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

• Decision Date: 06 February 1990
• Docket Number: No. 93S02-9002-EX-99,93S02-9002-EX-99
• Citation: 549 N.E.2d 1019
• Parties: UNITED RURAL ELECTRIC MEMBERSHIP CORPORATION, Jay County Rural Electric Membership Corporation, Whitley County Rural Electric Membership Corporation, Indiana Statewide Association of Rural Electric Cooperatives, Inc., Wabash Valley Power Association, Inc., and Paulding-Putnam Electric Cooperative, Inc., Appellants, v. INDIANA & MICHIGAN ELECTRIC COMPANY, General Motors Corporation, City of Bluffton, Indiana, City of Columbia City, Indiana, Town of South Whitley, Indiana, Town of Warren, Indiana, City of Fort Wayne, Indiana, County of Allen, State of Indiana, the Greater Fort Wayne Area Chamber of Commerce, UAW and the Utility Consumer Counselor of the State of Indiana, Appellees.
• Court: Indiana Supreme Court

Page 1019

549 N.E.2d 1019

UNITED RURAL ELECTRIC MEMBERSHIP CORPORATION, Jay County Rural Electric Membership Corporation, Whitley County Rural Electric Membership Corporation, Indiana Statewide Association of Rural Electric Cooperatives, Inc., Wabash Valley Power Association, Inc., and Paulding-Putnam Electric Cooperative, Inc., Appellants, v. INDIANA & MICHIGAN ELECTRIC COMPANY, General Motors Corporation, City of Bluffton, Indiana, City of Columbia City, Indiana, Town of South Whitley, Indiana, Town of Warren, Indiana, City of Fort Wayne, Indiana, County of Allen, State of Indiana, the Greater Fort Wayne Area Chamber of Commerce, UAW and the Utility Consumer Counselor of the State of Indiana, Appellees.

No. 93S02-9002-EX-99.

Supreme Court of Indiana.

Feb. 6, 1990.

David S. Richey, Parr, Richey, Obremskey & Morton, Indianapolis, Stanley H. Matheny, Matheny, Michael, Hahn & Bailey, Huntington, for appellants.

Don F. Morton, Carol Sparks Drake, Parr, Richey, Obremskey & Morton, Wabash Valley Power Ass'n, Indianapolis, for appellant-intervenor.

Milford M. Miller and Edward J. Liptak, Livingston, Dildine, Haynie & Yoder, Fort Wayne, John F. Wickes, Jr., Scopelitis, Garvin & Wickes, Indianapolis, Langdon D. Bell and Judith B. Sanders, Bell & Bentine Co., L.P.A., Columbus, Ohio, for appellees.

SHEPARD, Chief Justice.

We must decide whether the Indiana Utility Regulatory Commission ¹ properly exercised its statutory authority in the boundary dispute between United Rural Electric Membership Corporation and Indiana & Michigan Electric Company. We hold that the commission exceeded its authority.

Appellant United REMC is a cooperative engaged in the retail sale of electricity in various counties in northern Indiana. ² Appellee Indiana & Michigan Electric Company is an investor-owned utility also serving portions of northern Indiana. United is appealing a March 27, 1985, decision by the Utility Regulatory Commission, ³ which modified I & M's service area to include a 960-acre site that belongs to General Motors Corporation.

I. History

In 1980, the Indiana General Assembly created a detailed procedure by which the commission was directed to draw boundaries for electricity service areas. Ind.Code Secs. 8-1-2.3-1 to -6 (West 1982) (Electricity Suppliers' Service Area Assignments). Pursuant to this statutory mandate, United and I & M filed a joint petition of agreement on June 28, 1982, proposing their respective service territories. This joint proposal placed the currently disputed territory of 960 acres within United's service area. It is undisputed that United had always served this 960-acre site. When the joint petition was filed, United was serving 24 relatively small customers in the area. The commission conducted a public hearing concerning the joint petition on September 1, 1983, but never entered an order approving or disapproving it.

In the spring of 1984, General Motors began acquiring property for construction of a truck assembly plant. After an initial meeting with United on July 17, 1984, General Motors had a final meeting with United on August 28, 1984, and on that same day announced its preference that I & M serve its electrical needs. Also on that same day, I & M filed a "Petition for Modification," seeking to modify the assignment of the GM property to place it within I & M's service area. I & M argued that General Motors preferred that I & M serve the truck plant and that I & M was better qualified than United to provide electrical service to such a mammoth operation. ⁴ The commission conducted hearings on I & M's petition to modify on October 29, 30, 31 and November 5 and 7, 1984. On December 10, 1984, the commission granted the petition and, by a 3-2 vote, issued an interim order assigning the GM property to I & M.

United REMC sought judicial review of the commission's order. In the meantime, GM proceeded to construct the plant and produced the first truck there in December 1986. ⁵ Thereafter, the Court of Appeals affirmed the commission's order. United Rural Electric Membership Corp. v. Indiana & Michigan Elec. Co. (1987), Ind.App., 515 N.E.2d 1135. We grant transfer.

