Cities & Towns of Anderson v. Public Service Comm. of Ind., 2-277A51

Decision Date10 December 1979
Docket NumberNo. 2-277A51,2-277A51
Citation397 N.E.2d 303
CourtIndiana Appellate Court
PartiesCITIES & TOWNS OF ANDERSON et al., v. PUBLIC SERVICE COMM. OF IND. et al.

Paul Hirsch, Haymaker, Hirsch & Fink, Indianapolis, for appellants.

Fred E. Schlegel, Baker & Daniels, Indianapolis, for appellees, Indianapolis Water Co. and Indiana Chapter of Water Utilities Rules and Standards Revision Committee of National Ass'n of Water Companies.

Joe N. Van Valer, Greenwood, for appellee, Home Builders Ass'n of Indiana.

H. Kent Howard, Barnes, Hickam, Pantzer & Boyd, Indianapolis, for appellees, Muncie Water Works Corp., Richmond Water Co., Inc., Terre Haute Water Works Corp.

Wilson E. Shoup, Angola, for appellee, City of Angola.

William N. Salin, Fort Wayne, for appellee, City of Fort Wayne.

William F. Welch, McHale, Cook & Welch, Indianapolis, for appellees, Gary-Hobart Water Corp., Indiana Cities Water Corp., Water Utilities, Inc.

John Littler, Albany, pro se for appellee, City of Albany.

Frank J. Biddinger, Indianapolis, Theodore L. Sendak, Atty. Gen., Stephen L. Lucas, Deputy Atty. Gen., Indianapolis, for appellees, Public Service Commission of Indiana and Larry J. Wallace, William B. Powers and James M. Plaskett, as Members of the Public Service Commission of Indiana.

James L. McCaslin, Elkhart, for appellee, City of Elkhart.

BUCHANAN, Chief Judge.

CASE SUMMARY

Cities and Towns of Anderson, Lawrenceburg, Tipton, Greendale and Valparaiso (Cities and Towns) appeal from the Public Service Commission's (Commission) denial of a Motion to Dismiss all municipal water works from a rule promulgation hearing, claiming that the Commission has no jurisdiction to issue rules and regulations governing the operation of municipal utilities.

We reverse.

FACTS

The facts are undisputed:

On November 24, 1976, the Commission issued an order setting a promulgation hearing for "rules and regulations of service for water utilities of Indiana." These rules set forth specific requirements in such matters as: testing, type and location of water meters; cash deposits, billing and refunds to customers for water service; procedures for both voluntary and involuntary disconnection, as well as re-connection of service; procedures for dealing with and keeping records of customer complaints; and extension of water distribution mains.

The promulgation hearing was set for January 10, 1977. Thereafter petitions to intervene were filed by numerous private and public water companies and industry associations. Appearances were entered for appellants Anderson, Tipton, Lawrenceburg and Greendale. Those four appellants moved to dismiss the proceedings as to municipal water utilities, but this motion was denied on February 3, 1977, by Deputy Commissioner Ellen R. Dugan.

The City of Valparaiso entered its appearance on February 7, and thereafter all

of the appellants appealed the denial of the motion to dismiss to the full Commission. That motion was denied by the full Commission on February 11. It is from that denial that Cities and Towns appeal.

ISSUE

Only a single issue is presented:

Does the Commission have jurisdiction to issue rules and regulations extensively governing various phases of the operation of municipal water utilities?

PARTIES' CONTENTIONS Cities and Towns contend that the Commission has only explicit powers granted to it by statute, and that no statute gives it the broad power to issue rules and regulations to control municipal water utilities.

The Commission admits that no specific provision gives it the jurisdiction necessary for these rules, but maintains that, when construed together, several provisions found in Title 8 and Title 19 of the Indiana Code give the Commission jurisdiction to issue the rules.

DECISION

CONCLUSION The Commission does not have jurisdiction to issue the rules set forth in its order of November 24, 1976, insofar as they govern the operation of municipal water utilities.

Being a creature of statute, the Public Service Commission can exercise only such power as the legislature delegates to it. City of Crown Point v. Henderlong Lumber Company (1965), 137 Ind.App. 662, 206 N.E.2d 890; American Vitrified Prod. Co. v. Public Service Commission (1961), Ind.App., 176 N.E.2d 145. The Commission's power of authority is derived solely from statute, Citizens Gas & Coke Utility v. Sloan (1964), 136 Ind.App. 297, 196 N.E.2d 290; American Vitrified Prod. Co. v. Public Service Commission, supra, and it cannot resort to common law for authority to act. Town of Merrillville v. Bloomington Gardens Utilities Co. (1976), Ind.App., 351 N.E.2d 914. Unless a grant of power can be found, it must be concluded that there is none. Indiana Telephone Corp. v. Indiana Bell Telephone Co. (1976), Ind.App., 358 N.E.2d 218, modified at 360 N.E.2d 610; American Vitrified Prod. Co. v. Public Service Commission, supra; General Telephone Company of Indiana v. Public Service Commission (1959), 238 Ind. 646, 154 N.E.2d 372.

