                            STATE OF WEST VIRGINIA
                           SUPREME COURT OF APPEALS

Ohio Valley Jobs Alliance, Inc.,                                                FILED
Richard Goodman, Frances Olenick,                                           November 1, 2018
Joseph Olenick, David Dami,                                                       released at 3:00 p.m.
                                                                              EDYTHE NASH GAISER, CLERK
Jamie Vanhorn, and Jason Nuzum,                                               SUPREME COURT OF APPEALS
Petitioners                                                                        OF WEST VIRGINIA



vs) No. 18-0249 (Public Service Commission of West Virginia No. 17-0521-E-CS)

The Public Service Commission of West Virginia,
West Virginia State Building and Construction Trades Council, AFL-CIO,
ESC Brooke County Power I, LLC, and
West Virginia Oil and Natural Gas Association,
Respondents


                              MEMORANDUM DECISION

               Petitioners Ohio Valley Jobs Alliance (OVJA), Richard Goodman, Frances
Olenick, Joseph Olenick, David Dami, Jamie Vanhorn and Jason Nuzum appeal the Public
Service Commission of West Virginia (Commission) order granting a siting permit to ESC
Brooke County Power I, LLC (ESC Brooke) for construction and operation of a natural
gas powered wholesale electric generating facility in Brooke County, West Virginia.1
Petitioners allege the Commission should have required ESC Brooke to submit a
hypothetical tax estimate as part of its application, and that the Commission otherwise erred
in finding that the project did not offend the public interest, and that the project would have
a substantial positive impact on the local and state economies. While we agree with
Petitioners that the Commission should have required the hypothetical tax estimate, we


       1
        Petitioners are represented in this appeal by counsel William E. Robinson, Kelby
Thomas Gray, Gregory J. Phillips (admitted pro hac vice), Emily V. Danford (admitted pro
hac vice), and Robert Haffke (admitted pro hac vice). Respondent Public Service
Commission is represented by counsel Robert M. Adkins, Jessica M. Lane, and Linda S.
Bouvette. Respondent ESC Brooke is represented by counsel Lee F. Feinberg, Susan J.
Riggs, and Grant P.H. Shuman. Respondent West Virginia Building and Construction
Trades, AFL-CIO is represented by counsel Vincent Trivelli. Respondent Brooke County
Commission is represented by counsel Joseph E. Barki, III. Respondent West Virginia Oil
and Natural Gas Association is represented by counsel Mark D. Clark.

                                              1
affirm given the substantial and uncontroverted weight of the evidence in favor of granting
the siting permit.2

              Because this case does not present a new or significant issue of law, and for
the reasons set forth herein, we find this case is suitable for disposition in a memorandum
decision pursuant to Rule 21(c) of the West Virginia Rules of Appellate Procedure.

                            I.     Facts and Procedural History

               Pursuant to West Virginia Code § 24-2-11c (2018 Repl. Vol.), ESC Brooke
filed an application with the Commission for a siting permit authorizing the construction
and operation of a natural gas powered wholesale electric generating facility.3 The
proposed plant is not a public utility, but rather a federally authorized and regulated exempt
wholesale generator (EWG). So, ESC Brooke will not make retail sales to West Virginians,
and therefore the project will not affect ratepayers. Instead, ESC Brooke will make
wholesale sales on the open energy market. ESC Brooke remains wholly responsible for
the costs of construction of the proposed plant, which are estimated to be $884 million.

              The proposed plant location is a twenty-acre portion of the Cross Creek
Wildlife Management Area in Brooke County, owned by the West Virginia Division of
Natural Resources (WVDNR). ESC Brooke and WVDNR entered into an Option to Lease
Real Property relating to the twenty acres. The Lease Agreement and a Master Sublease
Agreement with the Brooke County Commission provide for a minimum lease payment to
the Brooke County Commission of approximately $19 million dollars over a thirty-year
period for use of the property, and additional compensation of $1 million dollars at the
closing of the project’s financing.

