Public Service Commission v. Jackson County Rural Electric Cooperative, Inc.

50 S.W.3d 764, 2000 Ky. App. LEXIS 78, 2000 WL 968067
CourtCourt of Appeals of Kentucky
DecidedJuly 14, 2000
DocketNo. 1998-CA-002609-MR
StatusPublished
Cited by5 cases

This text of 50 S.W.3d 764 (Public Service Commission v. Jackson County Rural Electric Cooperative, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Public Service Commission v. Jackson County Rural Electric Cooperative, Inc., 50 S.W.3d 764, 2000 Ky. App. LEXIS 78, 2000 WL 968067 (Ky. Ct. App. 2000).

Opinion

OPINION

BARBER, Judge:

The Public Service Commission appeals from a judgment of Franklin Circuit Court which reversed and set aside PSC orders assessing penalties against three utilities for safety violations by their independent contractors. The circuit court determined that the PSC’s' orders were based upon an improper application of the law. We disagree, hence we reverse.

The Judgment below provides a concise summary of the essential facts, procedural events and issues underlying this appeal:

This action is a consolidation for review of three Public Service Commission (hereinafter PSC) Orders in which the PSC assessed a civil penalty against an electric utility for alleged failures to maintain its plant and facilities in accordance with the National Electrical Safety Code (hereinafter NESC). At issue is the question whether the PSC can hold a utility responsible for NESC violations by the utility’s independent contractors.
This action is brought pursuant to KRS 278.410. By its Orders the PSC has assessed civil penalties against the plaintiff utilities for the alleged failure of their independent contractors to comply with Commission Regulation 807 KAR [766]*7665:041, Section 3, which regulation adopts the NESC by reference.
All three cases involve serious injuries (in one case the death of an employee) which resulted from alleged safety violations of the utilities’ independent contractors.
The utilities argued that the imposition of these civil penalties by the PSC is unlawful, unjust, unreasonable, arbitrary and unconstitutional. Since the Legislature has not expressly granted this power to the PSC nor have the Courts of this jurisdiction recognized that an employer utility is responsible for insuring that its independent contractors abide by safety regulations which apply to the utilities themselves, (sic)
The utilities argue that the PSC has unconstitutionally attempted to create such a duty when no such duty exists either by contract, by statute, or in the common law.
The PSC argues that the utilities’ duty to construct and maintain their facilities in accordance with the NESC is created by Administrative Regulation 807 KAR 5:041 and that duty may not be delegated to an independent contractor.
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The standard for judicial review of a PSC Order is defined at KRS 278.410(1) .... an Order of the PSC can be vacated or set aside only if it is unlawful or unreasonable. An Order is unlawful only if it violates a state or federal statute or constitutional provision. National Southwire Aluminum Co. v. Big Rivers Elec. Corp., Ky., App., 785 S.W.2d 503 (1990). 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.
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The PSC argues that ... [807 KAR 5:041] applies to independent contractors of the utilities as well as the utilities themselves.
This premise, however, runs counter to the holding of ... King v. Shelby Rural Electric Cooperative Corp., Ky., 502 S.W.2d 659 (1973), cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 235 (1974). In King, an employee of an independent contractor was badly injured because the contractor had failed to comply with safety standards. The injured employee sued the utility.... The Supreme Court found that the non-delegable duties arising out of inherently dangerous work did not extend to the employees of an independent contractor. ...
The PSC attempts to avoid the rule of King by arguing that the language of the regulation is designed not to protect employees of the independent contractor but to protect the public in general. But this argument finds no support in the facts of the cases at issue herein. The NESC regulations at issue in these instances were clearly designed to protect the safety of employees performing the work. Any other interpretation is implausible. The facts, which are not at issue in these cases, are that employees of the independent contractors failed to wear their rubber gloves when working near energized lines and that the independent contractors failed to enforce safety standards and left the work area. These are protections for the employees, not the public in general. The PSC has no authority to impose a new duty on utilities when that duty has no foundation in law. To do so is an unconstitutional legislative act by the PSC. See [767]*767Henry v. Parrish, 307 Ky., 559, 211 S.W.2d 418 (1948).
Since the PSC’s Orders ... are based upon an improper application of the law, they are unreasonable and must be reversed.

The PSC filed a CR 59.05 motion to vacate, or in the alternative, amend the judgment, contending that the trial court: (1) had failed to consider KRS 278.990(1), which deals with the imposition of penalties; (2) had misapplied the holding of King; (3) had made erroneous findings that the NESC rules were not intended to protect the general public; and (4) had failed to address the PSC’s counterclaims (to enforce the PSC’s orders). By Order entered September 21, 1998, the circuit court denied the PSC’s motion to vacate, and amended its judgment to reflect that the PSC’s counterclaims were dismissed.

The PSC is a creature of statute and has only such powers as granted by the General Assembly. Boone Co. Water and Sewer District v. PSC, Ky., 949 S.W.2d 588 (1997). Thus, any issue involving the PSC’s authority is necessarily one of statutory analysis. KRS 278.040 gives the PSC exclusive jurisdiction over the regulation of utility rates and service and provides that the PSC shall enforce the provisions of KRS Chapter 278. KRS 278.040(1) and (2). To that end, the statute gives the PSC the authority to adopt regulations to implement the provision of KRS Chapter 278. KRS 278.040(3).

KRS 278.280 provides in pertinent part: (1) Whenever the commission, ... finds that the ... practices, equipment, appliances, facilities or service of any utility subject to its jurisdiction, ...

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Cite This Page — Counsel Stack

Bluebook (online)
50 S.W.3d 764, 2000 Ky. App. LEXIS 78, 2000 WL 968067, Counsel Stack Legal Research, https://law.counselstack.com/opinion/public-service-commission-v-jackson-county-rural-electric-cooperative-kyctapp-2000.