Court Opinion

ID: 4198666
Source: CourtListenerOpinion
Date Created: 2017-08-24 15:06:05.612887+00
Date Added: 2024-06-11T14:40:16.671770
License: Public Domain

ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
John D. Papageorge                                         Daniel L. Taylor
Steven C. Shockley                                         J. Kent Minnette
Taft Stettinius & Hollister LLP                            Taylor, Chadd, Minnette,
Indianapolis, Indiana                                      Schneider & Clutter, P.C.
                                                           Crawfordsville, Indiana
Kelley A. Karn
Casey M. Holsapple
Duke Energy Business Services LLC
Plainfield, Indiana

ATTORNEYS FOR AMICUS CURIAE –
INDIANA ENERGY ASSOCIATION
Robert L. Hartley
Maggie L. Smith
Frost Brown Todd LLC
Indianapolis, Indiana

ATTORNEY FOR AMICUS CURIAE –
INDIANA CHAPTER NATIONAL
ASSOCIATION OF WATER
                                                                     FILED
COMPANIES, INC.
                                                                 Aug 24 2017, 6:30 am
Nicholas K. Kile
                                                                     CLERK
Barnes & Thornburg LLP                                           Indiana Supreme Court
                                                                    Court of Appeals
Indianapolis, Indiana                                                 and Tax Court

                                            IN THE
    COURT OF APPEALS OF INDIANA

Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017                Page 1 of 14
      Duke Energy Indiana, LLC,                                  August 24, 2017
      Appellant,                                                 Court of Appeals Case No.
                                                                 93A02-1704-EX-780
              v.                                                 Appeal from the Indiana Utility
                                                                 Regulatory Commission
      Town of Avon, Indiana,                                     The Honorable David E. Ziegner,
      Appellee.                                                  Presiding Commissioner
                                                                 The Honorable Aaron A. Schmoll,
                                                                 Sr., Administrative Law Judge
                                                                 Cause No.
                                                                 44804

      Najam, Judge.

                                        Statement of the Case
[1]   In June of 2016, Duke Energy Indiana, LLC (“Duke”) filed a complaint against

      the Town of Avon (“Avon”) with the Indiana Utility Regulatory Commission

      (“IURC”). In its complaint, Duke disputed Avon’s authority to order Duke to

      remove, at Duke’s own cost, utility poles, power lines, and other equipment

      located either on land owned by Avon or in Avon’s rights-of-way. However,

      prior to Duke filing its complaint with the IURC, Avon had filed a complaint

      for declaratory judgment against Duke in the Hendricks Circuit Court on the

      same questions. The IURC dismissed Duke’s complaint out of deference to the

      jurisdiction of the Hendricks Circuit Court. Duke appeals that dismissal and

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017              Page 2 of 14
      raises two issues for our review,1 but we consider only the following dispositive

      issue: whether Indiana law establishes exclusive jurisdiction in the IURC over

      the subject matter of the parties’ complaints. We hold that Indiana law

      establishes that exclusive jurisdiction. Accordingly, we reverse the IURC’s

      dismissal of Duke’s complaint and remand for further proceedings.

                                  Facts and Procedural History
[2]   Duke is an Indiana company that distributes, furnishes, and sells retail electric

      service to more than 800,000 Hoosiers. As such, Duke is an “electricity

      supplier” and a “public utility” under Indiana law. Appellant’s App. Vol. II. at

      7. In 2014, Avon informed Duke that Avon intended to construct road and

      trail improvements near the intersection of County Road 625 East and U.S.

      Highway 36 in Hendricks County. Avon’s project required Duke to relocate

      certain utility poles, power lines, and other equipment (collectively referred to

      as the “facilities”) that was owned by Duke but located either on land owned by

      Avon or in Avon’s rights-of-way.

[3]   On February 26, 2015, the Avon Town Council passed Ordinance No. 2015-03,

      enacted as Section 4-9-4-122(E) of the Avon Town Code (“the Ordinance”).

      The Ordinance shifted the costs of the relocation expenses associated with

      1
        The Indiana Energy Association and the Indiana Chapter National Association of Water Companies, Inc.
      join Duke’s appeal as amici curiae. We thank the amici for their informative brief.