             ESC Brooke, the Brooke County Commission, the Brooke County Board of
Education, the Sheriff of Brooke County, and the Assessor of Brooke County entered into


       2
        This Court acknowledges the participation of amici curiae in this case. A brief in
support of Petitioners was filed by the West Virginia Coal Association. Briefs in support
of Respondents were submitted by the Brooke County Commission, the Board of
Education of Brooke County, West Virginia, and the Independent Oil and Gas Association
of West Virginia, Inc.
       3
        Petitioners intervened in the proceedings before the Commission. Respondents
West Virginia State Building and Construction Trades Council, AFL-CIO, and the West
Virginia Oil and Natural Gas Association (WVONGA) likewise intervened. The West
Virginia Department of Commerce was also party to the proceedings below and was
represented by counsel Joshua L. Jarrell and Wesley H. White, but did not file a brief for
this Court’s consideration.
                                              2
a PILOT (Payment In Lieu of Taxes) Agreement.4 The PILOT Agreement states that ESC
Brooke is exempt from ad valorem property taxes for a period of thirty years, and instead
will make payments in lieu of taxes to be distributed to the Brooke County Board of
Education and the Brooke County Commission. The property, being owned by the
WVDNR, does not produce any ad valorem tax revenue at present, but the project would
generate a minimum of $7,331,751 over the thirty-year term, subject to a CPI escalator of
a minimum 2.5% per year. Evidence was presented to the Commission indicating that this
type of agreement is designed to make West Virginia more competitive than, or at least on
equal footing for business ventures with, for example, Pennsylvania, which has a different
and more lenient tax calculation for electrical power generation as well as lower property
taxes than that of Brooke County, which borders Pennsylvania.

               ESC Brooke’s extensive application contains a thorough explanation of the
site location decision, environmental impact analysis, the PILOT Agreement, associated
leases, and a lengthy discussion of the anticipated economic impact of the proposed project
among other things. The Commission conducted a tour of the proposed site with
representative parties and held a public comment hearing. Consistent with the procedural
schedule set forth in a June 30, 2017 order, the parties were directed to file briefs and the
Commission held an evidentiary hearing. The day before the evidentiary hearing, ESC
Brooke, the West Virginia State Building and Construction Trades Council, AFL-CIO
(Trades Council), the Commission staff attorneys, WVONGA, and the Department of
Commerce filed a Joint Stipulation and Agreement for Settlement, jointly recommending
that the siting permit be granted, subject to certain conditions.

              ESC Brooke also represented that it had entered into a Memorandum
Agreement with the Trades Council for which it sought Commission approval. The
Memorandum Agreement ensures that to the extent reasonably possible, the workers used
in the construction of the facility will be local workers who will be paid union wages. The
Memorandum Agreement was admitted into evidence at the evidentiary hearing, which
lasted for two days.

              ESC Brooke presented its case for the siting permit, reiterating the points
made in its application and appendix that detailed the practical aspects of the project such
as gas procurement and construction.5 It also presented witness testimony as to the
economic impacts to Brooke County and to West Virginia. Tom S. Witt, Ph.D, an

       4
           The PILOT Agreement is permitted by West Virginia Code § 8-19-4.
       5
         The siting permit application process and consequent evidentiary hearing required
a plethora of information that was provided to the Commission for consideration. We
exclude much of this information from the discussion here only because Petitioners’ claims
revolve solely around the economic benefit to the public, including the creation of jobs,
and the tax abatements provided by Brooke County.
                                             3
economist, testified concerning the economic impact of the project. Dr. Witt generated a
report projecting that a three-year construction period would result in 3,795 job years,
$263.2 million in employee compensation, and $331 million in value added. Dr. Witt
projected that in the first full year of the plant’s operation, the project would result in 1,164
full and part-time jobs, $73.3 million in employee compensation, and $112.7 million in
value added. He also estimated that $177.5 million per year of natural gas would be sourced
through long-term fuel agreements, in addition to a gas interconnection at a cost of $55
million. Consequently, the total economic impact is estimated to be more than $880
million during construction and $287.4 million during operation. Moreover, the Trades
Council, the Department of Commerce, WVONGA, the WVDNR, and even the
Commission staff all presented witnesses whose testimony supported the substantial
positive economic impact of the project.