The claimed source of its statutory authority to issue the rules in question is stated in the Commission's order of November 24, 1976:

The Commission, having under consideration the matter of the adoption and promulgation of revised rules, regulations and standards of service for water utilities operating within the State of Indiana pursuant to IC 1971, 8-1-2-1 to 8-1-2-120, IC 1971, 8-1-1-1 to 8-1-1-13 and IC 1971, 4-22-2-1 to 4-22-2-11, is of the opinion and now finds that the revised rules, regulations and standards of service for water utilities within the State of Indiana . . . should be promulgated and adopted.

The Commission further Finds that it may have sufficient statutory authority pursuant to IC 1971, 19-3-6.5-1 et seq., 19-3-10-1 et seq., 19-3-15-1 et seq., 19-3-25-1 et seq., 19-3-26-1 et seq., 19-3-32-1 et seq., 19-3-34-1 et seq., in connection with IC 1971, 8-1-2-120, to exercise jurisdiction over municipal water utilities' rules and regulations. (emphasis supplied)

Implicit in the words "that it May have sufficient statutory authority pursuant to . . ." is an expression of doubt. The doubt is well founded.

In the past the Commission has not fared well in its attempts to assert authority over municipal utilities beyond specific statutory mandates.

In Citizens Gas & Coke Utility v. Sloan, supra, a group of land owners in Greene County petitioned the Commission to investigate the operation of Citizens Gas. A motion to dismiss for lack of jurisdiction was overruled by the Commission, but reversed on appeal. Relying upon Burns §§ 54-408, 54-714, and 54-105 (Ind.Code (1976), 8-1-2-54, 8-1-2-115, and 8-1-2-1) the court held that municipal utilities were not subject to the general grant of authority to the Public Service Commission; 1 only in those areas in which specific statutory power was granted did the Commission have jurisdiction.

The Commission was equally unsuccessful in attempting to go beyond the specific words of the statute in American Vitrified Prod. Co. v. Public Service Commission, supra. In approving rates for a municipal electric utility, the Commission attempted to order that rates be effective for an "experimental period" of twelve months, reserving to itself the right to issue further orders as it deemed necessary without further hearings. This order was reversed. The Appellate Court recognized that while the order may have been one of convenience and expediency, it was completely outside the statutory powers granted the Commission.

More specifically on point are the cases involving the Commission's attempt to assert authority over municipally owned water utilities. The leading case is Meyers v. Evansville Water Works Department (1970), 147 Ind.App. 372, 261 N.E.2d 88.

The Evansville Water Works Department had abandoned its own rule allowing developers to recover the cost of water main extensions from those who purchased the land. Several developers petitioned the Commission for relief, however the Commission dismissed the petition for lack of jurisdiction. The dismissal was affirmed on appeal.

The court made clear its determination that the power of the Commission over municipal water utilities was limited; specifically, it stated that municipal utilities were not subject to the general grant of authority to the Commission. In interpreting Burns § 48-5404 (Ind.Code (1976), 19-3-25-3), Judge Hoffman observed:

"5. (The board has the power) To fix the rates to be charged for water or other services furnished by such department, to collect the same, and to establish and enforce rules governing the furnishing of such water, or other services and the payment therefor: Provided, however, That all such rates, rules and Regulations shall be subject to the approval of the public service commission or such other regulatory body having jurisdiction over such matters as may be provided by law, if any."

This section clearly states that the approval of the Commission is required for rule changes. However, the section also clearly states that it only applies when the Commission or such other regulatory body has jurisdiction, If any. This section does not confer jurisdiction on the Commission or any other administrative body but simply gives them approval power if they obtain their jurisdiction in another section. (original emphasis)

147 Ind.App. at 378, 261 N.E.2d at 93.

The opinion goes on to describe the intent of the legislature in dealing with the Commission and municipal utilities:

If appellants' contention were correct, one need only allege unreasonable or discriminatory rates or charges for services and facilities in order to invoke the jurisdiction of the Commission over a municipal utility. This would be in direct conflict with the general intent expressed throughout the Act, i. e., limit the jurisdiction of the Commission over municipal utilities.

When jurisdiction is given to the Commission it is made explicitly clear. For example, . . . Ind.Stat.Anno., §...

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