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017                  Page 3 of 14
      Duke’s facilities and required Duke to pay for that relocation.2 A violation of

      the Ordinance would result in a fine of $500 per day.

[4]   In February of 2016, Duke informed Avon that Duke would not comply with

      the Ordinance because, according to Duke, the Ordinance was unreasonable

      and contrary to Indiana law. As such, on May 23, Avon filed a complaint for

      declaratory and injunctive relief in the Hendricks Circuit Court against Duke.

      In its complaint, Avon alleged that Indiana law requires a utility provider that

      must relocate facilities to accommodate a municipal improvement to do so

      without reimbursement from the municipality. Accordingly, Avon requested

      the Hendricks Circuit Court to enter a declaratory judgment that “Indiana law

      does not require Avon to reimburse Duke for the relocation costs incurred” by

      Duke for Avon’s improvements. Id. at 19. Avon further asked the court to

      enjoin Duke from refusing to comply with Avon’s demands.

      2
          In particular, the Ordinance states as follows:

                 Relocation of public utilities. If it is necessary for public utilities located on public streets or
                 in the town’s rights-of-way to be relocated because of a town road project, street project,
                 sidewalk project, trail project or other project, or any combination thereof, the owner of
                 the public utility facilities will relocate the facilities at the owner’s expense at a time and
                 place determined by the town. The town will provide to the owner written notice, at least
                 60 days prior to the date by which the relocation must be completed, of the new location
                 of the facilities and the time for completion. If the owner fails to relocate the public
                 utility facilities as directed by the town, the town will have the right to relocate the public
                 utility facilities. If the town exercises its right to relocate the facilities, the owner will
                 reimburse the town for the cost of the relocation within 30 days of the receipt by the
                 owner of a notice of the cost of relocation. If the owner fails to reimburse the town for
                 these costs, the town has the right to collect these costs by exercise [of] any available legal
                 remedy, including but not limited to a money judgment for the costs incurred by the
                 town.
      Avon, Ind., Code § 4-9-4-122(E) (2016).

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017                                    Page 4 of 14
[5]   Thereafter, on June 24, Duke filed a motion to stay in the Hendricks Circuit

      Court and a complaint with the IURC. In its complaint, Duke alleged as

      follows:

              4.      [Duke’s] Argument. Statutory and case law provide that
              public utilities shall relocate their utility facilities at their own
              expense only if (a) they are located in the public right-of-way and
              (b) are in the way of a general road improvement project, e.g., a
              general widening or modification of the paved surface of the
              roadway for the benefit of the vehicular traveling public and not
              for the benefit of an adjoining landowner or another member of
              the traveling public, e.g., municipal utility facilities, municipal
              trails, or public utilities, etc. Because this case concerns a “multi-
              use trail,” it is [Avon’s] responsibility to pay for the relocation of
              [Duke’s] facilities . . . .

              5.      Applicable Statutes and Regulations. The [IURC] has
              jurisdiction over this matter pursuant to Ind. Code § 8-1-2-
              101(a)(1). The statute provides that the [IURC] shall set a
              hearing upon a Complaint by a utility that a municipal ordinance
              or determination is unreasonable. The statute further states
              that[,] if the [IURC] finds the contested ordinance or
              determination to be unreasonable, such ordinance or
              determination shall be void. . . .

      Id. at 9. Duke thus requested the IURC to find the Ordinance unreasonable

      and void and to declare that Duke “is not required under Indiana law to

      relocate its facilities for [Avon’s] multi-use trail unless and until [Avon] agrees

      to reimburse [Duke] for its costs with such relocation . . . .” Id. at 10.

[6]   On August 2, two presiding officers with the IURC “decline[d] to set a

      procedural schedule at this time” because “an action involving the same general

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017    Page 5 of 14
      subject matter was filed in Hendricks County prior to being filed with the

      [IURC].” Id. at 27. The officers instead ordered Duke to provide a timely

      status report to update the IURC on the status of the matter in the Hendricks

      Circuit Court.