              As to the tax abatement under the PILOT Agreement, Commission staff
requested that ESC Brooke provide an analysis of the hypothetical taxes it would have paid
without aid of the tax abatement. ESC Brooke responded that the project would not be
built in West Virginia without the PILOT agreement, but rather would simply be moved
800 feet into Pennsylvania for construction there because of that state’s more lenient tax
structure. Specifically, at the evidentiary hearing, ESC Brooke contended:

              1.    The [WVDNR] is not selling the property but leasing it
              to [ESC Brooke] and has not offered to sell the property.

              2.     In the event the [WVDNR] was selling the property, it
              is vacant, has no infrastructure, is not improved, and is a former
              coal mine site.

              3.      [ESC Brooke] would not own and develop the power
              plant without the PILOT [Payment in lieu of taxes agreement]
              and . . . no other prospective purchasers have approached the
              [WVDNR] to acquire the land, so presumably ad valorem taxes
              would still be $0.

After considering the evidence presented, the Commission entered an order on February
20, 2018, granting the siting certificate subject to the conditions outlined in the Joint
Stipulation proposed by all parties save the Petitioners herein, and also subject to the




                                               4
Memorandum Agreement between ESC Brooke and the Trades Council. This appeal
followed.

                                  II.     Standard of Review

              We employ a highly deferential standard of review when examining an order
of the Public Service Commission:

                      “ ‘ “[A]n order of the public service commission based
              upon its finding of facts will not be disturbed unless such
              finding is contrary to the evidence, or is without evidence to
              support it, or is arbitrary, or results from a misapplication of
              legal principles.” United Fuel Gas Co. v. The Public Service
              Commission, 143 W. Va. 33, 99 S.E.2d 1 (1957).’ Syllabus
              Point 5, in part, Boggs v. Public Service Comm’n, 154 W. Va.
              146, 174 S.E.2d 331 (1970).” Syllabus Point 1,
              Broadmoor/Timberline Apartments v. Public Service
              Commission, 180 W. Va. 387, 376 S.E.2d 593 (1988).[6]

As we have explained, our role is not to substitute our judgment for that of the Commission:

                      In reviewing a Public Service Commission order, we
              will first determine whether the Commission’s order, viewed
              in light of the relevant facts and of the Commission’s broad
              regulatory duties, abused or exceeded its authority. We will
              examine the manner in which the Commission has employed
              the methods of regulation which it has itself selected, and must
              decide whether each of the order’s essential elements is
              supported by substantial evidence. Finally, we will determine
              whether the order may reasonably be expected to maintain
              financial integrity, attract necessary capital, and fairly
              compensate investors for the risks they have assumed, and yet
              provide appropriate protection to the relevant public interests,
              both existing and foreseeable. The court’s responsibility is not
              to supplant the Commission’s balance of these interests with
              one more nearly to its liking, but instead to assure itself that the




       6
        Syl. Pt. 1, Sexton v. Pub. Serv. Comm’n of W. Va., 188 W. Va. 305, 423 S.E.2d
914 (1992).

                                               5
              Commission has given reasoned consideration to each of the
              pertinent factors.[7]

Ultimately, we summarize our analysis as follows: “(1) whether the Commission exceeded
its statutory jurisdiction and powers; (2) whether there is adequate evidence to support the
Commission’s findings; and (3) whether the substantive result of the Commission’s order
is proper.”8 With these standards in mind, we turn to the parties’ arguments.

                                      III.    Discussion

               Petitioners allege that the Commission erred in granting ESC Brooke a siting
permit because it was based on incomplete and inaccurate information. As to the
completeness of the application, Petitioners allege that ESC Brooke was not made to
provide an analysis showing the taxes it would have paid without the benefit of the tax
abatements as required under the Commission’s rules and by past precedent. As a facet of
that argument, Petitioners argue that the Commission erred in excluding Petitioners’ expert
who would have testified regarding the tax abatement analysis, giving the Commission the
requisite information to make a sound decision.

