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030 Order re PUC Motion to Dismiss Pursuant to CRCP 12(b)(1) or in the Alternative Stay Proceeding Pending Final PUC DecisionPage1 of1 COURT,DISTRICT COUNTY, COLORADOBOULDER Court Address: 1777 Sixth Street P.O. Box 4249, Boulder, CO, 80306-4249 Petitioner(s)THE CITY OF BOULDER v. Respondent(s)PUBLIC SERVICE COMPANY OF COLORADO et al. COURT USE ONLY Case Number:2019CV30637 Division:5 Courtroom: Order: Motion to Dismiss Pursuant to CRCP 12(b)(1), or in the Alternative Stay Proceeding Pending Final PUC Decision The motion/proposed order attached hereto: MOOT. Issue Date:9/4/2019 THOMAS FRANCIS MULVAHILL District Court Judge DATE FILED: September 4, 2019 2:43 PM CASE NUMBER: 2019CV30637 DISTRICT COURT, BOULDER COUNTY, COLORADO Boulder County Justice Center 1777 6th Street Boulder, Colorado 80302 Petitioner: THE CITY OF BOULDER, a Colorado Home Rule City, v. Respondents: PUBLIC SERVICE COMPANY OF COLORADO, a Colorado Corporation, d/b/a XCEL ENERGY, MORGAN GUARANTY TRUST COMPANY OF NEW YORK; and PAUL WEISSMANN, in his official capacity as Treasurer of Boulder County; and Intervenor: COLORADO PUBLIC UTILITIES COMMISSION; JEFFREY P. ACKERMANN, in his official capacity as Chairman of the Public Utilities Commission; and FRANCES A. KONCILJA and JOHN C. GAVAN, in their official capacities as Commissioners of the Public Utilities Commission. COURT USE ONLY Attorneys for Intervenor, the Colorado Public Utilities Commission: PHILIP J. WEISER, Attorney General PAUL C. GOMEZ, 22759* First Assistant Attorney General RUTH M. HARPER, 52143* Assistant Attorney General 1300 Broadway, 6th Floor Denver, CO 80203 Telephone: 720-508-6166 FAX: 720-508-6041 E-Mail: paul.gomez@coag.gov ruth.harper@coag.go *Counsel of Record Case No. 2019CV30637 Division: 5 MOTION TO DISMISS PURSUANT TO C.R.C.P. 12(b)(1), OR IN THE ALTERNATIVE STAY PROCEEDING PENDING FINAL PUC DECISION Attachment to Order - 2019CV30637 2 The Colorado Public Utilities Commission (“PUC”); Jeffrey P. Ackermann, in his official capacity as Chairman of the Public Utilities Commission; and Frances A. Koncilja and John C. Gavan, in their official capacities as Commissioners of the Public Utilities Commission; through undersigned counsel, hereby submits the following Motion to Dismiss Pursuant to C.R.C.P. 12(b)(1), Or In the Alternative Stay Proceeding Pending Final PUC Decision (“Motion to Dismiss, Or in the Alternative Stay”). CERTIFICATION PURSUANT TO C.R.C.P. 121 § 1-15(8) Undersigned counsel for the PUC has conferred with counsel for Petitioner, the City of Boulder (“Boulder” or “City”) and Respondents: (1) Public Service Company of Colorado (“Public Service”); and (2) Paul Weissmann, in his official capacity as Treasurer of Boulder County, regarding the PUC’s Motion to Dismiss, Or in the Alternative Stay. Counsel for Plaintiff stated that Plaintiff opposes the PUC’s motion. Counsel for the PUC is authorized to represent that Public Service does not oppose the PUC’s motion. Respondent, Mr. Weissmann, in his official capacity as Treasurer of Boulder County, takes no position on the PUC’s motion. MOTION SUMMARY This condemnation action is premature. The PUC has exclusive jurisdiction to approve the designation of assets for transfer from Public Service to Boulder to form Boulder’s new municipal electric utility. See C.R.S. § 40-5-105(1) (2018) (“the assets of any public utility … may be sold … only upon authorization by the commission”). The Boulder District Court has already considered the agency and court roles in this matter and resolved it is the PUC’s Attachment to Order - 2019CV30637 3 responsibility to determine how Public Service’s facilities should be assigned, divided, or jointly used by Boulder and Public Service to form Boulder’s new municipal electric utility. Until the PUC makes this determination, there is no “property” for the Court to consider for condemnation. The PUC therefore respectfully urges the Court to dismiss the First Amended Petition in Condemnation under C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction. Once the PUC has issued a final decision approving the designation of assets for transfer, Boulder may re-file a petition requesting to condemn and price the assets. In the alternative, the PUC urges that the Court stay the condemnation action pending a final PUC decision approving the designation of assets for transfer. FACTUAL AND PROCEDURAL BACKGROUND The PUC is currently adjudicating Boulder’s