[7]   Meanwhile, the Hendricks Circuit Court set a hearing on Duke’s motion to

      stay, but, on August 9, the parties submitted an Agreed Order to the Hendricks

      Circuit Court, which the court accepted. According to the Agreed Order:

              6.    The parties have reached an agreement regarding the
              preliminary issues raised by Avon’s request for injunctive relief
              and [Duke’s] motion for a stay that provides:

                       6.1 Avon will tender to the Court within ten days of the
                       entry of this order the full estimated relocation costs in the
                       amount of $103,455.97, and the Clerk will hold these
                       funds until the Court conducts a hearing on Avon’s
                       complaint . . . and determines whether these funds should
                       be paid . . . to [Duke] or returned to Avon . . . .

                       6.2 Avon will execute and deliver to [Duke a] Utility
                       Relocation Agreement, but Avon reserves its right to
                       present evidence to the Court and to continue to seek
                       declaratory relief that the relocation agreement is invalid;

                       6.3 [Duke] will deliver to Avon the required utility
                       relocation work plan, Avon will execute it and return a
                       fully executed copy to [Duke], and [Duke] shall relocate its
                       utility facilities pursuant to the Work Plan on or before
                       December 1, 2016;

                                                       ***

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017       Page 6 of 14
                         6.6 On August 2, 2016, the [IURC] declined to
                         schedule a hearing on [Duke’s] complaint because this
                         case, which involves the same general subject matter, was
                         filed by Avon before [Duke] filed its complaint with the
                         IURC. [Duke] intends to seek an attorneys’ conference
                         before the IURC to address the IURC August 2, 2016[,]
                         Order. Following the attorneys’ conference with the
                         IURC, the parties will provide a report to this Court
                         concerning any need for a stay of these proceedings. By
                         entering into this agreement, [Duke] does not waive any
                         rights to obtain a ruling on the Verified Complaint filed
                         with the IURC regarding the reasonableness of Avon’s
                         ordinance. Because of the parties’ agreement, there is no
                         need for a hearing on Avon’s request for injunctive relief
                         or [Duke’s] request for a stay.

      Id. at 33-34.3

[8]   The next day, Duke moved for an attorneys’ conference with the IURC. In that

      motion, Duke asserted that, “[b]ecause [Duke] has directly challenged the

      reasonableness of an ordinance, this matter comes within the IURC’s

      mandatory jurisdiction.” Id. at 28. Avon opposed Duke’s motion and asserted

      that “the Hendricks Circuit Court has valid subject matter jurisdiction over this

      matter and these issues.” Id. at 37.

[9]   On September 30, the IURC presiding officers entered an order in which they

      denied Duke’s request for an attorneys’ conference and again instructed Duke

      3
          Entering into the Agreed Order permitted Avon to receive federal funds for its improvement project.

      Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017                         Page 7 of 14
to provide timely status reports on the proceedings in the Hendricks Circuit

Court. According to that September 30 Order:

        The [O]rdinance is devoid of any fee requirement, and[,] as such,
        does not raise questions that would be more appropriately
        addressed to the [IURC] given its specific expertise in making
        determinations concerning the reasonableness of rates and
        charges . . . . Instead, the reasonableness of the [O]rdinance is a
        general legal question that may be raised to the trial court . . . .

Id. at 44. Duke appealed the September 30 Order to the full Commission of the

IURC. The full Commission agreed with the September 30 Order and, further,

dismissed Duke’s complaint without prejudice. In particular, the full

Commission stated as follows:

        The legality of Avon Town Ordinance 2015-03 is the subject of
        the Hendricks County Action, and[,] as such, Commission
        involvement in a pending trial court matter would be
        inappropriate. Accordingly, we affirm the Presiding Officers’
        September 30, 2016[,] Docket Entry. Further, absent an
        agreement between Duke and [Avon], subject to the trial court’s
        approval, to forego further proceedings related to [Avon’s]
        request for declaratory relief and to transfer the matter to the
        Commission, it is unnecessary to maintain this Cause on the
        Commission’s docket. Accordingly, this Cause is dismissed
        without prejudice.

Dismissal Order at 2. This appeal ensued.

Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017   Page 8 of 14
                                       Discussion and Decision
[10]   Duke appeals the IURC’s conclusion that it lacks jurisdiction over Duke’s

       complaint. “‘To the extent the issue turns on statutory construction, whether

       an agency possesses jurisdiction over a matter is a question of law for the

       courts.’” Walczak v. Labor Works-Ft. Wayne LLC, 983 N.E.2d 1146, 1152 (Ind.

       2013) (quoting Ind. Dep’t of Envtl. Mgmt. v. Twin Eagle LLC, 798 N.E.3d 839, 844

       (Ind. 2003)). That is, the issue of “statutory construction . . . on the question of

       [an agency’s] jurisdiction . . . lies squarely within the judicial bailiwick.” Id. at

       1153. “[W]hen all of the issues presented” in a complaint “fall within the

       exclusive jurisdiction of the relevant administrative or regulatory agency,” our

       trial courts lack “subject matter jurisdiction over th[e] case.” Austin Lakes Joint

       Venture v. Avon Utils., Inc., 648 N.E.2d 641, 646 n.5 (Ind. 1995).

[11]   As the Indiana Supreme Court has explained:

               [W]hen we construe any statute, our primary goal is to effectuate
               legislative intent. Shepherd Props. Co. v. Int’l Union of Painters &
               Allied Trades. Dist. Council 91, 972 N.E.2d 845, 852 (Ind. 2012).
               We presume the General Assembly intended the statutory
               language to be applied logically and consistently with the
               statute’s underlying policy and goals, id., and we avoid
               construing a statute so as to create an absurd result. St. Vincent
               Hosp. & Health Care Ctr. Inc. v. Steele, 766 N.E.2d 699, 704 (Ind.
               2002).

       Id. Further:

               The General Assembly created the Indiana Utility Regulatory
               Commission primarily as a fact-finding body with the technical

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017    Page 9 of 14
               expertise to administer the regulatory scheme devised by the
               legislature. United Rural Elec. Membership Corp. v. Ind. & Mich.
               Elec. Co., 549 N.E.2d 1019 (Ind. 1990); See Ind. Code § 8-1-1-5
               (2008). The Commission’s assignment is to insure that public
               utilities provide constant, reliable, and efficient service to the
               citizens of Indiana. Ind. Bell Tel. Co. v. Ind. Util. Regulatory
               Comm’n, 715 N.E.2d 351, 354 n.3 (Ind. 1999). The Commission
               can exercise only power conferred upon it by statute. United
               Rural Elec. Membership Corp., 549 N.E.2d at 1021.

       N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind. 2009).

[12]   Indiana Code Section 8-1-2-115 (2017) states as follows with respect to the

       obligations of the IURC to enforce the law:

               The commission shall inquire into any . . . violation of the statutes
               of this state or the ordinances of any city or town by any public
               utility doing business therein . . . and shall have the power, and it
               shall be its duty, to enforce the provisions of this chapter, as well as all
               other laws, relating to public utilities . . . .

       (Emphases added.) Section 101(a)(1) of that Chapter states that a municipal

       council shall have the power:

               To determine by ordinance the provisions, not inconsistent with
               this chapter or IC 8-1-11.1, upon which a public utility . . .
               occupies the areas along, under, upon, and across the streets,
               highways, or other public property within such municipality or
               county, and such ordinance or other determination of such
               municipality or county executive shall be in force and prima facie
               reasonable.

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017              Page 10 of 14
       I.C. § 8-1-2-101(a)(1). However, Section 101(a)(1) continues: “Upon

       complaint made by such public utility . . . the commission shall set a hearing, as

       provided in sections 54 to 67 of this chapter, and if it shall find such ordinance

       or other determination to be unreasonable, such ordinance or other

       determination shall be void.” Id.

[13]   We hold that Section 101(a)(1) and Section 115 unambiguously establish

       exclusive jurisdiction in the IURC to hear Duke’s complaint on the validity of

       the Ordinance. Section 115 explicitly says that it “shall be [the IURC’s] duty”

       to “enforce . . . all . . . laws[] relating to public utilities.” I.C. § 8-1-2-115.

       Section 115 further expressly directs the IURC to “inquire into

       any . . . violation” of a local ordinance by a public utility. Id. (emphasis added).

       And Section 101 specifically contemplates disputes between towns and utilities

       regarding access to rights-of-way or other access to public property by a utility.