               As to the inaccuracy of the information, Petitioners argue that even without
the aid of the tax abatement analysis, the payments made by ESC Brooke under the
agreements are so de minimis and disproportionately low that they patently offend the
public interest. Likewise, Petitioners argue that the Commission erred in finding that there
would be substantial economic impact to the West Virginia and local Brooke County
economies as opposed to Ohio and Pennsylvania economies bordering the project.

              We examine each of these arguments in turn.

             The overarching statutory duty of the Commission under West Virginia Code
§ 24-2-11c(c) as it relates to the issuance of siting permits provides that the Commission
should conduct a balancing test of various interests:

                     In deciding whether to issue, refuse to issue, or issue in
              part and refuse to issue in part a siting certificate, the
              commission shall appraise and balance the interests of the
              public, the general interests of the state and local economy, and
              the interests of the applicant. The commission may issue a
              siting certificate only if it determines that the terms and

       7
        Syl. Pt. 2, Monongahela Power Co. v. Pub. Serv. Comm’n, 166 W. Va. 423, 276
S.E.2d 179 (1981).
       8
       Syl. Pt. 1, in part, Central W. Va. Refuse, Inc. v. Pub. Serv. Comm’n of W. Va., 190
W. Va. 416, 438 S.E.2d 596 (1993).
                                             6
               conditions of any public funding or any agreement relating to
               the abatement of property taxes do not offend the public
               interest, and the construction of the facility or material
               modification of the facility will result in a substantial positive
               impact on the local economy and local employment.

In light of this statutory framework, the Commission has passed regulations, referred to as
“Siting Rules.”9 Siting Rule 3.1.l.1.C relates to the tax abatement analysis:

                       If the project will have any funding from public sources,
               either initially or in the future, the amount and terms for such
               funding must be fully disclosed. Such disclosure shall include
               a listing of each source of public funding, a description of the
               public funding and a copy of the written agreement(s) setting
               forth the terms and conditions for the public funding. The
               disclosure shall include reasonable estimates of the amount of
               taxes the applicant would pay if, hypothetically, the applicant
               constructed and operated the 24-2-1(c) generating facility
               without the benefit of any agreements abating taxes. For
               purposes of this paragraph, public funding shall include:

                      1)    loans, grants or contributions from the State or
               Federal government, any sub-division of the State or any
               public Board, Commission or similar entity;

                      2)    leases or other uses of property owned by the
               State, any sub-division of the State or any public Board,
               Commission or similar entity;

                      3)     abatement of any taxes.

              Finally, the Commission has, in past decisions, required the tax abatement
analysis as necessary to appropriately conduct its review of whether the public interest is
offended. In its first decision after the statutory duty was imposed, In re Longview Power
(Longview I),10 the Commission stated “the Commission believes that a finding that public
funding/tax abatement do not offend the public interest should be based on evidence as to




      9
        The Rules Governing Siting Certificates for Exempt Wholesale Generators (Siting
Rules) can be found at 150 C.S.R. Series 30.
      10
           P.S.C. Case No. 03-1860-E-CS (Aug. 27, 2004).
                                               7
the estimated amount of taxes that would have been paid by Longview if it built the Project
without the Public Documents.” Longview I created a two-step process to that end:

                         In Part One of the analysis, the Commission will
                 perform its duty to appraise and balance: (a) an applicant’s
                 interest to construct an electric wholesale generation facility;
                 (b) the State’s and region’s need for new electrical generating
                 plants; and (c) the economic gain to the State and the local
                 economy, against: (i) community residents’ interest in living
                 separate and apart from such facility; (ii) a community’s
                 interest that a facility’s negative impacts be as minimally
                 disruptive to existing property uses as is reasonably possible;
                 and (iii) the social and environmental impacts of the proposed
                 facility on the local vicinity, the surrounding region, and the
                 State.

