WEST VIRGINIA RECORD

CHARLESTON – Larry V. Faircloth, an Inwood land developer who recently announced his candidacy for the U.S. House of Representatives, has lost his appeal of a Public Service Commission order that granted him the relief he sought, but did not give him the relief on the terms he wanted.

Faircloth, a former member of the state House of Delegates, announced last week that he would seek the 2nd Congressional District seat being vacated by Rep. Shelly Moore Capito. Capito has announced that she will seek the Senate seat of retiring Sen. Jay Rockefeller, D-W.Va. Faircloth and Capito are both Republicans.

The opinion was issued per curiam, with the author anonymous.

“In 2004, the Berkeley County Water District and Sewer District filed requests with the PSC to charge capacity improvement fees (CIFs) due to rapid population growth in Berkeley County that was projected to overload the capacity of existing water and sewer plants," the opinion says.

“The CIF was a one-time fee charged to developers in Berkeley County. The PSC states that a CIF charge represents the future cost to a utility of developing capacity to meet growth in customer demand. A CIF is meant to offset the cost a utility will be required to incur, and its existing customers must pay, to expand and construct the capacity to meet and serve the new demand in an area experiencing rapid growth."

On Feb. 27, 2009, Faircloth filed a complaint against the Sewer and Water Districts, requesting that the PSC rescind the CIFs “until the economic, factual basis upon which they were created returns and further hearings are had to determine that any CIF sought is reasonable, just and void of any sort of discrimination against developers and builders.”

The PSC investigated the issue and held evidentiary hearings in which Faircloth and the districts participated. A briefing schedule was established for the parties but one week before the initial round of briefs were due, Faircloth filed a declaratory judgment action in the Circuit Court of Berkeley County, seeking relief from paying the CIFs, according to the opinion.

This is the same remedy he sought from the PSC.

The circuit court ruled in favor of Faircloth, finding that the PSC lacked jurisdiction to establish the CIFs. In response, the districts appealed to the Supreme Court and in February 2011, the court found that Faircloth had failed to exhaust his administrative remedies before the PSC when he filed the circuit court suit before the PSC had the opportunity to rule on the issue.

The opinion says, “In December 2011, the PSC heard testimony regarding the continuing need for CIFs. After hearing this testimony and considering briefs filed by both Faircloth and the Water and Sewer Districts, the PSC issued a May 9, 2012, final order discontinuing the CIFs. The PSC’s order explained that:

"CIFs are intended to address only rapid and unexpected capacity depletion that can be traced to extreme growth levels from new customers. Absent the compelling circumstances of (i) rapid and continued population growth, and (ii) a near-term exhaustion of system-wide capacity, CIFs are not warranted. To that end the Commission (PSC) created criteria to determine whether it was appropriate to charge a CIF. The recent economic downturn has slowed growth, and the Districts are no longer in immediate danger of exhausting the capacity of their respective treatment plants. Because the Districts no longer meet the criteria that were set by the Commission (PSC) and accepted by the District, it is appropriate to discontinue those fees."

After the PSC issued the order discontinuing the CIFs, the districts filed petitions for reconsideration and Faircloth responded with motions arguing against reconsideration. The PSC denied the petitions for reconsideration and ordered the districts to return any CIFs collected subsequent to the May final order.

“Faircloth obtained the relief it sought on the central issue before the PSC – the elimination of the capacity improvement fees. Thereafter, the PSC agreed with Faircloth and denied the Water and Sewer Districts’ petitions for reconsideration. Nevertheless, Faircloth filed the present appeal of the PSC’s May 9, 2012, order,” the Court wrote.

Faircloth argued that the PSC had erred by: (1) concluding that it had the jurisdiction to establish the CIFs; (2) concluding that a CIF is a charge rather than a tax; (3) failing to recognize the Local Powers Act which authorized the imposition of “impact fees” only after the county has implemented a comprehensive zoning ordinance; (4) failing to recognize that the Community Infrastructure Investment Project Act makes the assessment of a CIF unnecessary when a builder constructs its own improvements; and (5) assuming the Districts had a right to establish the fees, the PSC “arbitrarily and capriciously” indentified May 9 as the date the districts no longer met the criteria necessary to support the CIFs.

The Court, however, never reached those arguments.

“Faircloth has asserted inconsistent positions regarding the PSC’s May final order – first requesting that the PSC deny the petitions for reconsideration and enforce that order, then appealing the order to this Court asking that it be reversed. Our law is clear that Faircloth is judicially estopped from challenging the May final order,” the court declared.

“Faircloth’s motions in opposition to the petitions for reconsideration did not contain any of the arguments raised in this appeal. Nor did Faircloth file its own petition for reconsideration asking the PSC to affirm the portion of the order it agreed with, and to reverse the portion of the May final order that it subsequently challenged in this appeal. Instead, Faircloth adamantly argued that the petitions for reconsideration be denied and urged the PSC to enforce its May final order without any reservation.

“Faircloth received a benefit by prevailing in its motion to deny the petitions for reconsideration: it was no longer required to pay the CIFs that it had challenged. Additionally, the PSC ordered the Water and Sewer Districts to refund any CIFs they had collected since the May final order was entered.

“Faircloth obtained the relief it sought on the central issue before the PSC. It successfully opposed the petitions for reconsideration filed by the adverse parties. Faircloth then requested that this Court reverse the PSC’s May final order so that it could obtain additional relief.

“To permit Faircloth to take inconsistent positions in this case impedes rather than promotes, the truth-seeking function of the judiciary and thereby hinders public confidence in the integrity of the judicial process.

“Having applied the facts of this case to the elements of our judicial estoppel test, we conclude that Faircloth is judicially estopped from challenging the errors it alleges are contained in the PSC’s May final order.”