Third Supplemental Verified Application seeking approval of transfer of assets from Public Service to Boulder in PUC Proceeding No. 15A-0589E. This proceeding remains ongoing with outstanding issues. Most importantly, the PUC has yet to approve the final designation of assets for transfer. The question of PUC authority in this matter has already been litigated and decided. In 2015, Judge LaBuda of the Boulder District Court ruled “it is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety.” See Attachment A to PUC Motion to Intervene, Order Re: Judicial Review of the Colorado Public Utilities Commission Decisions at p. 12, City of Boulder v. Pub. Utils. Comm’n, Case No. 14CV30047 (Boulder Dist. Ct., January 14, 2015) Attachment to Order - 2019CV30637 4 (“Boulder District Court Decision”). Judge LaBuda found this PUC determination “must be made prior to the City’s condemnation of property for utility municipalization.” Id. To date, the PUC has conditionally approved designation of certain assets outside substations for transfer from Public Service to Boulder. See Attachment B to PUC Motion to Intervene, PUC Decision No. C17-0750, issued September 14, 2017, in Proceeding No. 15A- 0589E (“PUC Decision No. C17-0750”). Because this decision did not finally designate assets for transfer nor finally address all outstanding issues, this condemnation action is premature. The PUC recognizes that Boulder desires to move this case forward. However, this premature condemnation action only causes confusion and further delay and creates the risk of inconsistent agency and court rulings. Only as of August 2, 2019, has Boulder filed final versions of all filings required by PUC Decision No. C17-0750. Now that the proper filings have been made, the PUC can move forward to expeditiously establish appropriate procedures and a schedule for resolving the outstanding issues and pleadings and complete its proceeding. LEGAL STANDARD C.R.C.P. 12(b)(1) requires a court to determine whether it has jurisdiction. A court determines its subject matter jurisdiction by examining the substance of the claim based on the facts alleged and the relief requested. City of Aspen v. Kinder Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App. 2006). The court need not treat the facts alleged by the non-moving party as true as it would under C.R.C.P. 12(b)(5). Medina v. State, 35 P.3d 443, 452 (Colo. 2001). The court may also consider evidence outside the pleadings to resolve a jurisdictional challenge. City of Aspen, 143 P.3d at 1078; Medina, 35 P.3d at 452. The plaintiff has the burden of proving subject matter Attachment to Order - 2019CV30637 5 jurisdiction. Associated Gov’ts of Nw. Colo. v. Pub. Utils. Comm’n, 275 P.3d 646, 648 (Colo. 2012). The plaintiff enjoys no presumptions in its favor. Medina, 35 P.3d at 452. If the plaintiff fails to establish jurisdiction, the court must dismiss the matter; any order or judgment entered by the court would be void. C.R.C.P. 12(b)(1); City of Boulder v. Pub. Serv. Co. of Colo., 996 P.2d 198, 203 (Colo. App. 1999). ARGUMENT The PUC asserts that: (1) issue preclusion bars this condemnation action; and (2) Boulder must obtain PUC approval as a precondition to condemnation, and this Court lack subject matter jurisdiction until it does. The PUC’s designation of assets for transfer is a necessary and logical condition precedent to any proceeding to condemn and price the assets. See Attachment A to PUC Motion to Intervene, Boulder District Court Decision at p.12 (“it is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety” and “[s]uch a determination must be made prior to the City’s condemnation of property for utility municipalization”). Thus the PUC retains sole jurisdiction over this dispute until it issues a final decision approving the designation of assets for transfer, including a finding that the approved division will protect the remaining system’s effectiveness, reliability, and safety. As Judge LaBuda recognized in the Boulder District Court Decision at p. 9, the “PUC is best suited to exercise jurisdiction in this regard; when the General Assembly vested the PUC with this jurisdiction in the Colorado Constitution, it intended to provide a regulatory body with more expertise in administering utilities than the district court.” Attachment to Order - 2019CV30637 6 The PUC has not issued a final decision approving the designation of assets for transfer. PUC Decision No. C17-0750, which conditionally