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Judges address 'public utility' questions

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In a case of first impression in this state, the Indiana Court of Appeals has determined that BP Products North America Inc.'s petroleum refinery plant in northern Indiana isn’t a public utility as defined by state statute when it acts as a sort of conduit and provides natural gas and other services such as steam and wastewater to other private companies nearby.

But that ruling also affirmed a regulatory commission’s finding that the oil company is serving as an indirect public utility when it sells water to a local city for processing and sale to local customers.

The unanimous ruling came today in BP Products North America, Inc. and United States Steel Corp. v. Indiana Office of Utility Consumer Counselor and Northern Indiana Public Service Co., No. 93A02-0905-EX-490, as an appeal from the Indiana Utility Regulatory Commission’s decisions in 2009.

In 2008, the IURC received a request from BP relating to its operations at the Whiting refinery plant along Lake Michigan. As part of its crude oil refining operation, BP generates electricity and natural gas obtained from Northern Indiana Public Service Co. to power its plant and it also transmits excess gas, electricity, steam, and water to adjacent and on-site entities through private contracts – such as the nearby U.S. Steel plant and other companies. The refinery also sends low pressure raw service water to the city wastewater treatment facility to process and pass along to customers.

The BP request asked the IURC to determine that it wasn’t acting as a public utility in providing these materials or services or alternatively that it could be considered a "public utility" under Indiana Code Section 8-1-2-1(a).

The state commission determined in May and June 2009 that BP was not a public utility in connection to its natural gas transportation to a tenant on its property, but that it was considered a public utility with its provision of steam, electricity, water, and wastewater and sewer services. The commission also found that BP was acting as a public utility when selling water to the city.

On appeal, the state’s intermediate appellate court disagreed, reversing the IURC decision on those points and finding the commission misapplied state statute and relevant caselaw.

The judges found that caselaw doesn’t support the principle that an entity that serves only itself isn’t a public utility, but that it’s one that is dedicated to public use under a common law duty to serve all who apply or an entity that may be “impressed with public interest.” Finding no Indiana cases directly on point, they turned to several from other jurisdictions such as Wisconsin and Pennsylvania that have interpreted what constitutes a public utility.

“Because BP served these selected companies – a special class of entities that did not make up the indefinite public – it was engaged in a private activity, not the provision of services directly or indirectly to the public,” Senior Judge John Sharpnack wrote for the panel, which included Judges Nancy Vaidik and Cale Bradford. “Thus, as to these entities, the Commission which erroneously interpreted both the controlling statutes and related caselaw, must vacate its orders and allow BP to proceed outside its jurisdiction.”

The judges saw BP’s contract with the City of Whiting in a different light. "The contract provides for the provision of water to an entity that is a mere conduit serving the undifferentiated public, at least indirectly. Accordingly, BP is acting as a public utility when it sells water to the City," wrote the judge.

On the issue of supplying electricity, the appellate court also found that the IURC had erred in determining that BP is an “electricity supplier” as defined by I.C. Section 8-1-2.3-1 – in large because it wasn’t a “public utility.”

The case is affirmed on the city water aspect and reversed and remanded on the other issues.

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  1. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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