Cody Gas Co. v. Public Service Com'n of Wyoming, 87-62

• Citation: 748 P.2d 1144
• Decision Date: 27 January 1988
• Docket Number: No. 87-62,87-62
• Parties: CODY GAS COMPANY, Petitioner, v. PUBLIC SERVICE COMMISSION OF WYOMING, Wyoming Gas Co., and Marathon Oil Company, Respondents.
• Court: Wyoming Supreme Court

Page 1144

748 P.2d 1144

CODY GAS COMPANY, Petitioner, v. PUBLIC SERVICE COMMISSION OF WYOMING, Wyoming Gas Co., and Marathon Oil Company, Respondents.

No. 87-62.

Supreme Court of Wyoming.

Jan. 27, 1988.

Richard P. Boley of Lathrop & Uchner, Cheyenne, and Michael L. Williams, Colorado Springs, Colo., for petitioner.

Joseph B. Meyer, Atty. Gen., Mary B. Guthrie, Sr. Asst. Atty. Gen., Roger C. Fransen, Asst. Atty. Gen., for respondent Public Service Com'n of Wyoming.

Bruce S. Asay of Kline, Buck & Asay, Cheyenne, for respondent Wyoming Gas Co.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

URBIGKIT, Justice.

This is a certification from the district court, pursuant to Rule 12.09, W.R.A.P., for review of an order of the Public Service Commission of Wyoming finding that Cody Gas Company was encroaching upon Wyoming Gas Company's certificated area by selling natural gas to Marathon Oil Company, and is a case framed as a utility franchise contest based on a dispute of the point-of-delivery definition of certificated territory.

Petitioner Cody Gas states the issue:

"Did the Commission exceed its jurisdiction or authority in prohibiting Cody Gas Company, a division of The Coastal Corporation (Cody), from selling gas to Marathon Oil Company (Marathon) from facilities which it had previously granted Cody a Certificate of Public Convenience and Necessity and after finding that it would not be in the public interest for any other utility to sell gas to Marathon,"

and also defines the issues in its summary of argument as:

"I. The Commission's Order Must Be Set Aside Because There Was No Substantial Evidence to Support Its Finding That Even Though Cody Should be Permitted to Serve Marathon, It Was In the Public Interest That It Do So Only Through a Transportation Agreement.

"II. The Continuing Sale of Gas To Marathon By Cody Would Not Violate the Certificated Territories Concept."

The respondents are the Public Service Commission of Wyoming, and Wyoming Gas Co.; Marathon Oil Company declined to file a respondent's brief.

We will address these subjects by inquiry of (a) substantial evidence; (b) propriety of the application of the certificated-territories concept; and (c) jurisdiction and equity. We affirm the Commission decision. ¹

I. FACTS

Wyoming Gas filed a complaint with the Wyoming Public Service Commission (PSC) against Cody Gas on October 9, 1985, alleging that its Certificate of Public Convenience and Necessity territory in Hot Springs County was subject to trespass by Cody Gas in sale of natural gas to Marathon. It was contended that Cody Gas had a gas delivery point within its territory from which the gas was transported and used within the area certificated by the PSC to Wyoming Gas. On October 29, 1985, Cody Gas filed its answer and counterpostured an application to expand its own certificated territory to permit continued service to Marathon. Responsively, Wyoming Gas filed its further application to expand its certificated territory to include all the area of the Grass Creek and Walker Dome oil and gas fields where Marathon used gas.

With Marathon next intervening, the complaint and applications were consolidated and set for hearing before the PSC. After a three-day hearing, by order of April 8, 1986, the PSC denied Cody Gas authority to expand its territory to allow sales of natural gas to Marathon, and granted in part the application of Wyoming Gas to expand its certificated territory. However, the PSC did preserve Cody Gas' authority to provide transportation service in its pipeline to Marathon. After denial of a petition for rehearing, Cody Gas petitioned for judicial review, as now certified to this court without district court review.

II. SUBSTANTIAL EVIDENCE

Under § 16-3-114(c)(ii)(E), W.S.1977, this court will set aside agency action if not supported by substantial evidence. In Montana-Dakota Utilities Co. v. Wyoming Public Service Commission, Wyo., 746 P.2d 1272, 1275-76 (1987), we reiterated:

"The standard of review for substantial evidence is well established in Wyoming:

" ' "We examine the entire record to determine if there is substantial evidence to support an agency's findings, and if there is, we will not substitute our judgment for that of the agency. Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; it may be less than the weight of the evidence but cannot be contrary to the overwhelming weight of the evidence." Wyoming Insurance Department v. Avemco Insurance Company, Wyo., 726 P.2d 507, 509 (1986) (citations omitted).' Teton Valley Ranch v. State Board of Equalization, Wyo., 735 P.2d 107, 113 (1987)."