designated certain assets outside substations for transfer, was a substantial step toward resolution but ultimately addressed only assets outside substations and required additional filings with, and approvals by, the PUC. Boulder has only recently, on June 28, 2019, and August 2, 2019, and after extensions,1 provided final versions of the filings required by PUC Decision No. C17-0750. With these new filing, the PUC can now move forward to expeditiously establish appropriate procedures and a schedule for resolving the outstanding issues and pleadings and complete its proceeding. The PUC was compelled to intervene in this condemnation action for the limited purpose of ensuring the Court is fully apprised of the ongoing PUC proceeding and to preserve its jurisdiction. The PUC’s role, as established in C.R.S. § 40-5-105(1) (2018) and confirmed by the Boulder District Court Decision, is to approve the designation of assets for transfer. Exercising its subject matter expertise and exclusive jurisdiction over this subject matter, the PUC is in the process of determining how existing Public Service facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety. Once the PUC makes this determination, jurisdiction vests in the Boulder District Court to adjudicate the condemnation and pricing of assets. The PUC’s interest in intervening and moving to dismiss, or in the alternative stay, this condemnation action is thus solely to preserve its jurisdiction and 1 PUC Decision No. C17-1065-I, issued December 22, 2017 (extension to March 13, 2018); PUC Decision No. C18-0181-I, issued March 14, 2018 (extension to June 11, 2018); PUC Decision No. C18-0557-I, issued July 16, 2018 (extension to August 24, 2018); PUC Decision No. C18- 0742-I, issued August 31, 2018 (extension to October 26, 2018). Attachment to Order - 2019CV30637 7 complete its proceeding. The PUC is not interested in interfering with the actual condemnation action if and when it appropriately moves forward. The PUC identifies the following minimum outstanding issues for resolution by the PUC: 1. Approval of Exhibit 5A The PUC must approve the “Corrected List of Facilities Outside Substations,” referred to as “Exhibit 5A.” In PUC Decision No. C17-0750, the PUC required Boulder to “correct the errors and omissions from the list of assets for transfer outside of the substations and resubmit the revised list of assets for final approval.” Id. ¶ 5. Boulder filed a final version of Exhibit 5A on June 28, 2019. The PUC can now review the filing for final approval. This is not a “compliance-type” filing simply to be made. Boulder has claimed there “are no clear guidelines” in statute or rule “for what needs to be filed, what needs to be approved, or the timing of those events.” See Attachment G to PUC Motion to Intervene, Boulder Notice Regarding Proposed Process to Address and Resolve Outstanding Issues at ¶ 5, filed June 12, 2019, in PUC Proceeding No. 15A-0589E. However, in PUC Decision No. C17-0750 at ¶ 5 and Ord. ¶ 2, the PUC expressly required Boulder to resubmit the revised list of assets “for final approval.” The PUC further stated at ¶ 10 that the proceeding may conclude with a final decision designating the assets for transfer upon the PUC’s satisfaction that Boulder has complied with the conditions in Decision No. C17-0750. The Boulder District Court Decision is also instructive. Judge LaBuda recognized that the facilities Public Service requires to provide service to its customers, and the facilities needed by Boulder to create its municipal electric utility, are “intimately intertwined.” See Attachment to Order - 2019CV30637 8 Attachment A to PUC Motion to Intervene, Boulder District Court Decision at p. 12. Judge LaBuda concluded it was therefore “necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety.” Id. To complete its work, the PUC must now review the final versions presented by Boulder, afford parties opportunity to respond, and determine whether this assignment, division, or joint use protects the system’s effectiveness, reliability, and safety. Public Service agrees the PUC proceeding is not complete. In a recent filing to the PUC, Public Service, citing the Boulder District Court Decision, argues “the Commission is charged with making critical determinations to protect the electric distribution ‘system’s effectiveness, reliability and safety’” and that parties must be afforded due process before the PUC as it makes this “critical” final determination. See