In re Joint Application of Bald Head Island Transp.

1

In the Matter of Joint Application of Bald Head Island Transportation, Inc., Bald Head Island Limited, LLC; and Bald Head Island Ferry Transportation, LLC, for Approval of Transfer of Common Carrier Certificate to Bald Head Island Ferry Transportation, LLC, and Permission to Pledge Assets.

No. COA 24-127

Court of Appeals of North Carolina

November 19, 2024

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

Heard in the Court of Appeals 14 August 2024.

Appeal by intervenor from order entered 22 August 2023 by the North Carolina Utilities Commission No. A-41, SUB 22.

Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Amanda S. Hawkins, Marcus W. Trathen, Sam J. Ervin, IV, and Sanford Law Office by Jo Anne Sanford, for Intervenor-Appellants, Village of Bald Head Island.

Fox Rothschild LLP, by Kip David Nelson, M. Gray Styers, Jr., and Elizabeth Sims Hedrick and Maynard Nexen PC, by David P Ferrell for Bald Head Island Transportation, Inc., and Bald Head Island, Limited, LLC, Appellees.

Panel consisting of Chief Judge DILLON and Judges COLLINS and FLOOD.

PER CURIAM.

This appeal concerns the approval with conditions by the North Carolina Utilities Commission allowing the transfer of ownership of the operations related to the provision of transportation services between Southport to Bald Head Island.

I. Background

Intervenor Village of Bald Head is a municipality coterminous with Bald Head Island, an island accessible by boat but not by car.

Applicant Bald Head Island Transportation, LLC, developed and for decades has owned and operated the ferry service (the "Ferry Operation") providing passenger transportation between Southport to the Island. An affiliated entity, Applicant Bald Head Island Limited, LLC, developed and for decades has owned and operated a parking lot in Southport adjacent to the ferry port (the "Parking Operations") and a freight barge business (the "Barge Operation") providing transportation of various goods from Southport to the Island.

The Applicants sought to sell the Ferry, Parking, and Barge Operations. Though the Village desired to purchase the Operations, the Applicants contracted to sell the Operations to an unrelated third-party, Bald Head Island Transportation Inc., an affiliate of an entity known as SharpVue Capital, LLC (both referred to as "SharpVue").

In July 2022, SharpVue filed an application with the Commission seeking approval to purchase the Ferry Operation. There is no dispute among the parties that the Ferry Operation is a utility, subject to regulation by the Commission.

In December 2022, in a separate proceeding, the Commission determined that the Barge Operation and the Parking Operation were also subject to regulation by the Commission, concluding that they provide services ancillary and essential to the regulated Ferry Operation. That determination was reviewed by our Court in a separate appeal. See State ex rel. v. Bald Head, ____ N.C.App. _____ (Oct. 15, 2024) ("Bald Head I"). In that appeal, our Court held the Commission "may regulate the sale of [the] Parking Operations because [the relationship between the Ferry Operation and the Parking Operation] has an effect on the rates and service of the regulated [Ferry Operation]." However, over a dissent, our Court held that the Commission lacked authority to regulate the Barge Operation. Id. (Additional factual background may be found in that opinion.)

In any event, in August 2023 in this present matter - prior to our opinion in the other appeal - the Commission approved the transfer and pledge of assets of all three Operations to SharpVue. The Village timely appealed to our Court.

II. Standard of Review

The Village challenges the Commission's order approving the sale of the Operations to SharpVue.

"In an appeal taken from an order entered by the Commission, any . . . order made by the Commission under the provisions of Chapter 62 shall be prima facie just and reasonable." State ex rel. Utils. Comm'n v. Stein, 375 N.C. 870, 899 (2020) (internal quotations omitted). According to the Act, our Court on appeal must

decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission's findings, inferences, conclusions or decisions are:

(1) In violation of constitutional provisions, or

(2) In excess of statutory authority or jurisdiction of the Commission, or

(3) Made upon unlawful proceedings, or

(4) Affected by other errors of law, or

(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or

(6) Arbitrary or capricious.

N.C. G.S. § 62-94(b). A Commission's decision is "arbitrary and capricious when, among other things, [it] indicate[s] a lack of fair and careful consideration or fail[s] to display a reasoned judgment." State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 515 (1985). "In deciding whether to affirm, reverse, invalidate or remand the Commission's decision for further proceedings, we are required to review the whole record, or such portions thereof as may be cited by any party and take due account of the rule of prejudicial error." State ex rel. Utils. Comm'n. v. Va. Elec. and Power Co., 381 N.C. 499, 514 (2022) (internal quotations omitted).

While it is our responsibility to determine whether the Commission's decision was supported by "competent, material, and substantial evidence," State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 444, 448 (2014), it is the Commission's responsibility to determine the weight and credibility of the evidence provided, Stein, 375 N.C. at 900. We must accept the Commission's challenged findings of facts if supported by competent, substantial evidence. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 266-67 (1970). However, "the Commission's conclusions of law . . . are reviewed de novo." Stein, 375 N.C. at 900.

III. Analysis

We are bound by our Court's decision in the other appeal that the Barge Operation is not subject to Commission regulation. We, therefore, dismiss any argument by the Village in this present appeal that the Commission inappropriately approved the sale of the Barge Operation. We note that in the other appeal our Court recognized that the Commission could have jurisdiction over the Barge Operation either based on a determination that the Barge Operation was sufficiently ancillary to the regulated Ferry Operation or, alternatively, based on a determination that the Barge Operation - to the extent that it transported "household goods" or passengers - is itself a utility in its own right. See N.C. G.S. § 62-3 (stating a public utility includes operations which transport "passengers" or "household goods" for compensation). We further note our Court determined that the only issue properly before the Commission and before us in that appeal was whether the Barge Operation was ancillary to the Ferry Operation, leaving unanswered whether the Commission could otherwise regulate the Barge Operation as a transporter of passengers or household goods:

[T]he Village's request was insufficient to confer the Commission's jurisdiction to determine its unreached contention that [the Applicant] operates its Barge Operations as a per se utility transporting persons or household goods for compensation, as the Village's alleged use of the Barge Operations is limited to transporting municipal materials and equipment.

Bald Head I at *2. In any event, in this appeal the Village has not made any argument that the Barge Operation was itself a utility subject to regulation based on an allegation that the Barge Operation is used, at least in part, as a transporter of passengers or household goods. Rather, the Village in its brief merely states that the Barge Operation is subject to the Commission's jurisdiction based on its connection to the regulated Ferry Operation, an argument our Court rejected in the other appeal.

We now address the Village's arguments as they pertain to the approval of the transfer of the Parking Operation. For the reasoning below, we affirm the order of the Commission approving the transfer.

A. Legal Standard for...