                         The Commission performs Part Two of its analysis only
                 if it determines in Part One that, taken as a whole, positive
                 impacts relating to the various interests outweigh the negative
                 impacts on the various interests. (See W. Va. Code § 24-2-
                 11c(c)). In Part Two the Commission decides whether a
                 project’s public funding, if any, and property tax abatement, if
                 any, offends the public interest. (W. Va. Code § 24-2-
                 11c(c)).[11]

Many facts of Longview I are strikingly similar to those in this case: Longview Power
proposed a coal-powered power plant to be constructed on land that had been extensively
strip-mined, and on which there were no competing offers.12 The proposed site was owned
by the state and therefore not then generating any tax revenue.13 The lease structure and
PILOT agreement were similarly arranged.14 Longview’s response to the Commission
staff relating to the hypothetical tax calculation was much the same as ESC Brooke’s, that
is, that the project would not be completed without aid of the PILOT agreement.15 And, in


      11
           Id.
      12
           Id.
      13
           Id.
      14
           Id.
      15
           Id.

                                                8
that case, as we have previously discussed, the Commission conditioned Longview’s siting
permit, in part, on submission of the tax abatement analysis.

              The parties returned in Longview II,16 which included more discussion of the
tax abatement analysis. Longview’s taxation expert, Jerry Knight, testified that a
hypothetical tax analysis of the duration of the PILOT agreement period was impracticable
because, based on his thirty years of experience, the West Virginia State Tax Department
would never estimate personal property taxes beyond the first year.17 He also explained
that because there are so many variables in a yet-to-be-constructed facility, the data
necessary to analyze and estimate the property tax is at worst, unknown, and at best,
unreliable.18 Mr. Knight, on behalf of Longview, did, however, provide that first year’s
estimate of hypothetical tax revenue for the Commission’s consideration.19

              In its order in Longview II, the Commission accepted Mr. Knight’s
explanation that a thirty-year hypothetical analysis was unavailable under the
circumstances. It instead accepted the one-year estimate as reasonable, and noted that
“[t]he tax estimate does not stand on its own. It must be considered in the context of
Longview’s extensive testimony regarding the need for the PILOT agreement.”20

              Petitioners and Respondents read these administrative orders two different
ways. Petitioners rely solely on Longview I, and make only sweeping generalizations that
ESC Brooke has not presented “extensive testimony regarding the need for the PILOT
Agreement” or any of the other information the Commission relied on in Longview II.
Respondents, conversely, argue that Longview II effectively absolved parties of any
obligation to provide the hypothetical tax calculation because it was “essentially a futile
exercise” and only one small piece of a much larger puzzle.

              We disagree to some extent with both characterizations. First and foremost,
irrespective of what Longview I and Longview II might suggest, the Commission’s own
regulations require – that is, in mandatory terms – that the hypothetical tax calculation be
submitted for consideration. We have discussed that

                  “[a] regulation that is proposed by an agency and approved by
                  the Legislature is a ‘legislative rule’ as defined by the State

       16
            P.S.C. Case No. 03-1860-E-CS & 05-1467-E-CN (June 6, 2006).
       17
            Id.
       18
            Id.
       19
            Id.
       20
            Id.
                                                9
                  Administrative Procedures Act, W. Va. Code, 29A-1-2(d)
                  [1982], and such a legislative rule has the force and effect of
                  law.” Syl. Pt. 5, Smith v. West Virginia Human Rights Comm’n,
                  216 W. Va. 2, 602 S.E.2d 445 (2004). Accordingly, we reject
                  any suggestion that [the W. Va. Code of State Rules] are mere
                  “guides,” a term with no legal significance, or are otherwise of
                  no consequence.21

Longview I reiterated that requirement under similar conditions as those present here.
Longview II simply amended what the Commission deemed “reasonable” under those
circumstances as is permitted under the Siting Rules. The one-year estimate provided by
Longview through Mr. Knight’s testimony was, under those circumstances, reasonable and
acceptable to the Commission. Here, however, we have similar circumstances as in
Longview I and the Commission has declined to require the hypothetical tax analysis.

