On 1st day, Maryland PSC's Nazarian denies Defense Dept. request

Daily Record, The (Baltimore), Aug 21, 2008 by Danielle Ulman

On his first day as chairman of the Maryland Public Service Commission Wednesday, Douglas R.M. Nazarian did not shy away from saying no to the federal government.

Attorneys from the Department of Defense requested to bypass getting PSC approval for building emergency generators on their property, because they said the federal government is not under the jurisdiction of state agencies and does not require their consent. The department asked for an across-the-board release from the process, which Nazarian strongly rejected.

"You want a letter saying you don't have to come here, which I told you a year ago we wouldn't give you," said Nazarian, who made that determination when he was the commission's general counsel. Gov. Martin O'Malley tapped Nazarian to take over as chairman when Steven B. Larsen decided he would step down in August.

Any group that wants to construct an emergency generator on its property must file for a certificate of public convenience and necessity, a lengthy review process that ensures its safety and reliability, or apply for exemption from the process.

The Defense Department wanted blanket approval because even the exemption process takes an average of 30 days, adding cost and delaying projects that are built to "support mission-critical facilities," said Maj. Patrick Pfaltzgraff, a department attorney.

Nazarian balked at the request because giving the department approval to construct a generator without even a brief exemption review could harm the power grid, he said.

"We regulate the interaction between companies and the grid," Nazarian said. "You're asking for carte blanche the ability to hook up any dangerous generator you want without going through the process. I don't see how that's good for anyone."

Cmdr. Mike Maule, a Defense Department attorney, said the PSC lacks authority to make that decision.

"I'm not asking for something we want," Maule said. "I'm saying you have no jurisdiction to regulate us."

The federal government has sovereign immunity from state regulations, unless Congress waives the immunity, as is the case for air quality. That means the military must get an air permit from the Maryland Department of Energy before it can build an emergency generator; it also needs approval from the utility that serves the area.

Maule said the Defense Department wanted to be released from the exemption process because the MDE has refused to review its permit applications without PSC approval.

Pfaltzgraff estimated that the entire process can take 90 days.

"You mention that 30 days is not a burden, and I would argue with that," said Pfaltzgraff. "At Andrews [Air Force Base], we need flexibility to get things up and running. If it were just 30 days or less, we could possibly look at eating that."

A PSC staff review of department exemption requests found that the average application took 35.8 days to approve. One application in 2005 took 82 days to pass through the system; the most recent request, filed after the PSC received the department's first letter about the exemptions, took 15 days.

Commissioner Lawrence Brenner suggested a compromise.

"I don't know how long it has been, but it's not how it has to be," he said. "These don't have to be consecutive sentences, they can be served concurrently."

Nazarian agreed that he could "express the will of the commission to streamline the process," and the Defense Department's attorneys said that a shorter route to approval would be better.

"We've got to scratch our heads to see how much of a pain ... is this?" Maule said in an interview after the PSC meeting.

Fighting the PSC could be time consuming and expensive, but protracted application periods could hurt the department more, he said.

"The more painful the process," Maule said, "the more worthwhile our time."