Cities of Port Arthur, Port Neches, Nederland and Groves v. Railroad Com'n of Texas, 3-93-349-CV
| Decision Date | 01 June 1994 |
| Docket Number | No. 3-93-349-CV,3-93-349-CV |
| Parties | CITIES OF PORT ARTHUR, PORT NECHES, NEDERLAND AND GROVES, Appellants, v. RAILROAD COMMISSION OF TEXAS and Southern Union Gas Company, a Division of Southern Union Company; and Southern Union Company, Appellees. |
| Court | Texas Court of Appeals |
Steven A. Porter, Butler, Porter, Gay & Day, Austin, for appellant.
Dan Morales, Atty. Gen., Douglas Fraser, Asst. Atty. Gen., Austin, for Railroad Com'n of Texas.
John F. Williams, Clark, Thomas & Winters, Austin, for Southern Union Gas Co.
Before POWERS, JONES and KIDD, JJ.
The Cities fixed the Company's gas-utility rates in municipal-rate proceedings as provided in sections 3.01 through 3.04 of GURA, following which the Company appealed to the Commission for the de novo rate proceedings authorized by section 3.05(a) of GURA. The Commission consolidated the separate proceedings and, after hearings in October and November 1991, rendered a final order fixing the Company's new rates. The Cities complain of the final order in the particulars noted below.
In GURA section 3.03(a), the legislature provided as follows:
The governing body of any municipality participating in or conducting ratemaking proceedings shall have the right to select and engage rate consultants, accountants, auditors, attorneys, engineers, or any combination thereof, to conduct investigations, present evidence, advise and represent the governing body, and assist with litigation or gas utility ratemaking proceedings before any regulatory authority or in court. The gas utility engaged in those proceedings shall be required to reimburse the governing body for the reasonable costs of those services to the extent found reasonable by the applicable regulatory authority.
(Emphasis added). In the Commission proceeding, the Cities claimed a right of reimbursement under the statute for sums paid and to be paid to the following: (1) the law firm of Butler, Porter & Gay for work done in connection with the Commission proceeding; (2) the consulting firm of Diversified Utility Consultants, Inc., for work done in the municipal-rate proceedings and in connection with the Commission proceeding; and (3) the Cities' respective city attorneys for work done in the municipal-rate proceedings and in connection with the Commission proceeding. The Commission, in its final order, found only a part of the costs reasonable and allowed reimbursement for that part alone. The Cities contend in points of error one through four that the Commission's action in refusing to order reimbursement for the remainder was arbitrary, not supported by substantial evidence, and thus a violation of GURA section 3.03(a). See APA § 2001.174(2)(A), (E), (F).
A Commission rule placed upon the Cities a burden to prove the reasonableness of their rate-case expenses in light of the factors specified in the rule, which provides as follows:
§ 7.57. Allowable Rate Case Expenses
In any rate proceeding, any utility and/or municipality claiming reimbursement for its rate case expenses pursuant to Texas Civil Statutes, Article 1446c, shall have the burden to prove the reasonableness of such rate case expenses by a preponderance of the evidence. Each shall detail and itemize all rate case expenses and allocations and shall, in addition, provide evidence showing the reasonableness of the cost of all professional services, including, but not limited to, the amount of work done; the time and labor required to accomplish the work; the nature, extent, and difficulty of the work done; the originality of the work; the charges by others for work of the same or similar nature; 16 Tex.Admin.Code § 7.57 (1993).
and any other factors taken into account in setting the amount of the compensation. In determining the reasonableness of the rate case expenses, the commission will consider all relevant factors including, but not limited to, those set out previously, and will also consider whether the request for a rate change was warranted, whether there was duplication of services or testimony, whether the work was relevant and reasonably necessary to the proceeding, and whether the complexity and expense of the work was commensurate with both the complexity of the issues in the proceeding and the amount of the increase sought as well as the amount of any increase granted.