Attachment C to PUC Motion to Intervene, Public Service Response to Boulder’s Notice of Proposed Procedures and to the Combined Response in Opposition, filed June 19, 2019, in PUC Proceeding No. 15A-0589E. 2. Approval of Exhibit 5B The PUC must also approve the “Corrected List of Property Interests Outside Substations,” referred to as “Exhibit 5B.” In PUC Decision No. C17-0750, the PUC required Boulder to file an agreement(s) reached between Boulder and Public Service “that provides Public Service permanent non-exclusive easements and other necessary real property rights for the location of Public Service’s electric facilities within Boulder’s city limits that are necessary for Public Service to provide service to its customers after separation.” Boulder has now filed a final version of Exhibit 5B with the PUC, on August 2, 2019. Attachment to Order - 2019CV30637 9 Review and approval of this final version will require additional process like Exhibit 5A. Boulder’s suggestion that the PUC accept the filing without review or process is unreasonable. Public Service, the regulated utility whose property and electric distribution system are at stake, along with other intervenors, should be afforded opportunity to vet, review, and respond to the final versions of Exhibits 5A and 5B. In addition, the PUC must consider and determine that this assignment, division, or joint use will protect the system’s effectiveness, reliability, and safety, as confirmed by the Boulder District Court Decision. Now that the proper filings have been made, the PUC can move forward to expeditiously establish appropriate procedures and a schedule for resolving the outstanding issues and pleadings and complete its proceeding. 3. Issues Regarding Assets Inside Substations The PUC must resolve whether any issues regarding designation of assets for transfer inside substations are now ripe for review. In Decision No. C17-0750, the Commission found it premature to designate facilities inside substations for transfer. The Commission concluded it was reasonable for Public Service and Boulder to rely upon the normal transmission load interconnection request process that is available to Boulder as a prospective transmission customer of Public Service in order to attempt to resolve the required configurations and ownership arrangements inside substations. Although the Commission stated it expected that process would establish the required configurations and ownership arrangements without requiring further PUC action before Boulder proceeded to condemnation, this may not be the case. Public Service now contends the issues regarding assets inside substations are ripe for review. Attachment to Order - 2019CV30637 10 To this point, on January 25, 2019, Public Service filed a petition for declaratory order requesting the PUC declare Boulder may not commence condemnation proceedings to acquire assets inside substations until Boulder and Public Service agree on the transfer of assets and an application requesting designation of assets for transfer is filed with and granted by the PUC. See Attachment D to PUC Motion to Intervene, Public Service Petition for Declaratory Order, filed January 25, 2019, in PUC Proceeding No. 15A-0589E. Intervenor IBM, Corp. (“IBM”) supports this petition. See Attachment E to PUC Motion to Intervene, IBM Notice of Support and Joinder of Relief Sought in Petition for Declaratory Order, filed January 29, 2019, in PUC Proceeding No. 15A-0589E. The PUC has not acted yet on the petition because the proceeding was stayed to allow parties time to develop a proposal to resolve the many outstanding issues. See Attachment F to PUC Motion to Intervene, PUC Decision No. C19-0151-I, issued February 8, 2019, in PUC Proceeding No. 15A-0589E. Boulder filed a proposed process but parties objected. See Attachment G to PUC Motion to Intervene, Boulder Notice Regarding Proposed Process to Address and Resolve Outstanding Issues, filed June 12, 2019, in PUC Proceeding No. 15A- 0589E. In its response, Public Service reiterates that substation-related filings should be filed with the PUC and parties should be given opportunity to request a hearing, conduct discovery, and present evidence. See Attachment C to PUC Motion to Intervene, Public Service Response to Boulder’s Notice of Proposed Procedures. Likewise, IBM contends Boulder cannot proceed to condemnation without final PUC action and that Boulder’s proposed process is insufficient. See Attachment H to PUC Motion to Intervene, IBM Response to Boulder’s Combined Response in Opposition, filed June 19, 2019, in PUC Proceeding No. 15A-0589E. Attachment to Order - 2019CV30637 11 What processes and approvals are needed for designation of assets for transfer inside substations remains an open question. The PUC must hear from parties and resolve this issue prior to any action to condemn and price assets inside substations. Now that final versions of the outstanding filings in the PUC proceeding have been made, a status conference will soon be set to determine next steps in resolving this and other outstanding issues and pleadings. 