Discussion
of Issues
Issue 1:
Should oral argument on SSGC’s and Leesburg’s
Motions to Dismiss be granted?
Recommendation:
Yes. Oral argument on SSGC’s and Leesburg’s Motions
to Dismiss should be granted. The parties should be allowed 5 minutes per side
to make their arguments. (Trierweiler)
Staff Analysis:
Rule 25-22.0022(1), F.A.C.,
provides that a request for oral argument should be timely filed and must state
with particularity why oral argument would aid the Commission in understanding
and evaluating the issues to be decided.
Rule 25-22.0022(7), F.A.C., states that oral argument at Agenda Conference
will be entertained for dispositive motions, such as a motion to dismiss.
SSGC’s and Leesburg’s requests for oral argument on their motions were timely
filed. SSGC believes that oral argument
will aid the Commission in fully comprehending the deficiencies of the
Petition, the underlying factual situation involving the various parties, and
the very significant policy issues raised by PGS. SSGC and Leesburg requested
10 minutes each party for oral argument.
Peoples filed a response in
opposition to the requests for oral argument, stating that oral argument would
not assist the Commission in its ruling on the motions. However, Peoples asks
that if the Commission decides to grant oral argument that Peoples be given an
amount of time equal to the time granted to both SSGC and Leesburg combined.
Rule 25-22.0022(3), F.A.C.,
provides that granting or denying a request for oral argument is within the
sole discretion of the Commission. Staff believes that oral argument will
assist the Commission in understanding and evaluating the issues and arguments
raised in the motions. If oral argument is granted, 5 minutes for each side
appears to be reasonable.
Issue 2:
Should the Commission grant SSGC and Leesburg’s Motions
to Dismiss?
Recommendation:
The Commission should deny the Motions to Dismiss Peoples’
Petition because Peoples’ Petition contains a sufficient statement of the
ultimate facts as required by Rule 28-106.201, F.A.C. (Initiation of
Proceedings) and the specific pleading requirements of Rule 25-7.0472, F.A.C.
(Territorial Disputes for Natural Gas Utilities). (Trierweiler)
Staff Analysis:
Standard of Review for Motion to Dismiss
Unless otherwise
provided by law, a petition or request for hearing must include all items
required by Rule 28-106.201, F.A.C., if the hearing involves disputed issues of
material fact. A petition filed under Chapter 120, F.S., that is in substantial
compliance with the applicable uniform rule requirements need not be dismissed.
Rule 25-7.0472, F.A.C., lists the considerations that the Commission is
required to evaluate when resolving territorial disputes for natural gas
utilities.
The function of a motion
to dismiss is to raise as a question of
law the sufficiency of the facts alleged to state a cause of action. Varnes
v. Dawkins, 624 So. 2d 349, 350 (Fla. 1st DCA 1993). The applicable standard
for disposing of a motion to dismiss is whether, with all factual
allegations in the petition taken to be true, the petition states a cause of
action upon which relief may be granted. Id.
In making this determination, all reasonable inferences
drawn from the petition must be made in favor of the petitioner. Id. Consideration
of a motion to dismiss “may not properly go beyond the four corners of the
complaint in testing the legal sufficiency of the allegations set forth
therein.” Stubbs v. Plantation Gen. Hosp. Ltd. P’ship, 988 So. 2d 683,
684 (Fla. 4th DCA 2008) (internal quotation omitted). All of the elements of a cause of action must be properly
alleged in a pleading seeking affirmative relief. If the elements
are not properly alleged, the pleading
should be dismissed. Kislak v. Kreedian, 95 So. 2d 510 (Fla. 1957).
Peoples
Gas System’s Petition
The Petition states that Peoples is a natural gas local
distribution company (LDC) providing sales and transportation delivery of
natural gas throughout most of Florida to a total of approximately 380,000
customers, and is a “natural gas utility” as defined by Section 366.04(3)(c),
F.S., subject to the Commission’s statutory jurisdiction to resolve territorial
disputes. The Petition states that Leesburg is a Florida municipality that
operates a natural gas distribution system in portions of Lake and Sumter
Counties as a “natural gas utility” as defined by Section 366.04(3)(c), F.S. Leesburg
is also subject to the Commission’s statutory jurisdiction to resolve
territorial disputes.