II. Discussion

United asserts that the commission exceeded its statutory authority by receiving, considering and granting I & M's petition to modify. United raises eight issues; we conclude that one is dispositive of the case.

The manner by which Indiana's electrical utilities are regulated is largely in the hands of the legislature. The Utility Regulatory Commission, which was created by the General Assembly, is primarily a fact-finding body with the technical expertise to administer the regulatory scheme devised by the legislature. Johnson County Rural Elec. Membership Corp. v. Public Serv. Co. of Indiana (1978), 177 Ind.App. 53, 378 N.E.2d 1; Decatur County Rural Elec. Membership Corp. v. Public Serv. Co. of Indiana (1971), 150 Ind.App. 193, 275 N.E.2d 857. The commission can only exercise power conferred upon it by statute. General Telephone Co. of Indiana v. Indiana Pub. Serv. Comm'n. (1958), 238 Ind. 646, 655, 150 N.E.2d 891, 894, reh'g denied, 238 Ind. 646, 154 N.E.2d 372. The corollary to that rule is that in interpreting statutory authority granted to a public utility commission, any doubt about such authority must be resolved against the existence of such authority. See Chicago & E.I.R. Co. v. Public Serv. Comm'n. (1943), 221 Ind. 592, 594, 49 N.E.2d 341, 342.

The legislation at the heart of this dispute emerged from a long history of boundary disputes between the rural cooperatives and investor-owned utilities. The original REMC Act passed in 1935 did not afford any protection to REMC territory. As a result, REMC territory was subject to eminent domain by privately owned utilities. These boundary disputes created constant litigation. Before the 1980 legislation, as many as 51 separate boundary disputes were pending in this state's judicial system. Record at 2616-17. The purpose of the 1980 act, Pub.L. No. 69, was to draw permanent boundaries and eliminate the endless and numerous disputes over service areas. ⁶ Both the REMCs and the investor-owned utilities supported the legislation. ⁷

The original legislation mandated that electric suppliers "shall on or before July 1, 1982" file their petitions and boundary maps with the commission. Act approved Feb. 28, 1980, Pub.L. No. 69, 1980 Ind.Acts 742, 744 (emphasis added). In 1982, the legislature amended the statutory deadline by stating "... or on such other date as the commission may determine, but in any event on or before March 1, 1983." Act approved Feb. 25, 1982, Pub.L. No. 71, 1982 Ind.Acts 574, 575 (codified at Ind.Code Sec. 8-1-2.3-3) (emphasis added).

Enactment of the service area legislation prompted the filing of 178 petitions before the commission, which declared processing of these petitions "an enormous task." ⁸ Notwithstanding this burden, the 1982 amendment demonstrated that the General Assembly was determined that the task be completed under specific deadlines.

Discerning whether the legislature intended these deadlines to be mandatory or directory and whether the legislature considered time to be essential to this statute is crucial to resolving this case.

When the word "shall" appears in a statute, it is construed as mandatory rather than directory unless it appears clear from the context or the purpose of the statute that the legislature intended a different meaning. State ex rel. City of Indianapolis v. Brennan (1952), 231 Ind. 492, 109 N.E.2d 409. ⁹ On one occasion when this Court interpreted a statute containing "shall" to be directory rather than mandatory, we stated:

In construing the statute before us we must be mindful that the intent of the legislature controls. In this situation our judicial function is best discharged by an honest and earnest desire to ascertain and effectuate that intent. State v. Gilbert (1966), 247 Ind. 544, 219 N.E.2d 892.

The meaning and intention of the legislature are to be ascertained not only from the phraseology of the statute but also by considering its design, its nature and the consequences that flow from the various interpretations.

Allen County Dept. of Pub. Welfare v. Ball Memorial Hosp. Ass'n. (1969), 253 Ind. 179, 184, 252 N.E.2d 424, 427 (statute stating that a hospital "shall within seventy-two hours" report the admission of an indigent to the county welfare department). Analysis of Ind.Code Secs. 8-1-2.3-1 to -6 under the standard of Brennan and Ball Memorial leads us to conclude that the commission was without statutory authority to receive, consider, or grant a petition to modify. Our judgment about the power the legislature intended to grant the commission is derived from the precise step-by-step nature of Ind.Code Secs. 8-1-2.3-1 to -6 and its focus on a definite time limitation. The presumption that statutory time deadlines are mandatory and the rule that any doubts about statutory power for a public utility commission are resolved against the commission prevail in this case.

The proceeding to define the service area boundary between United and I & M commenced in accordance with this statute's step-by-step process. The United/I & M joint petition was filed on June 28, 1982, within the statutory time limits of Ind.Code Sec. 8-1-2.3-3(f). The commission properly conducted a public hearing on the proposal on September 1, 1983. The first lapse occurred when the commission failed to comply with the statutory mandate that it "shall issue an order within twelve (12) months of the filing of the petition and related maps." Next, I & M filed its petition to modify on August 28, 1984. The statute does not provide for such a petition, nor was I & M within any imaginable statutory time limit for filing any kind of petition.

Consequently, to resolve this issue in favor of the commission's order, we must find not only that the statutory time limit for a commission order was merely directory, but...