               Respondents argued variously in briefs and at oral argument that the
hypothetical tax calculation was either substantially complied with in accord with
Longview II, or that it is, and perhaps always has been, a useless exercise. As for the
contention that the analysis is a useless exercise, if the Commission and applicants have
known, as contended, since Longview II that the hypothetical tax calculation was useless,
or to use the Commission’s terms, “an academic exercise that is not meaningful or
probative in evaluating siting certificate applications,” the Commission has had twelve
years to amend its regulations requiring it. It has not done so. As recently as 2017, the
two-step test devised in Longview I has been applied in siting permit applications, in which
the Commission has interpreted part two of that test as requiring a reasonable estimate of
the amount of taxes to be paid without aid of the tax abatement.22 Nonetheless, the
Commission argues that the hypothetical tax calculation was not a critical element of the
Commission’s evaluation of the tax abatement agreements in that 2017 case, or in other
recent cases. Indeed, in those cases there was little, if any, evidence in the Commission’s
orders that the hypothetical tax calculation was a significant factor, let alone even provided
by the applicant.

              It is plain that the Commission’s practical application of its regulations has
caused confusion to applicants. Given that the Commission assures this Court that the
hypothetical tax calculation is neither probative nor a significant factor, but merely one
piece of a large puzzle, we urge the Commission to amend its regulations to that end and


         21
              Wooton v. Walker, 237 W. Va. 193, 197, 786 S.E.2d 212, 216 (2016).
         22
              See ESC Harrison County Power, LLC, P.S.C. Case No. 17-0036-E-CS (Oct. 27,
2017).

                                                10
to explicitly overrule any requirement to provide the calculation drawn from Longview I
or II.

               As it relates to substantial compliance, Respondents rely on this Court’s
precedent in Mountain Communities for Responsible Energy v. Public Service Commission
of West Virginia, 222 W. Va. 481, 665 S.E.2d 315 (2008), and Wooton v. Walker, 237 W.
Va. 193, 786 S.E.2d 212 (2016). In Mountain Communities, we affirmed a decision of the
Commission in which it had accepted, as substantially compliant, a map whose scale was
1/10th of an inch from the required scale and which lacked inclusion of a few cultural sites
that were arguably necessary.23 We explained that we failed to appreciate how a 1/10th
inch difference in map scale negatively impacted the Commission’s ability to debate the
application, and that reasonable minds could differ as to the significance of including
certain cemeteries and whether local roads constituted major transportation routes.24
Likewise, in Wooton, this Court examined a candidate for public financing who had filed
all required substantive information by the imposed deadline, but who submitted his sworn
statement one day late.25 The Wooton court explained that “‘not all technical procedural
violations merit relief where there is substantial compliance with substantive law.’”26
Thus, because all substantive information was timely submitted, with the exception of a
one-page pro forma cover letter statement, the Court determined that the late submission
of the statement was of no real consequence nor did it cause harm to anyone.27

                 These two cases are different from the circumstances here. The hypothetical
tax calculation is not a technical procedural requirement, but rather is a substantive
submission. It is not as if the tax calculation was submitted late, or not properly proffered.
It is not as if ESC Brooke attempted to comply and its estimates were not quite as accurate
as had been hoped. We disagree to the extent ESC Brooke and the Commission argue that
there was substantial compliance with this particular regulation. To say that ESC Brooke
substantially complied with the specific requirement to provide the hypothetical tax



       23
            Mountain Communities, 222 W. Va. at 492, 665 S.E.2d at 326.
       24
            Id.
       25
            Wooton, 237 W. Va. at 196, 786 S.E.2d at 215.
       26
        Id. at 197, 786 S.E.2d at 216 (quoting West Virginia Alcohol Beverage Control
Administration and Division of Personnel v. Scott, 205 W.Va. 398, 403, 518 S.E.2d 639,
644 (1999) (Workman, J., dissenting) (emphasis in original)).
       27
            Id. at 199, 786 S.E.2d at 218.

                                             11
calculation by using a threat denying the actuality of the project belies the definition of the
word “hypothetical.”

               However, given that this particular requirement is but one small piece of the
larger and extremely extensive application, we agree that ESC Brooke substantially
complied with the Siting Rules as a whole. In the larger scheme of the evidentiary hearing
and the overwhelming evidence presented that the project is in the public interest, in
contrast to the total lack of admissible evidence presented by Petitioners to refute it, we are
not inclined to reverse the decision of the Commission in granting the siting certificate.28
As noted by the Commission, it had ample information with which to balance all of the
respective interests and to reach a decision relating to the public interest.

