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TOWN OF BLACKSTONE v. SOUTHSIDE ELECTRIC COOPERATIVE, et al.


TOWN OF BLACKSTONE

v.

SOUTHSIDE ELECTRIC
COOPERATIVE, et al.


November 6, 1998
Record No. 980564

TOWN OF BLACKSTONE

v.

SOUTHSIDE ELECTRIC COOPERATIVE, ET AL.

Present: All the Justices

OPINION BY JUSTICE LAWRENCE L. KOONTZ, JR.
FROM THE STATE CORPORATION COMMISSION


In this appeal, the primary issue we consider
is whether a municipality seeking to acquire, by condemnation,
electric utility distribution facilities within an annexed area
under Code Sect. 56-265.4:2 must first obtain the approval
of the State Corporation Commission (Commission) under Code
Sect. 25-233.

BACKGROUND

The Town of Blackstone (the Town) is a
municipality in Nottoway County that owns and operates an
electric utility system for the distribution and retail sale of
electricity both within and beyond its corporate boundaries.
Southside Electric Cooperative (Southside) is a Virginia electric
distribution cooperative that provides retail electric service
within an area that encompasses eighteen counties and five
municipalities, including portions of Nottoway County.

In 1992, pursuant to an agreement with Nottoway
County, the Town annexed a 2.5 square mile area of Nottoway
County (the annexed area). Although the Town at that time
provided electric service to customers in a portion of the
annexed area, Southside, pursuant to a certificate issued by the
Commission, provided electric service to customers in other
portions of the annexed area as well as to customers in a
subdivision of the Town known as Pickett Court. Virginia Electric
and Power Company (Virginia Power) also provided electric service
in the Town, serving three customers outside the annexed area.

In order to extend its electric service to all
customers located within the annexed area, the Town engaged in
discussions with Southside in attempts to acquire Southside’s
electric distribution facilities and associated rights of way
(the facilities) within that area. After these discussions failed
to achieve that goal, on June 25, 1996, the Town Council passed a
resolution authorizing a condemnation proceeding, pursuant to
Code Sect. 56-265.4:2, to acquire the facilities. On June
28, 1996, the Town filed an application with the Commission
requesting permission to acquire the facilities by a condemnation
proceeding.
[1]

In its application, consistent with the
requirements of Code Sect. 25-233, the Town asserted that a
"public necessity" or an "essential public
convenience" required its acquisition of Southside’s
facilities and that these facilities were not essential to the
purposes of Southside. In support of those assertions, the Town
maintained that condemnation would: (1) end the fragmented
service that results from having more than one electric provider
in the area; (2) reduce rates for electric service; (3) improve
the reliability of electric service in the annexed area; (4)
allow more prompt service connections to customers in the annexed
area; (5) give customers in the annexed area a greater voice in
decisions regarding their electric rates and service; and (6)
have no effect on Southside’s remaining customers. Southside
challenged these claims in its answer opposing the Town’s
application.

The Commission appointed a hearing examiner to
consider the application, and hearings were held in December
1996. On August 21, 1997, the hearing examiner issued his report.
In that report, the hearing examiner rejected the Town’s
assertion that Code Sect. 56-265.4:2 does not require the
Town to obtain the Commission’s permission under Code
Sect. 25-233 prior to proceeding with condemnation of
Southside’s facilities in the annexed area. In addition, the
hearing examiner rejected the Town’s further assertion that under
the circumstances of this case the Commission must apply a less
stringent standard for determining whether a public necessity or
an essential public convenience supports the Town’s application.
With respect to the merits of the application, the hearing
examiner addressed each of the assertions made by the Town in
support of its application and found that none of these
demonstrated a "public necessity" or "essential
public convenience" warranting condemnation. For purposes of
our resolution of the issues presented in this appeal, we need
not relate the facts supporting these findings, which are
adequately supported by the record.
[2]

The Town filed exceptions to the hearing
examiner’s report. Thereafter, the Commission reviewed the report
and adopted the findings and recommendations of the hearing
examiner in an order dated November 24, 1997, denying the Town’s
application. This appeal followed.

DISCUSSION

On appeal, the Town asserts that the Commission
erred in finding that it was required to obtain the Commission’s
permission under Code Sect. 25-233 prior to exercising its
right under Code Sect. 56-265.4:2 to acquire, by
condemnation, Southside’s facilities in the annexed area. The
Town further asserts that even if it was required to obtain the
Commission’s permission prior to exercising its right under Code
Sect. 56-265.4:2, the Commission applied an erroneous legal
standard in determining whether the requirements of Code
Sect. 25-233 were met, by requiring the Town to establish a
"public necessity" or an "essential public
convenience" under the traditional standard, instead of some
"less stringent" standard.

Both issues raised by the Town are essentially
matters of statutory construction. Code Sect. 56-265.4:2, in
relevant part provides:

A. Any city or town in the Commonwealth which
provides electric utility service for the use of its residents
may, at any time following annexation of additional territory to
such city or town, acquire the distribution system facilities of
the electric utility serving the annexed area in the manner
provided by Title 25
.

(Emphasis added.)

At all times relevant to this appeal, Code
Sect. 25-233, provided in part:

No corporation or authority created under the
provisions of Chapter 39 (Sect. 15.1-1603 et seq.) of
Title 15.1 shall take by condemnation proceedings any property
belonging to any other corporation possessing the power of
eminent domain, unless, after hearing all parties in interest, the
State Corporation Commission shall certify that a public
necessity or that an essential public convenience shall so
require, and shall give its permission thereto
; and in no
event shall one corporation take by condemnation proceedings any
property owned by and essential to the purposes of another
corporation possessing the power of eminent domain.

