The Maine Supreme Court heard oral arguments Tuesday in two uniquely entwined appeals related to the New England Clean Energy Connect (NECEC) transmission project.

A court determination on the retroactive application of a Maine voter referendum on transmission development passed in November could affect the outcome of an appeal of a lower court decision to vacate a 1-mile lease of public land for the project. The validity of that lease could, in turn, determine the outcome of the constitutionality of applying the law established by the referendum to the NECEC project.

Maine law prohibits public land — including state parks or land set aside for conservation — from being “reduced” or its uses “substantially altered” unless the Legislature approves the changes with a two-thirds majority vote. A group of state legislators, the Natural Resources Council of Maine and a group of residents challenged the Maine Bureau of Parks and Lands’ (BPL) grant of a public land lease to NECEC’s developer, Avangrid (NYSE:AGR) subsidiary Central Maine Power (CMP), because it did not seek the Legislature’s approval.

The Superior Court agreed, vacating the lease. The court also found that the agency did not provide notice to the Legislature or the public of the lease contracts.

Meanwhile, voters in November approved a referendum that would categorize any transmission construction after September 2014 as a substantial alteration under the law, thus requiring the Legislature’s approval.

CMP and its development partner, NECEC Transmission — as well as BPL — appealed the Superior Court’s decision. Arguing on behalf of BPL Director Andy Cutko on Tuesday, Maine Assistant Attorney General Lauren Parker said that the statute on park lands does not apply to BPL’s leasing authority over lands it manages for “specified beneficial purposes, including electric power transmission.”

At the time BPL executed the lease with CMP, she said, Cutko had the authority to issue 25-year leases for transmission, contrary to the lower court’s ruling.

CMP attorney Nolan Reichl, a partner in Pierce Atwood’s Litigation Practice Group, argued separately that the statute on park lands calls a BPL determination on land use into question.

“If there is no substantially altered use of the land, there is no two-thirds vote requirement,” he said. The BPL, he added, has no obligation to make any case-by-case determinations on usage.

The legislature, he said, has “never required BPL to run any particular administration process in that respect,” with thousands of executed leases all “consistently reported” to the legislature.

It’s not clear that BPL made a use determination, Chief Justice Valerie Stanfill said, adding that the court could, therefore, remand the case to BPL to do so.

Referendum Appeal

The developers had also challenged the constitutionality of the voter referendum because of its retroactivity and that it deprived them of their “vested right” to build the project. The Superior Court disagreed, upholding the change to the law.

James Kilbreth, an attorney at Drummond Woodsum representing the group that challenged the lease, on Tuesday argued before the Supreme Court that the referendum invalidates the lease and therefore makes all questions in the appeal of its vacatur irrelevant. The appeal of the referendum, which relies on the validity of the lease, would therefore also be irrelevant, he said.

The referendum “moots all the questions” in the lease appeal, he said. State law, he added, also clearly establishes that when laws change during an appeal, as is the case with the referendum, the court must apply the new law in that case.

Kilbreth argued that the lease appeal must be decided before the referendum appeal. To bring the referendum appeal, he said, the developers need a valid lease because they claim that the lease is the basis for their vested right.

John Aromando, a partner at Pierce Atwood and attorney for NECEC Transmission and Avangrid, said that the existence of the lease appeal does not invalidate the lease in and of itself. A valid lease, he argued, ensures that the referendum cannot take away their vested right.

With the validity of the lease under appeal, the outcomes of both cases are uniquely connected.

In defending the referendum, the state argued that the concept of a vested right is not straightforward.

The vested right “as Avangrid conceives it, does not allow for any consideration of the governmental interests at stake in legislation,” Maine Assistant Attorney General Jonathan Bolton said.

In the developers’ view, Bolton said, government and public interests are “irrelevant” if construction of a project has started. “The modern view is that due process by its very nature requires consideration of both private rights and public or government interest,” he said.

NECEC agreed last fall to discontinue construction activity for the project pending outcome of the appeals.

“Delaying the construction of the project by 12 months will make it impossible for the company to complete the project by the contracted deadline in mid-2024,” Thorn Dickenson, president and CEO of NECEC Transmission, said in a September affidavit to the Supreme Court. The delay, he added, could cost as much as $83 million.

In closing the hearing, Chief Justice Stanfill said there is a “great deal” of interest in the referendum appeal and, by extension, the lease appeal.

“I don’t think this courtroom has been this full since I’ve been here,” she said, adding that the court will try to issue a written decision as soon as possible.