The Petition
states that SSGC is a Florida limited liability company formed on or about
March 22, 2017. Peoples asserts that SSGC does not currently provide natural
gas service and does not have customers. SSGC, on behalf of the Villages (a
large Central Florida Community that spans 3 counties), is constructing natural
gas infrastructure in the service area at issue.
The
Petition describes Peoples’ natural gas distribution facilities in Sumter
County to be “extensive” while Leesburg’s are “limited.” Peoples contends that virtually
all of Leesburg’s facilities and customers are in Lake County and Leesburg.
Virtually all of Peoples’ customers in Sumter County are located within The
Villages. Peoples states that its employees observed natural gas construction
materials at the intersection of County Roads 468 and 501 in Sumter County, in
late December 2017. In January 2018, Peoples states that it met with the
Director of the Leesburg Gas Department to determine what was being constructed
and to avoid a territorial dispute. Peoples was directed by Leesburg to contact
The Villages for details.
According
to the Petition, in August 2009, Peoples was granted by the City of Wildwood, a
non-exclusive franchise to provide natural gas service (the service areas in
question all appear to fall within the Wildwood City limits). Peoples alleges
that the City of Wildwood is in the process of establishing a non-exclusive
franchise agreement with SSGC to provide natural gas to the same service area.
The
Petition also contains a copy of an Agenda Memorandum recommending approval of
the Ordinance by Leesburg that would ratify a franchise agreement between
Leesburg and SSGC. The Leesburg and SSGC Agreement concerns the construction,
purchase, and sale of certain natural gas distribution facilities, for the
purpose of providing natural gas service to customers located within the service
area in question. The Agreement states that upon completion of each section in
the development, SSGC has agreed to convey ownership of the system to Leesburg
in exchange for receiving a portion of the gas revenues charged to natural gas
customers within the service area. Exhibit B of Peoples’ Petition (pg. 21)
contains a map where SSGC has depicted its proposed natural gas infrastructure
within the service area in question. See
Exhibit A.
According
to Peoples’ Petition, Leesburg has submitted construction notices to the
Commission as required by Rule 25-12.082, F.A.C. Peoples argues the notices
reflect planned construction of natural gas facilities in Sumter County which is
taking place immediately adjacent to Peoples’ existing natural gas facilities.
Peoples alleges that some of the facilities to be constructed would cross an
existing Peoples’ distribution main.
Peoples wants
to provide natural gas services to the customers in the service area in
question. Peoples graphically depicts the disputed area in two color coded maps
attached to its Petition. The first map contains Peoples’ rendition of the
SSGC’s proposed natural gas construction projects in reference to the City of
Wildwood’s municipal boundaries. See Exhibit
B The second map depicts SSGC’s and
Leesburg’s proposed natural gas infrastructure to be constructed in the service
area, against a backdrop of the existing Peoples’ natural gas distribution
system and its claimed service area. See
Exhibit C.
South Sumter Gas Company’s and the City of Leesburg’s Motions to
Dismiss
South Sumter Gas Company, LLC: SSGC asserts that
Peoples’ Petition does not properly state a cause of action because it has not
complied with an essential pleading requirement. Specifically, SSGC asserts
that the Petition fails to plead a statement of all disputed issues of material
fact, and characterizes the Petition as a collection of insufficient conclusory
allegations.
SSGC states that the Petition fails to sufficiently allege
minimum pleading requirements necessary to sustain a territorial dispute. SSGC
asserts that the proximity of the new and planned Leesburg natural gas
facilities to those operated by Peoples does not create a dispute; that Peoples
did not allege that it has construction notices that conflict with those of
Leesburg; that Peoples failed to allege that there is a race of competing
facilities; and that Peoples did not allege that it has facilities within the
locations identified by the construction notices.
