Case Title: Coastal States Gas Transmission v. PSC

Citation: 524 So. 2d 357

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1988-04-08T00:00:00Z

Document:
524 So. 2d 357 (1988)
COASTAL STATES GAS TRANSMISSION COMPANY, INC.
v.
ALABAMA PUBLIC SERVICE COMMISSION, et al.
86-1129.

Supreme Court of Alabama.
April 8, 1988.
G. Sage Lyons and Charles L. Miller, Jr. of Lyons, Pipes & Cook, Mobile, for appellant.
Thomas L. Stewart and Michael G. Kendrick of Gorham, Waldrep, Stewart & Kendrick, Birmingham, for appellee Alabama Public Service Comm'n.
Joseph S. Johnston of Johnston, Hume & Johnston, Mobile, and Robert C. Black of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellee Mobile Gas Service Corp.
Dudley C. Reynolds, and Haydn M. Trechsel of Bradley, Arant, Rose & White, Birmingham, for amicus curiae Alabama Gas Corp.
BEATTY, Justice.
This is an appeal by Coastal States Gas Transmission Company, Inc. ("Coastal States"), from an order of the Montgomery Circuit Court. That order upheld an order of the Alabama Public Service Commission ("Commission") that required Coastal States to comply with Commission regulations before selling natural gas to industrial customers in Mobile.
Coastal States is a subsidiary of Coastal Corporation. Coastal States owns and operates pipelines in connection with its sales of natural gas to select customers under private contracts. Coastal States entered into private gas purchase and sale contracts with Mobile Bay Refining Company and Union Carbide Corporation. Pursuant to these contracts, Coastal States constructed a pipeline 4,100 feet in length from the Union Carbide plant to the Phillips Petroleum pipeline and constructed another pipeline along Viaduct Road in Mobile from the Phillips Petroleum pipeline to Mobile Bay Refining Company. Coastal States has contacted certain industrial customers of Mobile Gas Service Corporation: Mobile Bay Refining Company; Union Carbide Corporation; Alabama Dry Dock and Shipbuilding Company; Scott Paper Company; *358 International Paper Company; Eagle Chemical; Diamond Shamrock; and American Cyanamid. It seems clear from testimony adduced by Coastal States' vice president that Coastal States intended to sell natural gas to whatever customers were available if it could make money doing so.
The cause was begun by a complaint filed with the Commission by Mobile Gas Service Corporation ("Mobile Gas"), which requested that the Commission declare Coastal States a utility and prohibit it from constructing "any plant, property, or facility for the sale, delivery, or furnishing" of gas without a certificate of convenience and necessity. In due course, a hearing was held, after which the Commission held that Coastal States was a utility under Code of 1975, § 37-4-1, that it must file tariffs, and that it must comply with other regulations prior to serving any customer.
That order was appealed to the Montgomery Circuit Court, which affirmed the order of the Commission.
The Commission and Mobile Gas argue that the activities of Coastal States, described above, place it within the definition of a "public utility" provided by Code of 1975, § 37-4-1(7):
Each party argues that the substantial weight of the evidence below was in its favor. Since the controlling issue is one of law, however, i.e., whether Coastal States is a "utility," this Court is not bound to apply a presumption that the Commission's order is just and reasonable. Vann Express, Inc. v. Bee Line Express, Inc., 347 So. 2d 1353 (Ala.1977).
Is Coastal States a public utility subject to the jurisdiction of the Commission? At bottom, this question is one of the interpretation of the phrase "to or for the public" contained in § 37-4-1(7)(b).
The subject is not a novel one in this jurisdiction. In Alabama Power Co. v. Cullman County Electric Membership Corp., 234 Ala. 396, 174 So. 866 (1937), this Court was called upon to decide whether the Cullman County Electric Membership Corporation was, as the term was defined in § 9742 of the Code of 1923, a "public utility." It should be noted that the definition of a public utility in the Code of 1923 is identical to that contained in the Code of 1975. It was contended by Alabama Power Company that the Cullman County Electric Membership Corporation was a public utility operating without a certificate of convenience and necessity in competition with Alabama Power Company's business. This Court held that because the statute creating the Cullman County Electric Membership Corporation authorized it to act as a utility in specific terms, its operations were controlled by the statute creating it, rather than by the laws governing public utilities in general. In recognizing this exception to the public utility statutes, this Court compared the functions of municipal corporations with those of quasi-public corporations and added:
In Southern Liquid Gas Co. v. City of Dothan, 253 Ala. 350, 44 So. 2d 744 (1950), this Court commented again upon the nature of a public utility. In that case, the plaintiff gas company sought to recover certain money it had paid the city, under protest, as business license fees based upon gross receipts, when, as it alleged, it was not a public utility, even though it distributed artificial gas by tanks, drums, etc. Thus, plaintiff contended, as applied to it, *359 the ordinance under which those fees were imposed was void. This Court wrote:
253 Ala. at 353, 44 So. 2d  at 746-47. In deciding that the allegations of the pertinent counts failed to state causes of action, this Court added:
253 Ala. at 353-54, 44 So. 2d  at 747. The Court then explained why the demurrer was not well taken:
253 Ala. at 354, 44 So. 2d  at 747. It was apparently argued by the City of Dothan that the demurrer was sufficient because on its face the complaint (count 2) showed that the plaintiff was a public utility. The Court rejected that argument with this pertinent discussion of the then-statutory definition, which is identical to the present one:
253 Ala. at 354, 44 So. 2d  at 747.
In Miller v. Hillview Water Works Project, Inc., 273 Ala. 267, 139 So. 2d 337 (1962), this Court once again commented upon the nature of a public utility. In that case, the owner of a residence wished to *360 avoid the water company's regulation that only one house be connected to any one "tap" off the company's main water line. When the company refused an exception, the owner petitioned for a writ of mandamus directed to the water company to compel it to allow him that access. The water company demurred to the petition, apparently on the ground that the water company's denial was based upon an exercise of discretion it possessed in promulgating the "one tap" rule. Having found that the petition itself showed that the water company was a public utility, this Court explored the ramifications of that finding, with this significant observation:
(Citations omitted.) 273 Ala. at 271, 139 So. 2d  at 339-40. The Court then found that the "tap on" rule was a reasonable rule of operation and held that mandamus would not lie, since there was no showing of a clear legal right to relief. 273 Ala. at 272, 139 So. 2d  at 340.
It cannot be unnoticed that this long-held view of this Court of the definition of a "public utility" in our statute, now § 37-4-1(7), has remained unchanged. Indeed, not all purveyors of energy commodities are "public" utilities, even though they sell and distribute their products under statutory regulation. See, e.g., Hall v. Dexter Gas Co., 277 Ala. 360, 170 So. 2d 796 (1964), in which this Court noted at 277 Ala. 364, 170 So.2d 799:
The legislature has used the words "public utility" in § 37-4-1(7). When plain language is used in a statute, this Court is bound to interpret that language to mean exactly what it says. Ex parte Jones, 456 So. 2d 380 (Ala.1984); Ex parte Madison County, 406 So. 2d 398 (Ala.1981).
Webster's Dictionary (New Riverside ed. 1984) defines a "public utility" as "a private business organization, subject to governmental regulation, that provides an essential commodity or service, as water, electricity, or communication, to the public." And, in Black's Law Dictionary, (5th ed. 1979) at 1104, the term "public utility" is defined as:
Those definitions of a "public utility" accord with the position taken by this Court when it has been called upon to interpret that term. Miller; Southern Liquid Gas Co.; Alabama Power Co., supra. We also find support in other decisions. In Florida, for example, the Third District Court of Appeals held in Village of Virginia Gardens v. City of Miami Springs, 171 So. 2d 199, 201 (Fla.Dist.Ct. App.1965), that one municipality which sold water to another municipality under a contract rate which the other considered to be unreasonable was not operating as a public utility:
"`To constitute a "public utility," the devotion to public use must be of such character that the product and service is available to the public generally and indiscriminately, or there must be the acceptance by the utility of public franchises or calling to its aid the police power of the state.' 118 So. 2d  at 585.
"`We find little need to enter into a lengthy discussion of what is or what is not a public utility, because we would ultimately apply the almost universally *362 accepted test, which summarized is, that to fall into the class of a public utility, a business or enterprise must be impressed with a public interest and that those engaged in the conduct thereof must hold themselves out as serving or ready to serve all members of the public, who may require it, to the extent of their capacity. The nature of the service must be such that all members of the public have an enforceable right to demand it.' 229 P.2d  at 672."
See also Higgs v. City of Fort Pierce, 118 So. 2d 582 (Fla.App.1960); Stoehr v. Natatorium Co., 34 Idaho 217, 200 P. 132 (1921).