4. Issues Raised by IBM Finally, the PUC must resolve remaining issues raised by intervenor IBM. In Decision No. C17-0750 at ¶¶ 236-239, the PUC found the record insufficient “at this time” to conclude Boulder was unwilling or unable to provide substantially adequate service to IBM. The PUC found that IBM’s operational and financial concerns can be addressed as Boulder and Public Service develop plans for substation configurations and as Boulder continues to create operations plan for its utility. The PUC clarified that IBM is not precluded from bringing additional evidence to the PUC that demonstrates Boulder is unable to provide it adequate service. IBM continues to assert to the PUC that its concerns have not been addressed. The outstanding issues raised by IBM must addressed and resolved prior to any condemnation action. CONCLUSION The PUC respectfully urges that the subject matter of this condemnation action is still before the PUC and therefore Boulder’s First Amended Petition in Condemnation is premature. If the Court were to proceed with this condemnation action, it would be condemning and pricing assets that are not finally designated by the PUC—leading to confusing and inconsistent agency and court rulings. The Boulder District Court has already considered and defined the roles and Attachment to Order - 2019CV30637 12 jurisdiction of the PUC and the courts in this process. The PUC must be afforded opportunity to complete its proceeding prior to this Court taking up any condemnation action. WHEREFORE, the PUC respectfully requests this Court dismiss the First Amended Petition in Condemnation based upon lack of subject matter jurisdiction. In the alternative, the PUC requests that the Court stay the condemnation action pending issuance of a final PUC decision approving the designation of assets for transfer. Respectfully submitted August 8, 2019. PHILIP J. WEISER, Attorney General /s/ Paul C. Gomez PAUL C. GOMEZ, 22759* First Assistant Attorney General RUTH M. HARPER, 52143* Assistant Attorney General State Services Section Attorneys for the Colorado Public Utilities Commission *Counsel of Record In accordance with C.R.C.P. 121 § 1-26(7), a printed copy of this document with original signature is maintained by the Office of the Attorney General and will be made available for inspection by other parties or the Court upon request. Attachment to Order - 2019CV30637 13 CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the above captioned MOTION TO DISMISS PURSUANT TO C.R.C.P. 12(b)(1), OR IN THE ALTERNATIVE STAY PROCEEDING PENDING FINAL PUC DECISION was served upon all parties herein by e- filing and service through the Colorado Courts E-Filing System (CCEF) or by depositing copies of the same in the United States mail, first-class postage prepaid, at Denver, Colorado, this 8th day of August, 2019, addressed as follows: Attorneys for Petitioner, City of Boulder Office of the Boulder City Attorney Thomas A. Carr Kathleen E. Haddock P.O. Box 791 Boulder, CO 80306 Hamre, Rodriguez, Ostrander & Dingess, PC Donald M. Ostrander Richard F. Rodriguez 3600 S. Yosemite Street, Suite 500 Denver, CO 80237 Attorney for Respondent, Paul Weissmann, in his official capacity as Treasurer of Boulder County Oliva D. Lucas Boulder County Attorney P.O. Box 471 Boulder, CO 80306 Attorneys for Respondent, Public Service Company of Colorado John R. Sperber Sarah M. Kellner Brandee L. Caswell Matthew Dumont Clark Katharine M. Gray Sean J. Metherell FAEGRE BAKER DANIELS LLP 1144 Fifteenth Street, Suite 3400 Denver, CO 80202 /s/ Xan Serocki XAN SEROCKI In accordance with C.R.C.P. 121 § 1-26(7), a printed copy of this document with original signature is maintained by the Office of the Attorney General and will be made available for inspection by other parties or the Court upon request. Attachment to Order - 2019CV30637