SSGC suggests that the mere fact that the new Peoples’
natural gas distribution facilities within the Village of Fenney are located
near the separately noticed Leesburg facilities within Southern Oaks is not
evidence that a dispute exists. SSGC seeks to rely upon Commission Order No. PSC-98-0174-FOF-EU, issued January
28, 1998, in Docket No 930885-EU, In re:
Petition to resolve territorial dispute
with Gulf Coast
Electric Cooperative, Inc. by Gulf Power,
Docket No. 930885-EU, affirmed on appeal, Gulf
Coast Electric Cooperative v. Johnson,
727 So. 2d 259 (1999), where the Commission held that territorial
disputes will be resolved
on a
case-by-case basis. SSGC argues that unlike the situation in Gulf Coast-Gulf Power, Peoples has not provided evidence or
allegations of its legal right to serve the area, that the mere physical proximity of one utility’s infrastructure to another
does not make for duplicative facilities, and that
Peoples failed to allege uneconomic duplication of facilities.
SSGC also relies upon Gulf Coast-Gulf Power
to support its assertion that the Petition should be dismissed for ripeness,
citing the two-prong test for ripeness
in Nat'l Park Hospitality Ass'n v.
DOI, 538 U.S. 803, 807, 123 S. Ct. 2026, 155 L.Ed.2d 1017, (2003). SSGC challenges the premise that the Petition is based upon
a prima facie dispute by declaring that there is no dispute and that therefore
the matter is not ripe for adjudication. SSGC asserts that the facts do not
support a request for a sweeping determination for a service provider to serve
all future portions of the Villages Community over many years. SSGC argues that
this issue is not yet fit for a judicial decision and that the Commission’s
ability to adjudicate this matter would be enhanced by allowing more time for
these events to unfold. SSGC states that the second part of the ripeness test would
be the hardship that Peoples would suffer if the Commission “withholds a
decision” (fails to act). SSGC asserts that Peoples will not suffer a hardship
and that Peoples has not alleged any direct harm.
SSGC’s final argument is that Peoples has not alleged that
its service to the customers in the disputed area would be in the public
interest. SSGC also suggests that the developer, with decades of experience, is
in the best position to determine who the best service provider would be for the
community within this service area.
The City of Leesburg:
Leesburg claims that Peoples has failed to plead sufficient facts for the
matter to move forward. Leesburg summarizes its argument by stating that
Peoples has merely asserted a territorial dispute without pleading all disputed
facts as required. Leesburg asserts that Peoples has not made sufficient
factual allegations that warrant the Commission’s involvement in determining
which utility should serve the disputed area. Leesburg alleges that the facts
supporting the alleged dispute are missing from the pleadings because they do
not exist.
Leesburg also states that the Commission should be hesitant
to inject itself into a business dispute. Leesburg suggests that where market
forces are at work to determine the manner in which the expansion of facilities
is going to take place, the Commission is not required to step in and conduct
centralized planning. Leesburg states that there is no need in the present
situation for the Commission to respond to the request to resolve the
territorial dispute, this is because customer choice and market forces are
already at work to select the utility to serve this area.
Peoples’ Response to the Motions to Dismiss
Peoples disagrees
with SSGC’s assertion the Petition must comply with the general pleading
requirements in Rule 28-106.201,
F.A.C, which applies primarily to petitions requesting a hearing on a proposed
agency action (PAA). However, Peoples does state that if this case were decided
under Rule 28-106.201, F.A.C., then its petition meets the pleading
requirements in accordance with Commission Order No. PSC-06-0260-PCO-EI, issued March 28, 2006,
in Docket No. 060038-EI, In re Petition for Issuance of a Storm Recovery
Financing Order, where the Commission held that “A petitioner filing an original
request for relief cannot reasonably be expected to identify all disputed issues
of material fact that might arise.”
According to Peoples, its Petition contains a
statement of the ultimate facts that satisfy the specific pleading requirements
within Rule 25-7.0472, F.A.C. (Territorial Disputes for Natural Gas Utilities),
which provides that a territorial dispute may be initiated by a petition and
that each utility that is a party to a territorial dispute shall provide a map
and written description of the disputed area along with the conditions that
caused the dispute. Peoples argues that SSGC’s natural gas infrastructure is
being installed immediately adjacent to infrastructure belonging to Peoples and
that Leesburg is building a 6-inch main line to serve the area in question. The
Petition also contains a written agreement between SSGC and Leesburg for
natural gas service in the area adjacent to the community where Peoples already
provides service. Peoples asserts that a common sense reading of its Petition,
the attached agreements, building permits, and maps establish that Peoples is
the utility who can best serve the adjacent community. Peoples asserts that it
has met the burden of providing a sufficient statement of facts upon which the
Commission can evaluate the territorial dispute.
