United Rural Elec. Membership Corp. v. Indiana & Michigan Elec. Co.

• Decision Date: 30 November 1987
• Docket Number: No. 2-485,2-485
• Court: Indiana Appellate Court
• Parties: UNITED RURAL ELECTRIC MEMBERSHIP CORPORATION, et al., Appellants, v. INDIANA & MICHIGAN ELECTRIC COMPANY, et al., Appellees. A 116.

Page 1135

515 N.E.2d 1135

UNITED RURAL ELECTRIC MEMBERSHIP CORPORATION, et al., Appellants, v. INDIANA & MICHIGAN ELECTRIC COMPANY, et al., Appellees.

No. 2-485 A 116.

Court of Appeals of Indiana Third District.

Nov. 30, 1987.

Rehearing Denied Jan. 14, 1988.

David S. Richey, Parr, Rickey, Obremskey & Morton, Indianapolis, Stanley H. Matheny, Matheny, Michael, Hahn & Bailey, Huntington, for appellant United Rural Elec. Membership Corp.

Milford M. Miller, Edward J. Liptak, Livingston, Dildine, Haynie & Yoder, Fort Wayne, for appellee Indiana & Michigan Elec. Co.

Langdon D. Bell, Judith B. Sanders, Bell & Bentine Co., L.P.A., Columbus, Ohio, for appellee General Motors Corp.

HOFFMAN, Judge.

Appellant United Rural Electric Membership Corporation (United) is a distribution cooperative engaged in the retail sale of electricity in various counties in northern Indiana. Appellee Indiana & Michigan Electric Company (I & M) is an investor-owned utility also serving portions of northern Indiana. United is appealing a December 1984 order of the Public Service Commission wherein the Commission awarded I & M a service area which includes a 960-acre site acquired by General Motors Corporation (GM) for construction of a truck assembly plant.

In 1980 the Indiana General Assembly enacted P.L. 69-1980 (IND.CODE Sec. 8-1-2.3-1 et seq.) in order to quell the rising number of territorial disputes between electricity suppliers. It is undisputed that on June 28, 1982 United and I & M filed a joint petition with the Commission proposing the 960-acre tract remain within the service area of United, the traditional boundary. Pursuant to the statutory scheme, a public hearing was held on the joint petition on September 1, 1983. However, the Commission failed to enter an order on the petition.

On August 28, 1984 I & M filed a petition for modification of the service area with the Commission. Several parties, including GM, were allowed to intervene on the side of I & M. They are now appellees to this action. A petition to intervene by Wabash Valley Power Association, Inc., (WVPA), a supplier of electricity to United, was denied by the Commission. Although, WVPA did not appeal that decision, it was allowed to intervene as an appellant in this cause pursuant to IND.CODE Sec. 8-1-2.3-3.

After a public hearing spanning from October 29, 1984 to November 7, 1984, the Commission issued an order. The December 10, 1984 order concluded inter alia that I & M's petition "shall be and is hereby approved, as consistent with 'good utility practice' and 'the public convenience and necessity,' and I & M shall be and is hereby assigned the area of the proposed General Motors Corporation site as I & M's assigned service area." This appeal ensued.

As broadly restated, the issues presented for review are:

(1) whether IND.CODE Sec. 8-1-2.3-3(f) requires the Commission to approve an agreed petition within 12 months of its submission;

(2) whether IND.CODE Sec. 8-1-2.3-3(g) requires the Commission to act on boundary disputes by March 1, 1983, thus I & M's petition was not timely;

(3) whether the equidistant method of determining the boundary lines found in IND.CODE Sec. 8-1-2.3-3(d) was the proper method in the present case;

(4) whether the Commission had jurisdiction to entertain a "petition to modify" when the provisions of IND.CODE Sec. 8-1-2.3-6 are inapplicable to the present case;

(5) whether sufficient evidence supports the Commission's decision;

(6) whether the Commission could properly determine which of two utilities could better serve the area's needs;

(7) whether the Commission abused its discretion in denying United's request for a continuance to complete discovery; and

(8) whether the Commission's decision forbidding intervention by WVPA was arbitrary and capricious and unduly prejudicial.

The majority of United's issues hinge upon the proper interpretation of certain sections of P.L. 69-1980.

United first alleges that while the Commission made no specific order approving United as the electricity provider for the disputed area, the agreed petition should be deemed as accepted by the Commission as of 12 months after its submission pursuant to IND.CODE Sec. 8-1-2.3-3(f). United contends that IND.CODE Sec. 8-1-2.3-3(f) requires the Commission to enter an order approving the agreed petition within 12 months; consequently, the Commission was without jurisdiction to entertain I & M's petition to modify the service area which was filed on August 28, 1984.

