Ed. 2d 373
[A] landowner's action to recover just
compensation for a taking by physical intrusion
has come to be referred to as inverse or
reverse condemnation . . . [A] condemnation
proceeding is commonly understood to be an
action brought by
a condemning authority such as
the Government in the exercise of its power of
at 255, 100 S.Ct. at 1129.
West Virginia Department of Transportation v. Dodson Mobile Home Sales and Services,
218 W. Va. 121, 123, n. 2, 624 S.E.2d 468, 470, n.2, (2005).
In their briefs before this Court, the appellants represented that [t]he sole issue on
this appeal is whether a siting certificate from the Public Service Commission [PSC]
forecloses a circuit court from considering whether a proposed industrial wind facility is a private
nuisance when the wind facility is NOT
a regulated public utility and has no power
to condemn property. (Emphasis in original). In support of this argument, appellants
maintained that [t]he wind-generated power in this case is not
part of any regulated public
utility and claimed that orders of the PSC make it clear that wind turbine facilities are not
regulated public utilities because NedPower, upon request, was granted a waiver by the PSC
relieving NedPower of its obligation to file certain financial and cost-of-service information
in support of its application for a certificate of convenience and necessity. (Emphasis in
original). Appellants conceded that a landowner cannot enjoin a real
[apparently meaning a public utility that is subject to the full range of regulation by the PSC
under the provisions of Chapter 24 of the W. Va. Code with respect to its rates and practices]
because [such] utility can condemn and acknowledged this Court's decision in Sexton v.
Public Service Commission
, 188 W. Va. 305, 423 S.E.2d 914 (1992), noting that when the
PSC is regulating a real
public utility, all related nuisance damages must be sought through
an eminent domain proceeding or a damage suit in circuit court. (Emphasis in original). In
their Reply Brief, Appellants argued that [i]n Sexton
, the reason that the circuit court could not
award an injunction was not
the exclusive jurisdiction of the PSC, but rather the fact that
the offending sewer treatment plant was a public utility
with the right of condemnation!
(Emphasis in original).
Unfortunately, the Majority opinion is not as clear as it could and should have been
regarding appellant's representations and concessions as to the impact of a determination that
NedPower is a regulated or a real public utility with the power of eminent domain. That
the Court agreed with the appellants' representations and concessions is perhaps best
indicated by its statements that [i]n Sexton
, this Court found that equitable relief was not
available to enjoin the taking for a public use but that the private landowners could seek
nuisance damages in an eminent domain proceeding. In contrast, the instant case does not
involve the taking of private property for public use. Therefore, the appellants herein, unlike
the plaintiffs in Sexton,
do not have the right of eminent domain proceeding in which they
can also seek nuisance damages. Majority opinion, p. 16. This statement by the Majority
is confusing. If the Majority means that this is not a condemnation case, it is correct; on the
other hand, if it means that the wind turbines are for private use, I disagree for the reasons
W. Va. Code § 54-1-2 (a)(2) (2006) provides, The public uses for which private
property may be taken or damaged are as follows: . . . (2) For the construction and
maintenance of telegraph, telephone, electric light, heat and power plants, systems, lines
transmission lines, conduits, stations (including branch, spur and service lines), when for
public use[.] This provision was previously codified at W. Va. § 54-1-2 (b) (1979) but was
redesignated as W. Va. Code § 54-1-2 (a)(2) in 2006 without textual amendment.
As noted in footnote 1, supra, the PSC's April 2, 2003, order determined that
NedPower had sought and received from the FERC the status of an EWG. In paragraphs 5
and 6 of its August 8, 2002, application to the PSC for a certificate of public convenience and
necessity to construct and operate up to 200 wind-turbine generators, NedPower made the
5. Applicant will own and operate the Project as an exempt
wholesale generator as defined in Section 32(a) of the Public
Utility Holding Company Act of 1935. 15 U.S.C. § 79a, et seq.
As an EWG, Applicant will be engaged directly and exclusively
in the business of owning and operating the Project and selling
the electric energy generated by the Project at wholesale.
Applicant's application for EWG status was filed on June 2,
2002 and was approved by the Federal Energy Regulatory
Commission (FERC) on July 23, 2002. The letter approving
Applicant's application is attached as exhibit 2.
6. Upon commercial operation, Applicant will use the Project
to generate electric energy exclusively for sale at wholesale in
the competitive wholesale market. Applicant will make no retail
sales of electric energy from the Project, including without
limitation sales to industrial or commercial customers, unless
and until such sales are (i) permitted under West Virginia law
and the Commission's rules and regulations; and (ii) permitted
for EWGs under federal law.