BERKELEY COUNTY PUB. SERV. SEWER v. PSC

• Decision Date: 11 December 1998
• Docket Number: No. 25007, No. 25008.
• Citation: 204 W.Va. 279,512 S.E.2d 201
• Court: West Virginia Supreme Court
• Parties: BERKELEY COUNTY PUBLIC SERVICE SEWER DISTRICT, Appellant, v. The WEST VIRGINIA PUBLIC SERVICE COMMISSION, the City of Martinsburg and Opequon Public Service District, Appellees. Opequon Public Service District, Appellant, v. The West Virginia Public Service Commission, the City of Martinsburg and Berkeley County Public Service Sewer District, Appellees.

512 S.E.2d 201

204 W.Va. 279

BERKELEY COUNTY PUBLIC SERVICE SEWER DISTRICT, Appellant, v. The WEST VIRGINIA PUBLIC SERVICE COMMISSION, the City of Martinsburg and Opequon Public Service District, Appellees.

Opequon Public Service District, Appellant, v. The West Virginia Public Service Commission, the City of Martinsburg and Berkeley County Public Service Sewer District, Appellees.

Nos. 25007, 25008.

Supreme Court of Appeals of West Virginia.

Submitted October 27, 1998.

Decided December 11, 1998.

William F. Rohrbaugh, Esq., McNeer, Highland, McMunn and Varner, L.C., Martinsburg, West Virginia, Attorney for Berkeley County Public Service Sewer District.

Richard G. Gay, Esq., Margaret B. Gordon, Law Office of Richard G. Gay, L.C., Berkeley Springs, West Virginia, Attorney for Opequon Public Service District.

John Philip Melick, Jackson & Kelly, Charleston, West Virginia, Attorney for the City of Martinsburg.

Cassius H. Toon, Charleston, West Virginia, Attorney for the Public Service Commission of West Virginia.

McCUSKEY, Justice:

The parties to this proceeding are engaged in a tug-of-war over the right to provide water and sewer utility service to a newly developed tract of land located in Berkeley County, West Virginia. On one end of the struggle are the appellants, Berkeley County Public Service Sewer District ("Sewer District") and Opequon Public Service District ("Water District"). On the opposite end is the appellee, the City of Martinsburg ("City"). The parties' respective arguments were aired before the Public Service Commission of West Virginia ("PSC"). In its final order, the PSC awarded the right to serve the contested tract to the City. On appeal from that ruling, we are asked to decide which entity, between a city and a public service district, has the superior right to extend its facilities to provide utility service to a previously unserved tract of real estate, located within the district, when that tract has been annexed into the city. The appellants request that we reverse the PSC's order. We conclude that W.Va.Code § 16-13A-8 (1981) controls the outcome of this dispute and that the PSC's award of service rights to the City was consistent with that statute. We find, however, that although the result reached by the PSC was correct, the PSC erroneously discarded W.Va.Code § 16-13A-8 in making its analysis, and, for that reason, we affirm the final holding of the PSC under the rationale hereinafter set forth.

I. Factual Background

These consolidated cases concern a tract of about 13 acres, located in Berkeley County, West Virginia and owned by Picerne Development ("Picerne").¹ On that tract stands a 204 unit apartment complex, known as Martin's Landing, which was recently built by Picerne. The tract lies inside the City's municipal limits. The tract also lies inside the geographic boundaries of both the Water District and the Sewer District. These overlapping borders, of the City and the Districts, have led to the instant conflict over service rights.

The boundaries of each public service district were defined by the County Commission of Berkeley County ("County Commission") in its orders creating and, in the case of the Water District, enlarging, the districts. The order creating the Sewer District, entered April 10, 1979, delineates "the territory to be embraced by this public service district" as "all of Berkeley County, West Virginia." The order creating the Water District, entered January 20, 1961, described it as "embracing... the territorial limits of Opequon Magisterial District of Berkeley County, West Virginia." The Water District's borders were subsequently expanded by the County Commission, by order entered December 3, 1965, to encompass part of Hedgesville Magisterial District, including the tract occupied by Martin's Landing. Pursuant to that order, the Water District's territory was enlarged "to more nearly coincide with its service area authorized heretofore by the Public Service Commission." The Water District's "service area," at that time, was established in a PSC order, issued December 27, 1961, granting the Water District a certificate of public convenience and necessity² to provide public water service throughout Opequon Magisterial District and in a portion of Hedgesville Magisterial District, including the 13 acre tract now at issue.

