Gas Service Co. v. State Corp. Commission

• Decision Date: 18 April 1980
• Docket Number: Nos. 51378,51379,51589 and 51595,s. 51378
• Citation: 609 P.2d 1157,4 Kan.App.2d 623
• Parties: The GAS SERVICE COMPANY: Midwest Gas Users Association and Seymour Foods, Inc., Appellants, v. The STATE CORPORATION COMMISSION of the State of Kansas; G. T. VanBebber, Richard C. Loux, and William G. Gray, as Members of said Corporation and their Respective Successors in Office, Appellees.
• Court: Kansas Court of Appeals

Page 1157

609 P.2d 1157

4 Kan.App.2d 623

The GAS SERVICE COMPANY: Midwest Gas Users Association and Seymour Foods, Inc., Appellants, v. The STATE CORPORATION COMMISSION of the State of Kansas; G.

T. VanBebber, Richard C. Loux, and William G.

Gray, as Members of said Corporation and

their Respective Successors in

Office, Appellees.

Nos. 51378, 51379, 51589 and 51595.

Court of Appeals of Kansas.

April 18, 1980.

Syllabus by the Court

1. An interim order becomes final when superseded by a final order fixing permanent rates.

2. An administrative agency's decision must express the basic facts on which it relies with sufficient specificity to convey to the parties as well as to the courts an adequate statement of the facts which persuaded that agency to arrive at its decision.

3. The trier of facts is vested with considerable discretion in determining the proper scope of cross-examination and, absent a showing of an abuse of that discretion, the trier's rulings with respect thereto will not be disturbed on appeal.

4. Various rules for determining and allowing existing operating expenses are stated and applied.

5. It is within the sound discretion of the State Corporation Commission whether to make adjustments outside the test year for construction work in progress under K.S.A.1979 Supp. 66-128 or other operating expenses, and absent a clear abuse of that discretion an appellate court will not overturn the exercise of that discretion.

6. In a proceeding to review orders of the State Corporation Commission having approved a rate schedule for the retail sale of natural gas, it is held : (a) The State Corporation Commission did not err in finding that its order of July 5, 1979, is an interim order and that it had jurisdiction to issue its order of August 20, 1979; (b) the State Corporation Commission did not abuse its discretion in limiting cross-examination of a witness or in excluding certain exhibits; (c) the rate schedule is not shown to be unlawful or unreasonable.

W. H. Bates and Stuart W. Conrad, of Lathrop, Koontz, Righter, Clagett, Parker & Norquist, Kansas City, Mo., and Thomas L. Theis, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, Topeka, for appellants Midwest Gas Users Association and Seymour Foods, Inc.

Richard C. Byrd and Walker A. Hendrix, of Anderson, Byrd & Richeson, Ottawa, and Donald D. Guffey, Kansas City, Mo., for appellant The Gas Service Company.

Terence L. Mundorf and Elizabeth R. Herbert, Assts. Gen. Counsel, Wichita, for appellees.

Before FOTH, C. J., and ABBOTT and PARKS, JJ.

ABBOTT, Judge:

Four separate requests for judicial review have been consolidated in this case. All of the requests involve State Corporation Commission Docket No. 115,485-U.

The Gas Service Company is a public utility authorized to transact business in Kansas as a foreign corporation. It is engaged in the distribution and sale of natural gas for domestic, commercial and industrial uses. On June 23, 1978, it filed an application with the State Corporation Commission (Commission) for a rate increase to customers in Kansas which, based upon a test year ending June 30, 1978, would produce an additional $12,603,724.

Midwest Gas Users Association (Midwest) and Seymour Foods, Inc., (Seymour) filed a petition to intervene. Midwest is an unincorporated, nonprofit association of some 155 business concerns and corporations which are substantial users of natural gas in Kansas, Missouri and Oklahoma. Seymour operates a large processing plant in Topeka, Kansas, and is an industrial customer of Gas Service. The Commission found that Midwest and Seymour have interests adequate to warrant their participation and granted them leave to intervene.

Hearings were completed on January 23, 1979, and the matter was taken under advisement. On March 16, 1979, the Commission announced to the press that it was granting a rate of return that would produce an additional $960,574. On July 5, 1979, an order confirming the original announcement of March 16, 1979, was mailed to the parties by the Commission. The order does not contain sufficient findings to permit meaningful review, and it obviously was not intended to do so. The order recited in part: "The Commission shall issue a subsequent order in this proceeding which shall make additional findings consistent with this order." The order further mandated Gas Service to file tariffs within thirty days in accordance therewith. The Commission did not allow Gas Service to collect the additional revenue until after its first order was mailed on July 5, 1979. The increase was put into effect when tariffs were filed with the Commission on July 9, 1979.

