Court Opinion

ID: 5093273
Source: CourtListenerOpinion
Date Created: 2021-10-01 16:17:48.154469+00
Date Added: 2024-06-11T08:20:42.232404
License: Public Domain

WINTERSHEIMER, Justice,
dissenting.
I must respectfully dissent from the majority opinion because the proper standard of review has not been applied. There was no clear and satisfactory evidence that the Order of the Public Service Commission was *592unlawful or unreasonable in directing refunds of approximately $123,425. The Court of Appeals and the circuit court were correct in holding that the Boone County Water & Sewer District failed to publish or file with the PSC the rates for service associated with the particular sewer collection line and consequently, the Commission was within its authority to order refunds on all fees collected in violation of KRS 278.160.
Boone County Sewer System, one of the largest public sewer utilities in this State, consists of package treatment plants and collector lines. The collector lines transport waste water from Boone County into the sewage treatment system of Sanitation District No. 1 of Campbell and Kenton Counties. The Southeast Line, which is the subject of this action, is a sewer collector line which runs from the South Fork of Gunpowder Creek to the Sanitation District’s Dry Creek inceptor line. Without the knowledge or approval of the Public Service Commission, in 1987, the Boone County Water and Sewer District constructed the Southeast Line. The District assessed a $1,000 tap-in, or capacity fee, for each residential unit connecting to the line. The record indicates that between November 1987 and October 24, 1991, the District collected $117,000 in capacity fees. The District also assessed all new sewage customers, regardless of the type of facility which served them, a sewer inspection fee of $25. These fees were not listed in any of its tariffs or PSC applications until October 24, 1991. The Boone District collected approximately $6,425 from the inspection fees.
Amerieoal, the developer of a mobile home park in the area serviced by the Southeast Line, was required to pay a connection fee and an inspection fee for each individual lot in the mobile home park. In 1990, Amerieoal filed a complaint with the PSC claiming that the Boone District did not have a tariff on file for the connection fee as required by the filed-rate doctrine codified in KRS 278.160. The Boone District responded that the PSC did not have jurisdiction over the fee because the line was not a sewage treatment facility. The PSC subsequently began its own investigation of the tariffs of the Boone District. An evidentiary hearing was held in 1991, and in 1992, the PSC found that the Boone District had not filed the appropriate capacity or inspection fee, in violation of the statute, and it required the Boone District to refund all the revenues collected from those fees, plus 6 percent interest, over a five year period. The amount refunded to Amerieoal was fixed at $46,000 for the connection fee and $1,150 for inspection fees. The total amount to be refunded to the remaining customers was $71,000 for the connection fee and $5,275 for inspection fees.
Boone District initiated judicial review of the order and the Franklin Circuit Court affirmed the PSC’s order. In 1995, the Court of Appeals affirmed the judgment of the Franklin Circuit Court in its entirety. This Court granted discretionary review.
During the time this motion was pending before our Court, the Boone District agreed with the Sanitation District for the transfer of its sewer facilities, including the Southeast Collector Line, to the Boone District. This agreement was approved by the PSC in 1995.
I
We must first consider the standard of review applicable to the Public Service Commission. The standard is set out in KRS 278.410(1) which provides that an order of the PSC can be vacated or set aside only if it is found by clear and satisfactory evidence to be unlawful or unreasonable. An order is considered to be unreasonable only when it is determined that the evidence presented leaves no room for differences of opinion among reasonable minds. Thurman v. Meridian Mutual Ins. Co., Ky., 345 S.W.2d 635 (1961). A party challenging a PSC order has the burden of proof to show by clear and satisfactory evidence that the order is unlawful or unreasonable. KRS 278.430. This standard of review is different from that traditionally applied in the appellate review of administrative decisions. The scope of judicial review is very limited. Cf. Energy Regulatory Com’n v. Kentucky Power Co., Ky.App., 605 S.W.2d 46 (1980). See also Lexington Telephone Co. v. Public Service Com’n, 311 Ky. 584, 224 S.W.2d 423 (1949).
*593II
Boone District appeals on the basis that the PSC does not have jurisdiction over its collection of sewage. The District argues that because it is only collecting sewage through the Southeast Line and is not involved in the treatment of that sewage pursuant to KRS 278.010(3), the PSC does not have jurisdiction over these collection facilities.
KRS 278.040(2) provides that the Commission shall have jurisdiction over all utilities in this State so as to regulate the rates of service of such utility with the exception that nothing is to limit or restrict the powers and duties of cities or political subdivisions.
