City attorney put brakes on PSC

THE BALTIMORE SUN

If the legal pyrotechnics of a dispute over the price of electricity could be translated into a Hollywood-worthy tale, the current struggle over BGE's rates might provide a perfect plot line for a television courtroom drama.

And the unlikely leading man could be Ralph S. Tyler III, the city of Baltimore's top lawyer, whose bookish persona is worlds apart from his more jocular boss, Mayor Martin O'Malley.

Critics of O'Malley have said the city's legal action that temporarily torpedoed BGE's 72 percent rate increase was pure political theater, scripted by a Democratic candidate for governor looking to outshine his Republican rival, Gov. Robert L. Ehrlich Jr.

But O'Malley's political bark was buttressed by what turned out to be a remarkably effective legal bite from Tyler.

The 59-year-old former Maryland deputy attorney general did not hesitate to lead his team of four government lawyers in a showdown with the state's expert practitioners of utilities law - Maryland's Public Service Commission and the energy company that wanted new prices to take effect with the market's July 1 deregulation.

Tyler's team successfully confronted that powerful legal combination by injecting a contrarian question into the General Assembly's spring debate over how to help BGE's 1.2 million Baltimore-region customers afford a 72 percent rate increase.

"That's not the right question. The right question is, should there be an increase at all?" Tyler said in his baritone. "And, if so, how much?"

That question, and the city's ensuing legal challenge based on its premise, transformed the rate debate. Many credit it with leading the Assembly to pass veto-proof legislation expected to oust the PSC's current members and charge a newly configured commission to provide an answer - with proof.

"His greatest gift is to take a complex issue and strip it down to its core," said First Deputy Mayor Michael Enright. "Everyone kept saying 72 percent was inevitable, and in his booming voice he would say, 'Why?'"

The litigation between the city and the PSC spurred what many are calling a classic case study of administrative law. That's the field that governs public agencies whose actions are determined by unelected experts appointed to regulate markets such as electricity.

"The first [regulatory agency] was in 1839, the railroad commission. The modern administrative state ... began with the New Deal," said Charles H. Koch, a professor at William and Mary School of Law. "The Reagan Revolution was meant to get rid of a lot of those [regulatory agencies]."

A debate over the limits of regulatory control played out over the past several months as the five-member PSC (four appointed by Ehrlich) said that the newly deregulated market determined the 72 percent rate increase and that the commission was powerless to devise a regulatory solution because of deregulation law passed by the Assembly in 1999.

The city became involved in April when low-income Baltimore customers on BGE's budget-billing program began to see the 72 percent rate increase.

In their research, Tyler and his team - Elizabeth F. Harris, 32; Veronica P. Jones, 42; Cary Berkeley Kaye, 35; and Joshua N. Auerbach, 33 - determined that the PSC did not conduct proper hearings. They argued that the PSC did not obtain enough evidence from BGE - such as details from the free market auction buying of electricity, and cost savings from BGE's pending merger with a Florida utility owner - to justify the increase.

"The PSC never had any intention of scrutinizing any numbers to find out if 72 percent was actually a fair, justifiable rate increase," Tyler said. "Their view of the world was that that was settled by the auction, and they put blinders on to everything else."

On May 19, the city requested that Baltimore Circuit Court review the PSC's process and demanded a new hearing that allowed for due process - the submission of evidence, testimony and cross-examination. Judge Albert J. Matricciani Jr. ruled in the city's favor in late May and ordered a new PSC hearing.

"From the beginning [of administrative law] there was this idea that the expert doesn't rule, that they have to be subject to law and ... judicial review," Auerbach said. "This really was a vindication of that idea."

PSC Chairman Kenneth D. Schisler accused the city of being "petty" and "specious" with its lawsuit. Tyler said he and his lawyers acted in the public's interest.

"Here's the truth: Judge Matricciani ruled, and no one appealed," he said. " ... What you do when you lose, if you think you're right, is you appeal. That's how the system works."

Christine E. Nizer, a PSC spokeswoman, said the commission did not appeal because it felt there was not time before the July 1 deadline. Nizer said the PSC was not required to hold hearings that the city claimed it should have conducted.

Tyler said the motivating factor in his office was that government should not simply say it is "powerless" to address major policy dilemmas.

"There are many problems in this world to which there is no solution. But this does not appear to be such a problem - and, more fundamentally, no one had tried," Tyler said. "The PSC conducted its business in a way to make itself powerless. This just isn't how government is supposed to be."

Tyler is a Cleveland native with a fondness for reading histories and biographies, especially about Watergate and President Nixon. He has been a lawyer since 1972, starting as a legal aid attorney.

The sailing aficionado moved to Maryland 10 years later to join the attorney general's office, for which he successfully argued a Fifth Amendment case before the U.S. Supreme Court in 1989.

Married for 15 years to wife Georgiana, Tyler projects a public image of a grave, gray-suited government lawyer. But friends say his stern public style belies a humorous private nature.

He served as a deputy to Attorney General J. Joseph Curran Jr. until he entered private practice as a partner at Hogan & Hartson in 1996. O'Malley hired him as city solicitor two years ago.

Johanna Neumann, an advocate at Maryland Public Interest Research Group, said the legal issues surrounding the rate increase were fairly straightforward.

"In this case everyone is looking to the PSC to be the watchdog and to do the right thing for the public. It shocked everyone that basic due process didn't happen," Neumann said.

The city's action was remarkable, she said, only in that no one else did it sooner.

Others say that's not surprising.

"PSC decisions are not challenged in court - seldom, rarely - because we have had a sense of fairness in previous commissions," said Del. Carol S. Petzold, a Montgomery County Democrat and member of the state's advisory council on administrative hearings. "In the 20 years I've been on the legislature, I can't think of a single PSC decision that has been handled this way, certainly not overturned by a judge."

Federal appellate Judge Diana Gribbon Motz, a former colleague of Tyler's in Curran's office, said this of his actions: "I think the thing that struck me was that he did something when everybody said nothing could be done."

doug.donovan@baltsun.com

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