The Cities jointly engaged Butler, Porter & Gay as their counsel in the de novo proceeding in the Commission. These attorneys filed in the Commission affidavits showing the Cities had incurred and would incur a total of $80,000 in costs for the attorneys' work. The affidavits declared the sums were reasonable and necessary based on the affiants' knowledge and expertise and the matters referred to in Rule 7.57. The costs incurred by the Cities before December 10, 1991, were the verified debts the Cities had in fact incurred as a result of the attorneys' billings before that date. The invoices state in detail the nature of the work done each day and the amount of time it required. When combined, the invoices reflect the following past expenses and anticipated future expenses during the progress of the case:
Attorneys' Fees for Past Work
Mr. Don Butler 139.00 hours at $150/hour $20,850.00
Mr. Geoffrey Gay 3.20 hours at $150/hour 480.00
Mr. Steve Porter 232.25 hours at $150/hour 34,837.50
Estimated Attorneys' Fees for Work after December 10, 1991
148.31 hours at $150/hour 22,246.19
Case Expenses: 1,586.31
------------------------- -----------------
Total 522.76 hours $80,000.00
The Commission found unnecessary a $400 charge resulting from Mr. Butler's work relating to the Cities' motion for reconsideration and rehearing; and the Commission found the sum of $22,246.19, estimated for future work in the case, was "too speculative and [it is] therefore reduced to $3,000," which the Commission reduced further by almost two-thirds to $1,100 because "the time charged [sic] is excessive for the issues involved in this proceeding." (The "charge" for future attorneys' fees in the case was an estimate; it had not been presented for payment.) The Commission's findings relative to the $3,000 and the $22,246.19 appear to be superfluous, however, because in a subsequent finding the Commission determined as follows:
In addition to the allowance of $1,586.31 in expenses, it is reasonable to allow $39,450 for 263 hours charged by the law firm of Butler, Porter & Gay rather than $78,413.69 for approximately 522.76 hours, the amount originally requested. This $39,450 includes the reduction of Butler, Porter and Gay's charges for future estimated expenses.
(Emphasis added). This finding allows the Cities reimbursement for all the attorneys' expenses and $39,450 in attorneys' fees, while refusing the Cities reimbursement for the remainder of such costs. Nothing in the Commission's final order explains further why or how the Commission arrived at its determination that only $39,450 of the attorneys' fees were reasonable. We are faced then with the stark proposition that the Commission determined as it did based simply on the fact that it believed only 263 hours of attorneys' work and resulting costs of $29,450 were reasonable for the case. "We may consider only what was written by the Commission in its order, and we must measure its statutory sufficiency by what it says." Morgan Drive Away, Inc. v. Railroad Comm'n, 498 S.W.2d 147, 152 (Tex.1973).
The Cities contend they proved their costs for attorneys' fees because the attorneys' supporting affidavits were uncontradicted, unimpeached, free of any inherent improbability, and not internally ambiguous or contradictory. The Commission and the Company rejoin that the Commissioners were the judges of the credibility of the witnesses and the weight to be assigned their affidavit testimony; the Commissioners were therefore free to reject such testimony in whole or in part and decide as they did based on their own expertise and examination of the record and what it showed as to the complexity and The issues raised for a reviewing court, when an agency rejects uncontradicted evidence, are subtle and complex as mentioned in Fuel Distributors, Inc. v. Railroad Commission, 727 S.W.2d 56, 61 (Tex.App.--Austin 1987, writ ref'd n.r.e.). There we held the Commission might rationally have rejected the uncontradicted opinion testimony of an expert witness because it confessedly rested, at bottom, on his assumption about what a proper regulatory philosophy should be--a philosophy not shared by the Commission which had exclusive authority to decide what the State's official policy would be.
difficulty of the relevant issues and the effort and time reasonably required of the attorneys.
In the present case the Commissioners simply differed with the conclusions contained in the affidavits as to what amount of work was reasonable. The attorneys concluded in their affidavit that 522.76 hours of work were reasonable and...
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