Peoples also takes exception to SSGC’s and Leesburg’s
interpretation of the Commission’s ruling in Gulf Coast-Gulf Power and points out that on appeal,
the court held that the Commission was not required as a matter of law to
"establish territorial boundaries in order to resolve a territorial
dispute that does not involve service to current or future identifiable
customers." Gulf Coast-Gulf Power, 727 So. 2d at 264. Peoples distinguishes the scenario in Gulf Coast-Gulf Power, which involved disparate
locations that had no customers, by pointing out that customers within the disputed service area were
easily identifiable as the homeowners within those specific developments that the
Villages is constructing immediately adjacent to its prior developments being
served by Peoples.
Peoples argues that SSGC’s and Leesburg’s positions that
the Villages has found a better financial arrangement with another gas company,
indicates that there is a bona fide territorial dispute. Peoples states that it
is the conduct of SSGC and Leesburg that has created a territorial dispute and
that the Commission should allow Peoples’ Petition to move forward.
Staff’s Analysis and Recommendation
Peoples’ petition states a cause of action upon which
relief can be granted, and it meets the
requirements of Rules 28-106.201 and 25-7.0472, F.A.C. The Petition sets
forth that a gas infrastructure is being installed by SSGC in a People’s
natural gas service area, that the area
in question is adjacent to Peoples' natural gas infrastructure, that Peoples
already has a non-exclusive franchise with the City of Wildwood to provide
natural gas service to the area, and that there is an agreement between
Leesburg and SSGC in which Leesburg is to supply gas to the area.
The Petition and its attachments indicate that Leesburg
is in the process of building a 6-inch main line that is 6.25 miles in length to
the service area from its distribution line serving Coleman Prison, and that together
with SSGC, the overall length of all proposed natural gas piping being
constructed in the service area is approximately 29 miles.
When viewed within the “four corners of the complaint” exclusive of all
affirmative defenses/responses, assuming all alleged facts are true, and in the
light most favorable to Peoples, staff believes that the Petition states a
cause of action that would invoke the Commission’s jurisdiction and permit the
Commission to grant the relief requested.
Specifically, the Petition contains sufficient allegations such as
customer preference and cost to serve, to allow the Commission to review the
Petition to Resolve the Territorial Dispute in accordance with Rule 25-7.0472,
F.A.C.
Section 366.04(3)(b), F.S., grants
jurisdiction to the Commission to resolve, upon
petition of a utility or on its own motion, any territorial dispute involving
service areas between and among natural gas utilities. In the instant
case, Peoples’ Petition establishes that a territorial dispute exists pursuant
to Section 366.04(3)(b), F.S. The Petition contains adequate information in the
form of an agreement, construction notices, ordinance, permits, and maps to
indicate that an active dispute exists as to who will provide natural gas to
the disputed service area. A review of the maps attached to the Petition
further illustrates that this is a fully formed territorial dispute over the
contested service area. See Exhibits A-C.
Rule
25-7.0472(2)(c-e), F.A.C., requires the Commission, when resolving territorial
disputes, to consider the cost of each utility to provide natural gas service
to the disputed area presently and in the future. Among the many factors that
the Commission considers in a territorial dispute, customer preference is
considered if all other factors related to the costs are substantially equal.
Conclusion
For the
reasons set forth above, the Commission should deny SSGC and Leesburg’s motions
to dismiss Peoples’ Petition.
Issue 3:
Should this docket be closed
Recommendation:
If the Commission denies SSGC’s and Leesburg’s
motions to dismiss, the docket should remain open to address Peoples’ petition
to resolve the territorial dispute. Alternatively, if the Commission votes to
grant the motions to dismiss, the docket should be closed upon the issuance of
a final order. (Trierweiler)
Staff Analysis:
If the motions are denied, this docket should remain
open to address Peoples’ petition to resolve the territorial dispute. If the motions
are granted, the docket should be closed after issuance of the final order.