And, in finding that certain actions of a city did not make it a public utility, the Court of Appeals of Tennessee in Johnson City v. Milligan Utility District, 38 Tenn. App. 520, 531, 276 S.W.2d 748, 753 (1954), described a public utility:
Commenting upon the question of whether one's supplying water to his own property or to that of his neighbors constituted him a public utility, the New Jersey Court of Chancery in Junction Water Co. v. Riddle, 108 N.J.Eq. 523, 526, 155 A. 887, 889 (1931), observed:
In that same vein is the decision in Lockwood Water Users Association v. Anderson, 168 Mont. 303, 542 P.2d 1217 (1975), which adopted the following language of State ex rel. Public Utilities Comm'n v. Nelson, 65 Utah 457, 238 P. 237, 42 A.L.R. 849 (1925), which was approved in Garkane Power Co. v. Public Service Comm., 98 Utah 466, 100 P.2d 571, 132 A.L.R. 1490 (1940):
"`No one may successfully contend that it is competent for the Legislature to regulate and control in such respect a mere private business or to declare a private business to be public service or a public utility. In other words, the state may not, by mere legislative fiat or edict, by regulating orders of a commission, convert mere private contracts or a mere private business into a public utility or make its owner a common carrier. [Citing cases.] So, if the business or concern is not public service, where the public has not a legal right to the use of it, where the business or operation is not open to an indefinite public, it is not subject to the jurisdiction or regulation of the commission.'"
Coastal States insists that it is not operationally equipped to sell natural gas to the public generally or to small commercial customers, and intends to serve only those with whom it contracts. Presently, as it appears from the record, such customers typify large industrial users of natural gas. A similar marketing situation decided under the exact statutory definition as that in our § 37-4-1(7) is found in Llano, Inc. v. Southern Union Gas Co., 75 N.M. 7, 399 P.2d 646 (1964):
"`. . .
"`"Public utility" or "utility" means every person not engaged solely in interstate business and except as hereinafter stated, that now does or hereafter may own, operate, lease or control:
"`. . .
"`(2) Any plant, property or facility for the manufacture, storage, distribution, sale or furnishing to or for the public of natural or manufactured gas, or mixed or liquefied petroleum gas, for light, heat, or power, or other uses; * * *.'
"`The test is, therefore, whether or not such person holds himself out, expressly or impliedly, as engaged in the business of supplying his product or service to the public, as a class, or to any limited portion of it, as contra-distinguished from holding himself out as serving or ready to serve only particular individuals.
"`The public or private character of the enterprise does not depend, however, on the number of persons by whom it is used, but on whether or not it is open to the use and service of all members of the public who may require it, to the extent of its capacity; and the fact that only a limited number of persons may have occasion to use it does not make it a private undertaking if the public generally has a right to such use. * * *' [Emphasis added in Llano.] *364 and from 43 Am.Jur. 571, Public Utilities and Services:
"`As its name indicates, the term "public utility" implies a public use and service to the public; and indeed, the principal determinative characteristic of a public utility is that of service to or readiness to serve, an indefinite public (or portion of the public as such) which has a legal right to demand and receive its services or commodities.' [Emphasis added in Llano.]
To the same effect is Wilhite v. Public Service Commission, 150 W.Va. 747, 149 S.E.2d 273 (1966). The court's own syllabus of its opinion in that case, at 150 W.Va. 747, 149 S.E.2d 274-75, is pertinent here:
The Commission has reached a contrary result in this case, we respectfully conclude, by arrogating to itself an authority under § 37-4-1(7) that it does not possess. The rationale of its finding that Coastal States is a public utility is, simply put, that a contrary finding would allow Coastal States, and others situated like it, to take *365 business away from public utilities regulated by the Commission, making its regulation a "sham." Thus, it concluded that its duty was to "balance the interests of the companies involved" and to gauge "the effect of the company's activities upon the public at large." The Commission's order added:
Whether such a result would be in the offing,[1] nevertheless, the test of a public utility as set out in the Commission's order does not comport with the test that this Court has utilized heretofore, which is supported by the authorities we have cited, and which has remained unchanged at least since 1937.[2] Any modification thereof, we conclude, is properly a matter for legislative action.
Let the judgment be reversed and the cause remanded to the Montgomery Circuit Court for an order consistent with this opinion. It is so ordered.
REVERSED AND REMANDED.
All the Justices concur.
[1]  The president of Mobile Gas Service Corporation conceded that, under its block rate to large industrial customers, which was lower than Coastal States' contract price, it is making a profit.
[2]  Cf. Code of 1975, § 37-1-36, which states: "When a person is engaged in business, a portion of which business is private business and a portion of which is the business of a utility, the authority, powers and jurisdiction of the commission conferred upon it by law shall not be deemed to apply to and shall not be exercised with respect to that portion of said business which is a private business."