               Petitioners present no viable factual basis that the project does, in fact, offend
the public interest so as to overcome the deference this Court affords to the Commission’s
findings. Instead, Petitioners ask this Court to impose new standards on the Commission’s
analysis. First, Petitioners seek to require that the Commission use the pro forma EBITDA
statement (Earnings Before Interest, Taxes, Depreciation, and Amortization) and the
payments made under the lease and PILOT Agreement to concoct some sort of acceptable
ratio as to what does and does not offend the public interest. Not only are we wary of
imposing such a test ex post facto, but we are also concerned that EBITDA does not
accurately capture the financial circumstances typical of these types of projects. Neither
the Commission nor this Court is in a position to regulate the rate of return a business may
expect as a prerequisite to a siting permit by determining when it “could afford to pay
more.”

             Similarly, use of an EBITDA/PILOT comparison alone is inappropriate
because it would conflate earnings with profits. It ignores that the applicant seeking to do

       28
          Petitioners’ second assignment of error is that the Commission erred in excluding
the testimony of Petitioners’ expert, who Petitioner contends would have given the
Commission the requisite hypothetical analysis. We note with irony that Petitioners’
expert, Mr. Knight, who purported to give a thirty-year estimate of hypothetical taxes in
this case, is the same Mr. Knight of the Longview cases, in which he testified that a thirty-
year calculation was unreasonable and incapable of calculation.

        We do not find that the Commission erred in excluding Mr. Knight’s testimony.
His “rebuttal” testimony can hardly be characterized as such, was submitted in
contravention of prior discovery responses that OVJA was no longer pursuing a claim
related to the PILOT Agreement and Lease Agreement, and was submitted nearly two
months after the deadline and just eleven days prior to the evidentiary hearing. To have
admitted Mr. Knight’s testimony under the circumstances would have prejudiced the
parties in preparing for the evidentiary hearing, and therefore it was properly excluded.

                                               12
business in West Virginia takes all risk and is responsible for making principal and interest
payments on debt-financing, as well as all income taxes. So, EBITDA is inaccurate as the
only measuring stick for whether the public interest is offended, and in any case would
nullify the import of negotiations made at arms-length between the applicant business and
county agencies. For those reasons, Petitioners having presented no evidence to the
contrary, we accept that the Commission has considered EBITDA with appropriate weight
and in the appropriate context, and acknowledge that negotiations were conducted at arms-
length by sophisticated parties, including both state and local officials, all of whom are in
agreement that the project weighs heavily in the public interest.

               We likewise decline Petitioners’ request to change the standard of review
required of siting permit applicants. Petitioners ask this Court to require clear and
convincing evidence that the PILOT Agreement and associated leases do not offend the
public interest. Petitioners base their argument on the premise that the tax abatements in
this case should meet the heightened requirements of clear and convincing evidence
required in In re Tax Assessment of Foster Foundation’s Woodlands Retirement
Community, 223 W. Va. 14, 672 S.E.2d 150 (2008). In that case, we held that parties who
seek a reduced tax burden in property appraisal must meet the “clear and convincing”
standard before the appropriate board and declared “[i]t is not unreasonable or unfair . . .
to require the party claiming to have superior knowledge of the value of its own property
to shoulder the burden of presenting such evidence to the decision maker.”29

               Of course, we are in a far different context here than in Foster. We are not
considering an appeal from a tax appraisal, in which the tax assessor’s assessment is
presumed to be correct. 30 The case before us concerns the Commission’s approval of a
siting certificate that required consideration of a multitude of factors when assessing the
offense to the public interest. PILOT agreements are specifically provided for by the
Legislature to equalize opportunities for West Virginia – there is no presumption the
applicant must overcome that the PILOT Agreement is ill-conceived.31 While the burden
of proof is on the applicant to prove the PILOT does not offend the public interest, to be
sure, we see no cause to elevate this particular requirement to a heightened burden of proof
above the many other considerations of the Commission in its analysis of those agreements
in the siting permit application process.

