Fayetteville-Lincoln County Electric System

FAYETTEVILLE-LINCOLN COUNTY ELEC. SYSTEM 101 Fayetteville-Lincoln County Electric System and Local Union 846, International Brotherhood of Electrical Workers, AFL-CIO, Petitioner. Case 26-RC-3708 June 8, 1970 DECISION AND ORDER By MEMBERS MCCULLOCH, BROWN , AND JENKINS Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a hearing was held before Hearing Officer Hutton S. Brandon. Pursuant to Section 102.67 of the Na- tional Labor Relations Board Rules and Regula- tions, Series 8, as amended, the Regional Director for Region 26 transferred this case to the Board for decision. Thereafter the Employer and the Peti- tioner filed briefs with the Board. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its powers in connection with this case to a three- member panel. The Board has reviewed the. Hearing Officer's rulings made at the hearing and finds that they are free from prejudicial error. They are hereby af- firmed. Upon the entire record in this case, the Board finds: Fayetteville-Lincoln County Electric System, hereinafter the Employer, is engaged solely in the distribution of electricity, including maintenance of lines and a traffic system (traffic controls and street lights) in the city of Fayetteville, Tennessee. It purchases all the power it distributes from the Ten- nessee Valley Authority. The Employer was established in May 1963 through the merger of the Lincoln County Electric Membership Corporation (hereinafter the Corporation) and Fayetteville Electric System. The latter was owned by the city. As a result of negotiations among the board of trustees of the Corporation, the board of directors of the Fayetteville Electric System, and the mayor and board of aldermen' of the city of Fayetteville, it was determined that the city would acquire all the assets and liabilities of the Corporation. In December 1963, the transfer was effected through the authorization of a private act of the state legislature which empowered the city to make the acquisition. Thereafter, a deed and bill of sale made by the Corporation to the city was executed. The Corporation was dissolved and all its assets and lia- bilities were purchased by the city which now owns all physical assets of the Employer, including the building out of which it operates and all vehicles used by it. The Fayetteville Electric System had no history of collective bargaining. However, the Corporation, at the time of the merger, had a collective-bargain- ing agreement with the Petitioner. When the systems merged, the city notified the Petitioner that, acting under its rights, it did not want to negotiate or recognize the Petitioner; the Petitioner agreed and the relationship was terminated. The Employer presently operateds in accordance with two statutes: (I) the December 1963 Private Act which, by its terms, incorporates the second, and (2) the Tennessee Municipal Electric Plant Law.' These determine the Employer's organization in the following respects: The board of utilities, which serves only in con- nection with the Employer, is a seven-member board appointed by the mayor for staggered terms of 3 years; the appointments are subject to the ap- proval of the board of aldermen. The enabling legislation requires that one member of the board of utilities be an alderman. The members of the board of utilities may be removed for cause by the mayor and board of aldermen at any time. The board of utilities makes a formal report once a year to the mayor and board of aldermen and, in addi- tion, has a representative present at the regular meetings of the mayor and board of aldermen to make a report and bring any item requiring atten- tion to the mayor and board of aldermen for action. While the city is incorporated, the Employer is not established as a separate municipal corporation under the statutes of the State. However, the money from the sale of electric power is not put in the general fund of the city but in the Employer's separate fund. The surplus money which is accumu- lated may be used for renewal and replacement of equipment, increasing the size of the system, appli- cation of surplus as an advance payment on a debt, and reduction of rates. Hence, the Employer is a nonprofit operation The Employer does not take in any tax money and is not authorized to issue bonds. Financing is accomplished by the issuance of bonds by the mayor and board of aldermen in the name of the city. Before the merger, the Corporation had authority to borrow money and would do so on the basis of an engineering study and get approval for a loan trom the board of trustees of the Corporation. Today, the Employer, similarly on the basis of en- gineering studies, recommends the borrowing of money to the mayor and board of aldermen; the The transcript of the hearing refers to the "Board of Mayor and Al- dermen " This is presumed to be in error, as the briefs refer to the "Mayor and Board of Aldermen." ' Acts 1935, ch 32, § 1, C Supp 1950, § 3708 1 183 NLRB No. 19 102 DECISIONS OF NATIONAL LABOR RELATIONS BOARD latter determines whether bonds shall be issued by the city, or not at all. The Employer pays to the city tax equivalents to cover the Employer's share of the cost of govern- ment. The city, in turn, pays the Employer for elec- tricity just as any private party and at the same rates. However, the Employer does not have the power to sue in its own name but must sue in the name of the city. The Employer does