BASIL C. POLLITT AND THE GAS GROUP, INC. v. COMMONWEALTH OF KENTUCKY, PUBLIC SERVICE COMMISSION
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RENDERED:
OCTOBER 14, 2005; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001516-MR
BASIL C. POLLITT AND
THE GAS GROUP, INC.
APPELLANTS
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE ROGER L. CRITTENDEN, JUDGE
ACTION NO. 01-CI-00581
v.
COMMONWEALTH OF KENTUCKY,
PUBLIC SERVICE COMMISSION
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
KNOPF, TAYLOR, AND VANMETER, JUDGES.
TAYLOR, JUDGE:
Basil C. Pollitt and the Gas Group, Inc. appeal
from a March 2, 2004, order of the Franklin Circuit Court
granting summary judgment and a permanent injunction in favor of
the Public Service Commission (PSC).
We affirm.
In February 1999, an unmarked natural gas line was
discovered in Warren County, Kentucky.
PSC was alerted to the
line’s existence and initiated an investigation.
During the
investigation, PSC discovered numerous safety violations and
ascertained the owner of the line was the Gas Group.
The Gas
Group was owned and operated by Pollitt.
Consequently, PSC ordered the Gas Group and Pollitt to
show cause why they should not be subject to penalties for
violations of Kentucky Revised Statutes (KRS) 278.020; KRS
278.160; 807 Ky. Admin. Regs. (KAR) 5:022, §§ 14(5)(a),
14(5)(c)(2), 14(5)(e)(2), 13(9); 807 KAR 5:023; 49 C.F.R.
192.707(a); 49 C.F.R. 192.707(e)(2); 49 C.F.R. 192.615 and 49
C.F.R. 199.
A summons was issued advising Pollitt that he had
twenty (20) days to respond.
The summons further provided
notice of the date, time and place of an evidentiary hearing
before PSC.
The summons was personally served upon Pollitt on
April 22, 1999.
Pollitt never responded.
On May 18, 1999, PSC conducted an evidentiary hearing.
Pollitt did not appear at the hearing.
On September 2, 1999,
PSC issued an order finding that Pollitt was the owner and
operator of a natural gas distribution facility known as the Gas
Group.
It further found the unmarked natural gas line:
[C]onsisted of 22 miles of three and fourinch plastic pipe which extends northward
along Kentucky Highway 185. The system is
pressurized and valves are located at 4-mile
intervals. The gas distribution system
services natural gas to approximately 50
customers. . . .
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PSC concluded that the Gas Group violated KRS 278.020, KRS
278.160; 49 C.F.R. 192.707(a); 49 C.F.R. 192.707(e)(2); 49
C.F.R. 192.615; and 49 C.F.R. 199.
PSC accessed civil penalties
of $25,750.00 and directed the Gas Group to file an application
for a certificate of convenience and necessity, as well as a
schedule of rates.
Neither Pollitt nor the Gas Group filed an
appeal in the circuit court from PSC’s September 1999 order
within thirty (30) days as provided by KRS 278.410(1).
Some two years later, on May 14, 2001, PSC filed a
complaint in the Franklin Circuit Court seeking enforcement of
its September 1999 order and an injunction terminating the
distribution of natural gas by the Gas Group.
On November 1,
2001, PSC filed a motion for summary judgment and for a
permanent injunction.
On March 2, 2004, the circuit court
granted summary judgment in favor of PSC and issued a permanent
injunction terminating the flow and distribution of natural gas
through the gas line.
This appeal follows.
The Gas Group claims that the circuit court erred by
entering summary judgment in favor of PSC to enforce its
September 1999 order and issuing a permanent injunction.
The
proper standard of review to be applied on appeal from a summary
judgment is "whether the trial court correctly found that there
were no genuine issues as to any material fact and that the
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moving party was entitled to judgment as a matter of law."
Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. 1996).
The record is
viewed in the light most favorable to the nonmoving party and
any doubts shall be resolved in his favor. Steelvest, Inc. v.
Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991).
As
resolution of this appeal centers upon issues of law, we review
the circuit court’s decision de novo.
Initially, we observe that the exhaustion of
administrative remedies doctrine requires a party to exhaust
“all administrative remedies available within the agency whose
action is being challenged . . . .”