            The Commission had before it substantial evidence that the project did not
offend the public interest and Petitioners never presented any evidence suggesting
otherwise. The factual evidence is far from overcoming the deference this Court accords


       29
            Foster, 223 W. Va. at 33, 672 S.E.2d at 169.
       30
            Id. at 25, 33, 672 S.E.2d at 161, 168.
       31
            See W. Va. Code § 8-9-14.
                                               13
to findings of the Commission, and we will not set aside those findings by requiring a
heightened standard of proof or creating a “one-size-fits-all” proportionality test of the
project’s projected earnings and payments under the PILOT Agreement.

              Finally, Petitioners argue that the Commission erred in finding that there
would be substantial positive impact to both the State and local economies, and local
employment. Petitioners’ argument is based on two issues they perceive in the Witt
economic study report – the economic impact study conducted by ESC Brooke’s economic
expert, Dr. Witt. First, Petitioners argue the study is inaccurate because it assumes that the
project will source West Virginia natural gas, and because it ignores that there would be
substantial spill-over of jobs into Pennsylvania and Ohio.

              Dr. Witt’s analysis was created through use of IMPLAN software, a
nationally recognized input-output modeling system used to examine the economic impact
of projects such as this. It has been used frequently in this context and before the
Commission. Petitioners do not argue that the algorithm itself is flawed, but rather that if
the inputs are incorrect, the outputs are necessarily incorrect. Consequently, Petitioners
find it was faulty for Dr. Witt to have assumed that natural gas would be sourced from
West Virginia as opposed to Pennsylvania, and that his projections were high as it related
to assumptions that employment would go to West Virginians as opposed to
Pennsylvanians or Ohioans.

               As to the natural gas sourcing, Petitioners ignore that the proposed project
site is adjacent to a natural gas well pad. As the Executive Director of the West Virginia
Oil and Natural Gas Association, who supports the project, testified, it is most
economically prudent to source natural gas close to the production site so as to lower costs.
Likewise, WVONGA detailed that the project would contribute to an increased demand
for natural gas production, and due to the project, other natural gas producers and power
plants would have access to infrastructure not previously available. ESC Brooke made
assurances that while it might temporarily be necessary to use other sources of delivery
providing access to an interstate pipeline to ensure a secure means of transportation for the
financial markets, it has every intention of extracting natural gas from the adjacent well
pad in West Virginia as soon as possible.

               Relating to the assumption that the workers would be West Virginians,
neither the parties nor Dr. Witt contemplated that all of the workers would be from West
Virginia. As the Brooke County Commission aptly put, spillover into bordering states is
expected in border counties throughout the state, and is no different from Brooke County
residents seeking work in Pennsylvania or Ohio. It does not wholly discount the positive
economic impact to West Virginia and Brooke County simply because there will be some
spillover of employment into bordering states. Additionally, Petitioners’ contention that
there is no obligation to hire West Virginia workers is without support. The Memorandum
Agreement ESC Brooke made with the Trades Council ensures that “to the extent

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reasonably possible,” local workers will be used. The agreement is binding on the
successors and assigns of the parties, and the Trades Council entered the agreement on
behalf of its members, to whom it owes a duty to bargain and to protect. Steve White, on
behalf of the Trades Council, testified that although some of the workers from other states
may fill some construction jobs, an estimated seventy-five percent would be filled by West
Virginians, and “[n]o matter how you look at it, that’s a lot of work for a lot of our
members.”

                Given the current economic condition of West Virginia, and Brooke County,
in particular, it is apparent that the project will substantially and positively impact the state
and local economies. Petitioners have put forward no evidence sufficient to convince us
that the Commission was wrong in relying upon Dr. Witt’s estimates in this regard.

                                      IV.    Conclusion

             For the foregoing reasons, we affirm the February 20, 2018 order of the
Public Service Commission.

                                                                                      Affirmed.

ISSUED: November 1, 2018

CONCURRED IN BY:

Chief Justice Margaret L. Workman
Justice Elizabeth D. Walker
Justice Paul T. Farrell, sitting by temporary assignment
Justice Tim Armstead
Justice Evan H. Jenkins

Justice Allen H. Loughry II suspended and therefore not participating.




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