Applications for rehearing were filed on July 16, 1979, by Gas Service, General Motors (no longer a party), Midwest and Seymour in accordance with K.S.A.1979 Supp. 66-118b. The matters were set for oral argument and on August 20, 1979, the Commission denied the requests for rehearing. On the same date, the Commission mailed its second or "final" order (also reciting the date of March 16, 1979), wherein it made findings of fact and conclusions of law regarding its previous order.

Applications for rehearing were thereafter filed by Gas Service, Midwest, Seymour and General Motors. Oral argument was held and the Commission denied the requests for rehearing. In the interim, Gas Service, Midwest and Seymour timely filed their applications for judicial review to this Court.

Gas Service, Midwest and Seymour take the position that all proceedings taken by the Commission after its statutory denial of their applications for rehearing on the first order were null and void; and that the first order is unlawful and unreasonable because it fails to contain findings of basic facts as required by law. We have no hesitancy in saying the first order upon which the Commission acted does not contain a concise and specific statement of the relevant law and basic facts. Securities Comm'n v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943); Cities Service Gas Co. v. State Corporation Commission, 201 Kan. 223, 440 P.2d 660 (1968); Kansas Public Service Co. v. State Corporation Commission, 199 Kan. 736, 743, 433 P.2d 572 (1967); K.A.R. 82-1-232(a)(3). The Commission does not contend otherwise. Its position is that the first order is an interim one and that the Commission's statement, "The instant order is a final order of the Commission insofar as it grants rate relief to Applicant in the amount of $960,574.00 and adopts the rate design proposed by Applicant in this proceeding," was intended to let the litigants know that the amount of rate increase and rate design would not be changed in the final order. Applicant and intervenors argue that the first order is called a final order by the Commission, is a final order, and therefore procedurally it became a final order before the second order was issued and thus the Commission had no jurisdiction to issue the second order.

We agree with the Commission that the first order was a lawful and reasonable interim order, issued under the authority of K.A.R. 82-1-232(c) and designed to fill the gap between the times the decision was rendered and the full order could be issued. The Commission recognized that its first order was inadequate as evidenced by the statement that a subsequent order containing additional findings would be issued. Having issued an interim order, the Commission had jurisdiction to issue its second and final order.

In any event, there appears to be no useful purpose in holding the first order void solely because the findings are inadequate. The appropriate remedy for inadequate findings is to remand the case for additional findings of fact and conclusions of law. Cities Service Gas Co. v. State Corporation Commission, 201 Kan. at 238; see also K.S.A. 60-252(a), and In re Atwood, 2 Kan.App.2d 680, 681, 587 P.2d 1 (1978). Since the Commission has already issued a full order, the remedy of remanding the case solely for inadequate findings becomes a useless act and meaningless, as the Commission would obviously adopt as its findings those contained in the second order. We need not ascertain whether we have authority to retain jurisdiction while remanding for additional findings of fact, or what the effect would be if we reversed and remanded without retaining jurisdiction, as we are of the opinion the first order was an interim order.

An interim order becomes moot when superseded by a final order fixing permanent rates. Six Cities v. State Corporation Commission, 213 Kan. 413, 516 P.2d 596 (1973); Midwest Gas Users Ass'n v. Kansas Corporation Commission, 3 Kan.App.2d 376, 595 P.2d 735, rev. denied September 11, 1979. Thus, the question raised as to the adequacy of the findings will be determined on the basis of the findings in the second and final order.

An administrative agency's decision must express basic facts on which it relies with sufficient specificity to convey to the parties, as well as to the courts, an adequate statement of the facts which persuaded that agency to arrive at its decision. Blue Cross & Blue Shield v. Bell, 227 Kan. 426, Syl. P 1, 607 P.2d 498 (1980); Kansas Public Service Co. v. State Corporation Commission, 199 Kan. at 745, 433 P.2d 572. The Commission could have expressed its rationale in more detail in some instances, a statement that can be and usually is made in nearly every case considering the adequacy of findings. Our review of the record before us indicates adequate although not exceptional compliance with K.S.A. 60-252(a ) and K.A.R. 82-1-232(a)(3). Cities Service Gas Co. v. State Corporation Commission, 201 Kan. at 230-32, 440 P.2d 660.

Before turning to gas Service's remaining six issues with multiple subheadings, we dispose of the two remaining contentions of Midwest and Seymour that the Commission erred in refusing to permit them to cross-examine the Commission's witness, economist John C. Dunn, on the issue of relative risk of...