Florida Cities Water Co. v. Florida Public Service Commission
| Decision Date | 12 June 1980 |
| Docket Number | No. 55722,55722 |
| Citation | 384 So.2d 1280 |
| Parties | FLORIDA CITIES WATER COMPANY, Petitioner, v. FLORIDA PUBLIC SERVICE COMMISSION, Respondent. |
| Court | Florida Supreme Court |
John W. Costigan and B. Kenneth Gatlin of Madigan, Parker, Gatlin, Swedmark & Skelding, Tallahassee, for petitioner.
Prentice P. Pruitt, William E. Sundstrom and Richard V. Neill, Tallahassee, for respondent.
Debra E. Cohen of Myers, Kaplan, Levinson, Kenin & Richards, Miami, for Florida Waterworks Association, amicus curiae.
We have been asked to review an order of the Public Service Commission which, in the course of a rate proceeding, denied Florida Cities Water Company depreciation deductions for contributions in aid of construction (CIAC) and for advances in aid of construction (AIAC).
A hearing examiner assigned to consider Florida Cities' request for a rate increase had allowed the company, as has been customary in water and sewer cases, depreciation deductions for both CIAC and AIAC. Contrary to the hearing examiner's recommendation, the Commission disallowed these deductions on review, offering no reason for the abrupt discontinuance of prior agency policy other than that it was "wrong as a matter of law." Florida Cities and amicus curiae, Florida Waterworks Association, now assert that the Commission's unanticipated declaration of a new policy with respect to CIAC and AIAC violates administrative due process as articulated in chapter 120, Florida Statutes (1977).
Petitioner first argues that the Commission has announced a rule, as that term is defined in section 120.52(14), but that in doing so the Commission failed to follow appropriate procedures for rulemaking as set out in section 120.54. Quite clearly the Commission did not announce its new policy in a rule proceeding nor was it required to do so. Administrative agencies are not required to institute rulemaking procedures each time a new policy is developed, McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977), although that form of proceeding is preferable where established industry-wide policy is being altered. City of Plant City v. Mayo, 337 So.2d 966, 974-75 (Fla.1976).
Nonetheless, when an agency elects to adopt incipient policy in a non-rule proceeding, there must be an adequate support for its decision in the record of the proceeding. McDonald at 583-84. In this case, there is absolutely no record foundation for the Commission's disallowance of CIAC and AIAC deductions. Consequently, we must quash the Commission's order and remand this cause for further proceedings consistent with this opinion.
It is so ordered.
I agree with the majority's decision that "there is absolutely no record foundation for the Commission's disallowance of CIAC and AIAC deductions." However, I disagree with the majority's statement that the Commission is not required to adopt this new policy in a rule making proceeding.
The Administrative Procedure Act, chapter 120, Florida Statutes (1977), applies to all forms of agency decision making. Every policy statement an agency relies upon in reaching a decision must be either codified as a rule or expressly stated in an order. A rule is defined as "each agency statement of general applicability that implements, interprets, or prescribes law or policy . . .." § 120.52(14), Fla.Stat. (1977). An order is a "final agency decision which does not have the effect of a rule . . .." § 120.52(9), Fla.Stat. (1977). In adjudicating individual cases, agencies may find themselves developing policy which will be generally applicable to future cases. Such policy statements are a hybrid of a rule and an order and have been characterized as "incipient policy." McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977). The purpose of recognizing incipient policy is to encourage agencies "to structure their discretion progressively by vague standards, then definite standards, then broad principles, (and) then rules. . . ." Id. at 580.
Thus an agency may implement changes in its policy by adopting rules in rule making proceedings or by developing incipient policy by adjudicating individual cases. Both procedures fulfill administrative due process requirements of notice, hearing, and judicial review. The procedure to be used is often left to the agency's discretion. City of Plant City v. Mayo, 337 So.2d 966 (Fla.1976). However, there are times when this discretion may be abused and an appellate court may require a particular policy statement to be codified as a rule.
I believe the Commission abused its discretion by making a fundamental change in policy that is only tangentially related to this case. Rule making proceedings are especially designed...
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