Popplewell’s Alligator Dock
No. 1 v. Revenue Cabinet, 133 S.W.3d 456, 471 (Ky.
2004)(citation omitted).
An exception to the exhaustion
doctrine is recognized where the issue of jurisdiction of the
agency is raised and resolution is a question of law, not
dependent upon controverted facts.
Dep’t of Conservation v.
Sowders, 244 S.W.2d 464 (Ky. 1951); Goodwin v. City of
Louisville, 309 Ky. 11, 215 S.W.2d 557 (1948).
In this case, it is clear that Pollitt and the Gas
Group did not exhaust their administrative remedies.
However,
Pollitt and the Gas Group argue PSC lacked jurisdiction; thus,
the exception to the exhaustion of administrative remedies
doctrine would apply.
The facts relevant to decide the
jurisdiction of PSC are not in dispute.
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Therefore, we believe
the exception to the exhaustion doctrine is applicable to this
case.
As such, we shall analyze whether PSC possessed
jurisdiction.
KRS 278.040 provides that “[t]he Public Service
Commission shall regulate utilities and enforce the provision of
this chapter.”
To resolve the issue of whether PSC possessed
jurisdiction to enter the September 1999 order, it is necessary
to determine whether the Gas Group was a “utility” within the
meaning of KRS 278.010(3)(b), which defines utility as follows:
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.
PSC argues that the Gas Group was a utility because
the natural gas line provided “farm tap” gas services to some
fifty property owners along the gas line’s route.
owners paid for the gas utilized.
The property
Thus, PSC concluded the Gas
Group clearly distributed natural gas to the public for
compensation and met the requirements of a utility under KRS
278.010(3)(b).
Conversely, Pollitt and the Gas Group argue that the
natural gas line originally only supplied gas to an end user,
Midwestern Pipelines, Inc., and not to the public.
Although the
Gas Group’s contract with Midwestern terminated in 1997 and the
gas line no longer supplied gas to an end user, Pollitt and the
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Gas Group maintain that the character of the natural gas line
should be determined at the time of its creation.
Moreover,
Pollitt and the Gas Group point out that the farm taps were
provided to the fifty property owners by mandate of the PSC.
See KRS 278.485 (requiring a gas pipe line company to furnish
gas service to the owner of any property over which its gas
gathering line is located.)
Thus, Pollitt and the Gas Group
maintain that the Gas Group should not be considered a utility
because the gas line only distributed natural gas to the public
pursuant to the PSC’s mandate and because the gas line was
originally a pure gathering line to transport gas to Midwestern.
The language of KRS 278.010(3)(b) is clear that any
person who operates a facility which produces or distributes
natural gas to the public for compensation is a utility.
In the
case at hand, the undisputed facts reveal that the Gas Group
distributed natural gas through its line to some fifty property
owners.
Further, the Gas Group’s contract with its end user
terminated in 1997; thereafter, the gas line was utilized for a
time solely as a distribution line supplying natural gas to the
fifty property owners. 1
Pollitt and the Gas Group, however, urge this Court to
create an exception to KRS 278.010(3)(b) because the Gas Group
was mandated to furnish the farm taps.
1
KRS 278.010(3)(b)
It appears that sometime in September 2003, the Gas Group acquired a
contract with another end user, Viking Energy, LLC.
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recognizes no such exception, and we are not at liberty to add
language to a statute.
See City of Covington v. Kenton County,
149 S.W.3d 358 (Ky. 2004).
We also reject the assertion of Pollitt and the Gas
Group that the natural gas line was originally a gathering which
could not be “transformed” into a distribution line.
As is
evidenced by this case, the character of a natural gas line is
not static, but rather changes with the needs of its owner and
the public.
To recognize otherwise would be untenable.
Accordingly, we hold that the Gas Group was a utility within the
meaning of KRS 278.010(3)(b), and PSC possessed jurisdiction in
this matter.
We view the remaining contention of Pollitt and the
Gas Group to be without merit.
In sum, we are of the opinion the circuit court
properly entered summary judgment in favor of PSC upholding the
$25,750.00 in civil penalties and issuing the permanent
injunction terminating the distribution of natural gas through
the line.
For the foregoing reasons, the order of the Franklin
Circuit Court is affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Kirk Hoskins
Louisville, Kentucky
Jason R. Bentley
C. Dale Wright
Frankfort, Kentucky
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