IND.CODE Sec. 8-1-2.3-3(f) provides that utilities can submit to the Commission petitions and maps depicting proposed service areas requesting approval of the areas. The statute also states "[i]f the commission finds that the proposed service areas comply with this chapter, it shall issue an order within twelve (12) months of the filing of the petition and related maps, approving and assigning the service areas as designated on the prepared maps."

In Hancock Cty. Rural Elec. v. Greenfield City (1986), Ind.App., 494 N.E.2d 1294, this Court determined that another portion of the Act, IND.CODE Sec. 8-1-2.3-6, requiring a ruling by the Commission within 90 days was directory and not mandatory. A mandatory construction was rejected because 1) the statute did not specify any adverse consequences for the failure to act within the 90-day period, 2) the time period did not go to the essence of the statute, and 3) to hold otherwise would frustrate the legislative purpose. Hancock Cty., supra, 494 N.E.2d at 1296.

Analyzing IND.CODE Sec. 8-1-2.3-3(f) in light of the Hancock Cty. decision, it follows that the 12-month period was directory, not mandatory. The statute does not specify any adverse consequences for the failure to act within the allotted time frame. The 12-month period did not go to the essence of the statute. Illustrative of the non-essential nature of the time period were the 1982 amendments to IND.CODE Sec. 8-1-2.3-3(f) extending dates contained in P.L. 9-1980. See P.L. 71-1982, Sec. 1. Finally, a determination that the time period is mandatory would frustrate the purpose of the Act. The legislature empowered the Commission with authority to approve service area boundaries. There appears nowhere in the Act an alternative or diminution in that authority if the temporal goals are not met.

Further, United's argument ignores the portion of IND.CODE Sec. 8-1-2.3-3(f) which states that the Commission shall enter an order approving the service area "if the Commission finds that the proposed service areas comply with this chapter." The statute allows the Commission some discretion. The legislature did not relegate the Commission to a position of automatically approving petitions submitted by the utilities. Because the time frame in IND.CODE Sec. 8-1-2.3-3(f) is not mandatory but merely directory, the Commission was not required to approve the joint petition and the Commission had jurisdiction to act on I & M's petition.

Next United argues that even if IND.CODE Sec. 8-1-2.3-3(f) does not require the Commission to approve the joint petition, IND.CODE Sec. 8-1-2.3-3(g) does require such action. IND.CODE Sec. 8-1-2.3-3(g) provides:

"If two (2) or more adjacent electricity suppliers cannot agree upon the boundary line or lines between their respective proposed service areas on or before July 1, 1982, or such other date as the commission may determine, but in any event on or before March 1, 1983, the commission on its own motion or upon petition of one (1) of the electricity suppliers shall hold a public hearing regarding the location of the boundary line or lines, after publication of notice of the hearing at least ten (10) days before the hearing in the county or counties in which the boundary line or lines are located. The commission shall determine the boundary line or lines based as nearly as practicable upon a line equidistant between the existing electric distribution lines of the adjacent electricity suppliers, consistent with good utility practice and public convenience and necessity. The commission shall issue an order determining the boundary line or lines and assigning the service areas, and shall direct the parties to file with the commission maps showing such assigned service areas. If the commission determines that the maps comply with its order, it shall issue a supplemental order approving the assigned service areas as designated on the maps."

United takes the position that section (g) does not allow the utilities to disagree or file a petition with the Commission disagreeing with the boundaries after March 1, 1983. Hence, according to United the statute mandates action by March 1, 1983 and the Commission had no choice but to approve the joint petition because it was the only petition pending before the Commission on that date.

When construing any statute, a determination of legislative intent is imperative and that intent should be given deference whenever possible. Intent may be discerned from a consideration of the goals and the policy underlying the statute. Matter of Middlefork Watershed Conserv. (1987), Ind.App., 508 N.E.2d 574, 577. The task of construing the present act is facilitated by the legislature's declared policy found in IND.CODE Sec. 8-1-2.3-1 which provides:

"It is declared to be in the public interest that, in order to encourage the orderly development of coordinated statewide electric service at retail, to eliminate or avoid unnecessary duplication of electric utility facilities, to prevent the waste of material and resources, and to promote economical, efficient, and adequate electric service to the public, the currently unincorporated areas of Indiana shall be divided into designated geographic areas within which an assigned electricity supplier has the sole right to furnish retail electric service to customers."

Even though a statute on its face is clear, a court must necessarily determine whether a given set of circumstances is encompassed...