(Emphasis added.)

The Town contends that a proper construction of
Code Sect. 56-265.4:2 would exclude such condemnation
actions from the review of the Commission under Code
Sect. 25-233 by limiting the phrase "in the manner
provided by Title 25" to mean that a city or town need only
employ the procedures of the Virginia General Condemnation Act,
Code Sect. 25-46.1 et seq. In short, the Town
contends that Code Sect. 56-265.4:2 was enacted to permit a
city or town to do the very thing prohibited by Code
Sect. 25-233, that is to condemn the property of a public
utility with the power of eminent domain without first seeking
permission from the Commission. In making this contention, the
Town does not expressly state that Code Sect. 56-265.4:2 is
ambiguous, but supports its argument with extensive reference to
external aids to construction, raising the obvious implication
that the statute cannot be construed from its plain language.
[3] We disagree.

When considering a legislative act, a court may
look only to the words of the statute to determine its meaning,
and when the meaning is plain, resort to rules of construction,
legislative history, and extrinsic evidence is impermissible. Harrison
& Bates, Inc. v. Featherstone Assoc.
, 253 Va. 364, 368,
484 S.E.2d 883, 885 (1997). Accordingly, unless we find that any
words of the statute are "inherently difficult to
comprehend, of doubtful import, or lacking in clarity and
definiteness . . . it is not necessary to look beyond
the plain language of the statute to ascertain its underlying
legislative intent." Id. at 369, 484 S.E.2d at 886.

Utilizing this standard, we find no merit to
the Town’s contention that the phrase "in the manner
provided by Title 25" can be reasonably read to have a
limited construction. Nothing in that phrase suggests that the
legislature intended other than what the plain language imports,
which is that the right afforded to cities and towns seeking to
acquire by condemnation the electric utility distribution
facilities within newly annexed areas is subject to all the
provisions of Title 25 relevant to such actions. No resort to
external aids to construction is necessary to reach that
self-evident conclusion.

Accordingly, we hold that a city or town
seeking to exercise the right provided by Code
Sect. 56-265.4:2 must comply with Code Sect. 25-233,
which provides that permission must first be obtained from the
Commission by any public corporation or authority seeking to take
by condemnation proceedings the property of any other entity also
possessing that power. To do so, the city or town must
demonstrate "that a public necessity or that an essential
public convenience shall so require." Code
Sect. 25-233.

The Town contends, however, that unless a
"less stringent" standard is applied by the Commission
in its determinations under Code Sect. 25-233, Code
Sect. 56-265.4:2 is rendered meaningless. This is so, the
Town asserts, because "it is highly unlikely that a
municipality can ever demonstrate that a regulated public utility
is failing to provide adequate service at reasonable rates"
and, thus, no municipality could ever demonstrate that the
condemnation of electric utility distribution facilities is a
public necessity or essential to public convenience.

The Town’s contention on this issue rests on a
faulty premise. Nothing in the record before us suggests that the
Commission limited its consideration of the Town’s application
solely to the question of adequacy of service and reasonableness
of rates, or that it would so limit itself in the future. Rather,
the Commission focused its inquiry on whether the public would
benefit under the entire circumstances of the proposed
condemnation, and noted that while there would be certain
benefits, including a slight reduction of rates, the evidence on
balance did not support such a finding. The record adequately
supports that finding. Moreover, we reject the Town’s contention
that no municipality would be able to effectively compete with a
public utility in the provision of or cost of service.

In sum, we hold that all of the provisions of
Code Sect. 25-233 as traditionally applied by the Commission
apply to the condemnation of electric utility distribution
facilities under Code Sect. 56-265.4:2 by a city or town.
The decision of the Commission, as an expert tribunal, is
presumed to be just, reasonable, and correct unless without
support in the record or manifestly in error. Central
Telephone Co. of Virginia v. State Corporation Commission
,
219 Va. 863, 874, 252 S.E.2d 575, 581-82 (1979). Here, the record
supports the decision of the Commission and the Commission
correctly applied the law. For these reasons, the order of the
Commission will be affirmed.

Affirmed.

 

 

FOOTNOTES:

[1] In its application, the Town
recognized that the Commission had previously ruled, in a divided
opinion, that a municipality seeking to condemn facilities under
Code Sect. 56-265.4:2 was required to obtain Commission
permission under Code Sect. 25-233. See Petition
of City of Franklin
, Case No. PUE890069, 1990 S.C.C. Ann.
Rep. 301, 302. However, the Town did not concede the issue, and
the Commission, therefore, expressly addressed it.

[2]The hearing examiner also addressed the issue of whether
the facilities are essential to Southside, as required by Code
Sect. 25-233. Noting that the Commission has construed
"essential" to mean "only when the acquisition
would adversely affect service to [the relinquishing] utility’s
remaining customers," the hearing examiner concluded that
the facilities are not essential to Southside’s purposes. The
Commission subsequently determined that it need not reach this
issue since the Town had failed to establish that condemnation
was appropriate. The Town does not assign error to this
determination, and accordingly, we express no opinion on this
issue.

[3]The Town further contends that Code
Sect. 56-265.4:2 must be read to provide more expansive
powers of condemnation than are provided elsewhere in the Code,
otherwise its enactment would merely be redundant of other
statutes. However, as the Town itself notes, Code
Sect. 56-265.4:2 was enacted following this Court’s decision
in Town of Culpeper v. VEPCO, 215 Va. 189, 207 S.E.2d 864
(1974), in order to provide the express right of condemnation in
annexed areas which we had found lacking elsewhere in the Code.
Accordingly, the purpose of this statute is clearly not redundant
of the existing scheme for condemnation of electric distribution
facilities.

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