have the power of eminent domain. The day-to-day operations of the Employer are administered by a superintendent who is appointed by and serves at the pleasure of the board of utili- ties. He sets the wages, hours, and working condi- tions of the employees, taking into consideration the conditions that prevail in other municipal and cooperative systems and the Tennessee Valley Authority. No attempt is made to achieve compara- bility with other city employees. The Employer contends that the Board should not assert jurisdiction herein because it is not an "employer" within the meaning of Section 2(2) of the Act, but is, rather, a political subdivision of the State of Tennessee. The Petitioner, on the other hand, contends that the financing system of the Employer, the separate accounts, and the payment of operating expenses out of revenue, require a conclusion that this self-supporting Employer, hav- ing no power to tax, is not a political subdivision. The Petitioner asserts that the single interest of the city with regard to the Employer is in recovering the interest and principal on its bonds. Otherwise, the Petitioner argues, the Employer is completely autonomous in the conduct of its daily operations and the municipality exercises only nominal con- trol. The Petitioner also points out that the Em- ployer sets its own personnel policy, hires and fires employees free of governmental regulation, and comparability in terms and conditions of employ- ment is not maintained with other city government personnel. The Petitioner's arguments seeking to minimize the city's interest in and control over the Employer are without merit; and the factors it emphazises are not determinative. The Board has asserted jurisdic- tion where a corporation which "sought to be ex- empt as a political subdivision of the State is not created directly by the State, or administered by State-appointed or publicly elected individuals." In analyzing prior decisions involving this issue,3 the Board stated that "One or both of these factors [i.e., created by the State or publicly administered] have been present in those cases where, over the years, the Board has held that it had no jurisdiction of various governmental employees." In the instant proceeding, it is clear that the Employer was created by state legislation, both general and private, and that members of the board of utilities, which is governing board of the Employer, are the Randolph Electric Membership Corporation, 145 N LRB 158, 161, and cases cited therein at fn . 7, enfd 343 F 2d 60 (C A 4) immediate appointees of a publicly elected mu- nicipal official . Moreover , it is clear that the board of utilities is ultimately responsible for the day-to- day administration of the Employer in that it ap- points a supervisor, pursuant to state legislation, who is charged with administration of the Employer and who continues in his post at the pleasure of the board of utilities. Petitioner states in its brief that the Board 's deci- sion in Natural Gas Utility District of Hawkins County, Tennessee4 requires that the Board assert jurisdiction . However , the facts that led us to find that the gas utility involved in Hawkins , supra, was an "employer " rather than a "political subdivi- sion," within the meaning of Section 2 ( 2) of the Act, are not present in the matter now before us. Thus , the gas utility in Hawkins (called the District) was not created directly by the State but rather was formed , upon petition of property owners to the county court , after the judge considered the need for and feasibility of a gas distribution service and granted the petition . The District 's operations were directed by a three -member board of commis- sioners who , under Tennessee statute (T.C.A. 6-2604 ), were appointed by the county judge from among persons nominated in the petition seeking formation of the District . The District was separate- ly incorporated and exercised the usual powers of a private corporation , including the right to sue and be sued , lease , purchase , sell, convey and mortgage property , incur obligations , issue bonds , and enter into contracts necessary or convenient to its func- tion . The Board there found that "the District is no more a direct creation of the State than such privately-owned public service companies as rail- roads, and motor carriers , which also require some form of governmental approval , such as a cer- tificate of convenience and necessity."5 In contrast, as found above , the Employer in the instant proceeding was created directly by the State and is administered by public officials appointed by the mayor of the city; it has no corporate identity apart from the city of Fayetteville ; the government reserves the power to remove from office those responsible for the Employer's operations ; and the city's interest and control is prescribed in state legislation and is pervasive in practice. In these circumstances , we find that Fayetteville- Lincoln County Electric System is an arm of the city of Fayetteville. As such, it is a political subdivi- sion and not an "employer " within the meaning of Section 2 ( 2) of the Act. We conclude , therefore, that the Employer is exempt from the application of the Act . Accordingly , we shall dismiss the petition. ORDER It is hereby ordered that the petition filed herein be, and it hereby is, dismissed. 4 167 NLRB 691 , denied enforcement 73 LRRM 2835 (C A 6) S Ha%kins, supra , 167 NLRB 691, fn 7