Additionally, Wyoming precedent imposes:

" * * * The burden of proving a lack of substantial evidence is upon the party appealing the agency's determination. Laramie River Conservation Council v. Industrial Siting Council, [Wyo.], 588 P.2d [1241,] 1253 [ (1978) ]; Chicago & North Western Railway Company v. Public Service Commission of Wyoming, 79 Wyo. 343, 334 P.2d 519 (1959). If there is present substantial evidence to support a finding of the agency, the ultimate weight to be given that evidence before the PSC, as the trier of fact, is to be determined by the PSC in light of its expertise and the experience of its members in such matters. Williams v. Public Service Commission of Wyoming, [Wyo.], 626 P.2d [564,] 573 [cert. denied 454 U.S. 896, 102 S.Ct. 394, 70 L.Ed.2d 211 (1981) ]; Telstar Communications, Inc. v. Rule Radiophone Service, Inc., [Wyo.], 621 P.2d [241,] 245 [ (1980) ]; Big Horn Rural Electric Company v. Pacific Power and Light Company, Wyo., 397 P.2d 455 (1964)." Mountain Fuel Supply Co. v. Public Service Commission of Wyoming, Wyo., 662 P.2d 878, 883 (1983).

The hearing extended through three days, and created a transcript of 639 pages and voluminous exhibits in defining the factual status and posture of the litigants. Testing our decision by § 16-3-114(c), W.S.1977, ² and in answering the criteria of subsection (ii)(E), we find substantial evidence within the record to sustain the administrative decision made.

III. PROPRIETY OF THE APPLICATION OF THE CERTIFICATED-TERRITORY CONCEPT

Petitioner Cody Gas alleges that the certificated-territory concept means that the PSC, under § 37-2-205(a), W.S.1977, can only regulate the building of facilities and not service within an area. It is argued that the point-of-delivery rather than point-of-use test should be applicable under § 37-2-205(a). ³ The evidence is unrefuted that Cody Gas sells natural gas to Marathon within Cody Gas' territory and that this gas is transported by marathon and utilized in Wyoming Gas' certificated territory.

Although the argument challenges method rather than function, the Wyoming statute does not limit the PSC to regulation of facilities, as is contended. The issue is not factual in basic legal concept, but rather invokes the intrinsic authority of the PSC as an administrative agency, for which we find substantial justification for issuance of an area certificate. In Tri-County Electric Association, Inc. v. City of Gillette, Wyo., 584 P.2d 995, 1001 n. 6 (1978), it was said that

" * * * the grant of a Certificate of Convenience and Necessity is the grant of a franchise to do business and provide a service in a particular, designated area." (Emphasis added.)

Additionally, in analyzing specifically § 37-2-205, W.S.1977, and the certificate authority, it has been pointed out:

"Before a public utility can build facilities or commence service to a particular area not previously certificated to a like utility, it must apply for and be granted a Certificate of Public Convenience and Necessity by the PSC which authorizes it to build the particular facility or serve the particular geographic area in question. A public utility may generally provide service only within its duly authorized certificated area." (Emphasis added.) Carroll, State Jurisdiction Over the Regulation of Energy Distribution and Other Public Utility Services, XV Land & Water L.Rev. 5, 35 (1980).

The Supreme Court of Mississippi was faced with this issue of whether a certificate of public convenience and necessity was properly awarded on an area basis rather than on a facility basis in Mississippi Power Company v. East Mississippi Electric Power Association, 244 Miss. 40, 140 So.2d 286 (1962). In upholding the regulatory commission decision to certificate by area and not by facility, that court referred to the case as "peculiarly one that should be determined by a body such as the Public Service Commission." Id., 140 S.2d at 288. See also City of Kosciusko v. Mississippi Power & Light Co., Miss., 370 So.2d 1339 (1979).

While § 37-2-205(a) does not define the certificated area concept, it does refer to territory with no certificate and extensions within or to territory already served by a utility. Additionally, the record indicates that regulation by area avoids duplication. Clearly, public service commissions have the power to grant blanket or area certificates, Empire District Electric Company v. Cox, Mo.App., 588 S.W.2d 263, 266 (1979); State ex rel. Webb Tri-State Gas Co. v. Public Service Commission, Mo.App., 452 S.W.2d 586, 588 (1970); and there was substantial evidence in the record in the instant case for the PSC to choose to regulate by area rather than facility. Statutory designation of an administrative agency function encompasses a reasonable delegation of process determination required or adopted for performance. Teton Valley Ranch v. State Board of Equalization, Wyo., 735 P.2d 107 (1987); Gulf Oil Corp. v. Wyoming Oil and Gas Conservation Commission, Wyo., 693 P.2d 227 (1985); Great Western Sugar Co. v. Johnson, Wyo., 624 P.2d 1184 (1981); Barry & Barry, Inc. v. State Department of Motor Vehicles, 81 Wash.2d 155, 500 P.2d 540 (1972). ⁴ Any constraints on methods available to the agency to exercise designated...