A utility is defined in KRS 278.010(3)© as any person, except a city, who owns or controls or manages any facility to be used for or in connection with ... the treatment of sewage for the public.
I do not believe that we can accept the argument that the collection of sewage does not involve the treatment of such sewage. Although the treatment and collection may not be the same thing, the collection of sewage is clearly an operation “in connection with” the treatment of sewage as contemplated by the statute. The ultimate treatment of sewage is the only purpose for which it is collected and transported. The collection and treatment of sewage are inseparable.
In this instance, collection is the initial stage of treatment because sanitary waste is removed and transported from the site of origination for further processing. The PSC has for over 15 years consistently found that sewage collector lines are facilities used in connection with the treatment of sewage and that their owners are utilities subject to the jurisdiction of the PSC. The practical construction of a statute by administrative officers over a long period of time is entitled to controlling weight. See Barnes v. Department of Revenue, Ky.App., 575 S.W.2d 169 (1978); also Hagan v. Farris, Ky., 807 S.W.2d 488 (1991).
In addition, in 1994, the General Assembly reenacted KRS 278.010 without changing KRS 278.010(3)©. I believe the action of the legislature was an adoption of the long-standing interpretation by the PSC.
I must agree with the Court of Appeals and the circuit court that the PSC has at least implied authority to order refunds. KRS 278.040 requires the PSC to enforce the provisions of the Chapter. It is uncontro-verted that the Boone District did not file the capacity or inspection fees in its rate schedules in violation of KRS 278.160. KRS 278.160(1) mandates that a utility must file with the Commission schedules showing all rates and conditions for service.
Although the majority believe that the powers of the PSC are purely statutory and must be expressly conferred, I believe that Croke v. Public Service Com’n of Kentucky, Ky.App., 573 S.W.2d 927 (1978) includes the concept that such powers can be ascertained by a necessary or fair implication. Public Service Com’n v. Cities of Southgate and Highland Heights, Ky., 268 S.W.2d 19 (1954), held that the jurisdiction of the commission to approve the sale of a utility system is necessarily implied from the statutory powers of the Commission to regulate service. The various authorities presented by the Boone District have been analyzed and properly disposed of by the excellent Court of Appeals opinion rendered in this ease, and there is no need for further discussion at this time.
The authority of the PSC to order refunds is necessarily implied from the language of KRS 278.040(1) which authorizes the PSC to regulate utilities and enforce the provisions of the statutes. In order to properly enforce the statutes and to prevent the collection of unauthorized rates, the PSC must have the authority to order the refund of unlawfully collected rates. Otherwise, it is unable to perform its statutory responsibility.
Board of Education of Boyd County v. Trustees of Buena Vista School, 256 Ky., 432, 76 S.W.2d 267 (1934), held that an administrative agency may exercise powers necessarily implied from its expressed powers and duties. See also Humana of Kentucky, Inc. v. NKC Hospitals, Inc., Ky., 751 S.W.2d 369 (1988).
*594South Central Bell Telephone Co. v. Utility Regulatory Com’n, Ky., 637 S.W.2d 649 (1982), is distinguishable because it involved the power to regulate rates. The present ease involves the authority to enforce the other provisions of the statutes. Public Service Com’n of Kentucky v. Attorney General, Ky.App., 860 S.W.2d 296 (1993), is not applicable because that decision did not consider the issue of an administrative agency’s necessarily implied powers.
The problem presented in this type of case is that service provided by a district is proprietary in nature and it is monopolistic by statutory design and practical requirements. One of the principal functions of the PSC is to provide information, regulation and hopefully protection to the ratepayers and consumers of a service provided by a monopoly enterprise whether that be investor-owned or statutorily created. Here the PSC has not added to its enumerated powers when it employed authority which is by necessity or fair implication required to properly perform its statutory function.
The concern of the majority that a literal and limited behavior is necessary is at variance with the language of KRS 446.080 which states that all statutes of this State shall be liberally construed with a view to promote their objects and carry out the intent of the legislature. The common law rule of strict construction of statute no longer prevails in Kentucky. Scott v. Curd, 101 F.Supp. 396 (E.D.Ky.1951). The rules of statutory construction required that all statutes be construed to carry out the intent of the legislature. Hardin Co. Fiscal Ct. v. Hardin Co. Bd. of Health, Ky.App., 899 S.W.2d 859 (1995).
I would affirm the decision of the Court of Appeals, the circuit court and the Public Service Commission and permit the refunds.
STUMBO, J., joins in this dissent.