Boone County Water v. Public Service Commission

GRAVES, Justice. This is a review of a Court of Appeals opinion affirming a circuit court judgment which upheld the Public Service Commission’s (“PSC”) decision requiring Boone County Water and Sewer District (“Boone”) to refund unpublished fees. Also, Americoal Corporation (“Americoal”) has appealed an order which denied its motion for attorney fees to recover expenses incurred in seeking the refund. Because we find the PSC lacked jurisdiction in Case No. 95-SC-733-DG, all other issues are moot and need not be discussed in this opinion. Boone is a non-profit public utility which operates a water district and several small sewage treatment facilities, none of w'hich are involved in this action. Boone also operates a sewage collection system pursuant to a contract with Sanitation District No. 1 of Campbell and Kenton Counties (“Sanitation District”). Boone constructed facilities for collecting and transporting the sewage to the Sanitation District’s plant. The Sanitation District provides sufficient capacity in its treatment plant for sewage collected and transported by Boone. This arrangement [590] separates sewage collection and transportation from sewage treatment. Pursuant to the above-mentioned contract, Boone constructed a new main sewer line known as the Southeast Sewer Line in Southern Boone County. When the internal sewer lines of property owners in this area were connected to the Southeast Sewer Line, Boone assessed a “connection fee” or “capacity fee” of $1,000.00 and an inspection fee of $25.00 for each piece of property. Americoal is the developer of a mobile home park in the area being serviced by Boone’s Southeast Sewer Line. Americoal was required by Boone to pay a connection fee and an inspection fee for each individual lot in its mobile home park development when it connected its lines to the Southeast Sewer Line. Americoal filed a complaint with the Public Service Commission of Kentucky alleging that Boone did not have a tariff on file for the connection fee as required by the “filed rate doctrine” codified in KRS 278.160. The PSC held an evidentiary hearing and entered an order finding that Boone had not filed the capacity fee or the inspection fee, in violation of KRS 278.160. It then required Boone to refund all of the revenue collected from those two fees, plus 6 percent interest, payable over a five-year period. The total amount to be refunded to Americoal was $46,000.00 for connection fees and $1,150.00 for inspection fees. The total amount to be refunded to the remaining customers was $71,000.00 for connection fees and $5,275.00 for inspection fees. Boone appealed the PSC’s ruling to the Franklin Circuit Court. The circuit court entered a judgment upholding the decision of the PSC. Subsequently, Americoal made a motion in the circuit court for its attorney fees and costs incurred in the litigation against Boone to be paid proportionately from the total fund that Boone was ordered to refund to Americoal and the remaining customers. The basis of Americoal’s motion was that its legal action resulted in all the other customers receiving refunds from Boone; therefore, the common fund doctrine should be invoked to allow apportionment of the attorney fees and costs to all who benefit-ted from this litigation. The circuit court denied Americoal’s motion. Boone concedes PSC’s jurisdiction over its water system and sewage treatment operations. However, Boone contests PSC’s claim of jurisdiction over the collection of sewage. Boone maintains that the PSC does not have jurisdiction over these collection facilities because sewage is only collected through the Southeast Sewer Lines and it is not involved in the treatment of that sewage. Boone points out that collection and transportation of sewage are not mentioned in KRS 278.010(3)(b), which governs public utilities. KRS 278.040(2) defines jurisdiction of the PSC as follows: The jurisdiction of the commission shall extend to all utilities in this state. The commission shall have exclusive jurisdiction over the regulation of rates and service of utilities, but with that exception nothing in this chapter is intended to limit or restrict the police jurisdiction, contract rights or powers of cities or political subdivisions. KRS 278.260(1) further provides, “(t)he commission shall have original jurisdiction over complaints as to rates or services of any utility,.... ” A “utility” is defined in KRS 278.010(3) as follows: Any person except a city, who owns, controls or operates or manages any facility to be used for or in connection with ... (a) The generation, production, transmission or distribution of electricity to or for the public, for compensation, for lights, heat, power or other uses; (b) The production, manufacture, storage, distribution, sale or furnishing of natural or manufactured gas, or a mixture of same, to or for the public, for compensation, for light, heat, power or other uses; (c) The transporting or conveying of gas, crude oil or other fluid substance by pipeline to or for the public, for compensation; (d) The diverting, developing, pumping, impounding, distributing or furnishing of water to or for the public, for compensation; (e) The transmission or conveyance over wire, in air or otherwise, or any message by telephone or telegraph for the public, for compensation; or [591] (f) The treatment of sewage for the public, for compensation, if the facility is a subdivision treatment facility plant, located in a county containing a city of first class or a sewage treatment facility located in any other county and is not subject to regulation by a metropolitan sewer district. (Emphasis added.) The PSC is a creature of statute and has only such powers as have been granted to it by the General Assembly. The PSC has disclaimed jurisdiction over sanitation districts because sanitation districts are specifically governed by the provisions of KRS Chapter 220. The Commission noted a significant difference between such sanitation districts and water districts when it made and published the following policy statement: After reexamining KRS Chapter 278, the Commission concludes that the failure of the legislature to make specific reference to sanitation districts within Chapter 278 is persuasive evidence that the legislature intended to deny the Commission jurisdiction over sanitation districts. By comparison, KRS Chapter 278 has been amended to bring under Commission jurisdiction both water associations organized pursuant to KRS 273 (KRS 278.012), and water districts organized pursuant to KRS Chapter 74 (KRS 278.015). Based upon this analysis, the Commission has concluded that sanitation districts are not utilities within the meaning of KRS 278.010(3)(f), and are therefore exempt from regulation by the Public Service Commission. (Letter from Forest M. Skaggs, Executive Director the Public Service Commission, to all Sanitation Districts (April 5, 1988)). Sanitation districts are excluded from the provisions of KRS Chapter 278 and consequent PSC regulation, not only by omission, but also by precise placement in another chapter of the Kentucky Revised Statutes. Therefore, a sanitation district is not a utility within the context of KRS Chapter 278. Throughout KRS 278.010(3), which sets the parameters of PSC jurisdiction, explicit language describes the movement of products and services (electricity, natural gas, fluid substance, water, and messages). Notably, not one such descriptive action word is used for movement of sewage. The legislature chose to mention only treatment in connection with sewage. We should not and cannot enlarge the statute to cover collection and transportation of sewage. This is especially true when the legislature delineated transmission and distribution of electricity, distribution and furnishing of natural or manufactured gas, transporting or conveying fluid substances, distributing and furnishing water, and transmission and conveyance of messages. It is logical to conclude that the legislature did not mention collection and transmission of sewage because the legislature intended that these operations not be regulated by KRS Chapter 278. If the legislature had wanted activities pertaining to sewage collection and transportation to be regulated by the Public Service Commission, it would have specifically so stated in Chapter 278 of the Kentucky Revised Statutes. The legislature did not do so. The powers of the PSC are purely statutory and it has only such powers as are conferred expressly or by necessity or fair implication. Croke v. Public Service Commission of Kentucky, Ky.App., 573 S.W.2d 927 (1978). As a statutory agency of limited authority, the PSC cannot add to its enumerated powers. South Central Bell Telephone Co. v. Utility Regulatory Commission, Ky., 637 S.W.2d 649 (1982). For the foregoing reasons, the opinion of the Court of Appeals and the judgment of the Franklin Circuit Court are reversed. This case is remanded to the Franklin Circuit Court for dismissal of both cases. STEPHENS, C.J., and COOPER, GRAVES, JOHNSTONE and LAMBERT, JJ., concur. WINTERSHEIMER, J., dissents in a separate opinion in which STUMBO, J., joins.