       I.C. § 8-1-2-101(a)(1). Accordingly, Indiana law directs that the subject matter

       of the dispute between Avon and Duke be decided by the IURC.

[14]   We acknowledge the IURC’s assessment that, at least at this point in the

       proceedings, the subject matter of the parties’ dispute appears to be in the

       nature of a “general legal question” rather than one that requires “specific

       expertise” to resolve. Appellant’s App. Vol. II at 44. Nonetheless, the

       Ordinance directly affects a public utility, and if the IURC did not have

       exclusive jurisdiction to consider the operation, effect, and enforceability of

       such ordinances then Indiana’s public utilities would be forced to engage in a

       multitude of disputes over local ordinances throughout the State with no clear

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017      Page 11 of 14
       guidance either to the utilities or the municipalities. Section 101(a)(1) and

       Section 115 place the resolution of all such disputes with the IURC.

[15]   Indeed, as amici curiae explain:

               There are sound public policy reasons why the General Assembly
               has declared the [IURC] to be the exclusive arbiter of
               enforceability of ordinances affecting utility services. The
               General Assembly has established a uniform system for the
               regulation of utilities. The [IURC] has both the fact-finding
               expertise and the broader non-local focus necessary to balance
               competing interests and determine when a local entity’s
               imposition of costs on a public utility exceeds the bounds of
               reasonableness.

               An examination of Avon’s ordinance illustrates why the [IURC]
               must be the entity to determine the reasonableness of that
               ordinance. The [O]rdinance shifts onto public utilities all costs to
               relocate utility facilities, without considering the broader public
               interests of utility customers. It empowers Avon to determine
               unilaterally both the facilities to be moved and their new
               location, with no constraints on the exercise of that authority and
               without any need to (i) consider new impacts on service[] or (ii)
               balance costs and benefits or provide procedures for considering
               less costly alternatives.

               The [O]rdinance contains no provisions to ensure that any new
               location Avon designates is legal and feasible under the myriad
               of federal and state laws and regulations that public utilities must
               follow in siting and constructing their facilities. And it permits
               Avon to give only sixty days-notice . . . with no consideration of
               factors that may prevent utilities from complying within that
               time, such as weather, design constraints, availability of
               materials, feasibility, compliance with federal and local law,
               acquisition of legal rights, etc.

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017   Page 12 of 14
               The [IURC’s] strong understanding of the public interest and its
               demonstrated expertise in administering the regulatory schemes
               in which utilities operate are essential to a fair evaluation of local
               ordinances that impact utilities. The [IURC] must be the entity
               to determine the reasonableness of the Avon ordinance[] and all
               other ordinances affecting utility services across this State.

       Amici Curiae Br. at 6-7. We agree. Accordingly, we reverse the IURC’s

       dismissal of Duke’s complaint.

[16]   Duke further asks that we remand with instructions that the IURC “set a

       hearing,” Appellant’s Br. at 43, on Duke’s complaint in accordance with

       Section 101(a)(1)’s language that, upon complaint, the IURC “shall set a

       hearing, as provided in sections 54 to 67 of this chapter.” But Section 61(a) of

       that Chapter, to which Section 101(a)(1) refers and which expressly applies to

       complaints filed by public utilities, states that “[a]n order . . . may be entered by

       the commission without a formal public hearing” or that the IURC “may . . . on

       its own motion require a formal public hearing.” I.C. § 8-1-2-61(a) (emphases

       added).4 That is, Section 101(a)(1) compels the IURC here to hold a hearing

       only as provided in Section 61(a), and, on this record, Section 61(a) leaves the

       decision to hold a hearing in the IURC’s discretion. As such, we decline to

       instruct the IURC to hold a hearing at this time, and we remand only with

       4
         Section 61(a) also states that the IURC “shall” hold a formal public hearing “upon a motion filed” by
       various entities, but no such motion has been filed at this time. I.C. § 8-1-2-61(a).

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017                      Page 13 of 14
       instructions that the IURC proceed in a manner not inconsistent with this

       opinion.

[17]   Reversed and remanded with instructions.

       Kirsch, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 93A02-1704-EX-780 | August 24, 2017   Page 14 of 14