On May 3, 1990, long after the creation of both public service districts, and the enlargement and certification of the Water District, the 13 acre tract was annexed into the City. This was accomplished by a minor adjustment of the City's boundaries, in accordance with W.Va.Code § 8-6-5 (1989).³ As a result of the annexation, the tract in question was "included within the corporate limits of the City of Martinsburg, West Virginia."⁴

The proceedings below were initiated by the Sewer District and Water District through the filing of separate complaints with the PSC against the City, on April 4, 1996, and May 30, 1997, respectively. Each district alleged that Martin's Landing was located within its "franchise area," and sought an order barring the City from providing the utility service available from the district to Martin's Landing and directing the district to provide such service to Martin's Landing if Picerne applied for it.

The separate proceedings were consolidated by the PSC, by an order entered July 15, 1996, and referred, pursuant to that order, for decision by a PSC Administrative Law Judge. On September 26, 1996, a public hearing in the consolidated proceedings was conducted by the PSC's Chief Administrative Law Judge. During the hearing, the parties presented exhibits and the testimony of various witnesses. The parties and PSC Staff Counsel subsequently filed legal briefs, and on December 20, 1996, the Administrative Law Judge issued a Recommended Decision dismissing both complaints. The ALJ reasoned that because the City operates a combined waterworks and sewage system, as defined in W.Va.Code § 8-20-1 (1969),⁵ and because Picerne's property is within a twenty-mile radius of the City, the City has an absolute right, under that statute, to serve Martin's Landing.

In response to the Recommended Decision, exceptions were filed by the districts and by the PSC's Staff Attorney. After considering the exceptions, and the City's response to the exceptions, the PSC issued a unanimous order finding in favor of the City and dismissing the complaints. In that order, dated July 25, 1997, the PSC rejected the ALJ's analysis of W.Va.Code § 8-20-1 and held that "once the annexation occurred, the provisions of West Virginia Code § 16-13A-8 prohibit the Districts from providing service in the disputed area without the City's consent."

Petitions for reconsideration and rehearing of the PSC's decision were filed by the districts and PSC Staff, and the City filed a response to the petitions. On October 22, 1997, the PSC issued a Commission Order on Reconsideration, reaching the same result as its original order, that is, the dismissal of both complaints. In the Order on Reconsideration, which was a 2-1 decision, the majority retracted some of the legal conclusions contained in its first order and offered a new rationale for permitting the City to serve Picerne's property. The PSC majority reasoned, in part:

As this dispute involves the application of at least two conflicting statutes [W.Va.Code § 16-13A-8 and W.Va.Code § 16-13A-2] from which legislative intent applicable to these facts cannot be discerned,... it is within this Commission's authority to resolve this case.

Having found irreconcilable conflict between what it perceived to be applicable statutes, the PSC proceeded to hold that, as between the districts and the City, the City has the right to provide water and sewer service to Martin's Landing. This decision, explained the majority, was based upon three factors: (1) "the disputed area has been annexed into the City," (2) "neither District has facilities in place within the disputed area," and (3) "the customer desires to be served by the City." The majority's order was pointedly criticized, in a dissenting opinion authored by Commissioner Frum, as an unwarranted departure from the "fundamental reasoning" set forth in the first PSC order. It is the PSC majority's order of October 22, 1997, that is the target of this appeal.

II. Standard of Review

The standard of review applicable to a final decision of the PSC was articulated by this Court in Syllabus Point 2 of Monongahela Power Co. v. Public Service Comm'n., 166 W.Va. 423, 276 S.E.2d 179 (1981), as follows:

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 Commission has given reasoned consideration to each of the pertinent factors.

Additionally, in Syllabus Point 3 of Appalachian Power Co. v. State Tax Dept., 195 W.Va. 573, 466 S.E.2d 424 (1995), this Court set forth the standard applicable to agency decisions based on statutory interpretation, stating:

In deciding whether an administrative agency's position should be sustained, a reviewing court applies the standards set out by the United States Supreme Court in

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