Grand Canyon Trust v. ARIZONA CORP. COM'N

• Decision Date: 22 February 2005
• Docket Number: No. 1 CA-CV 04-0079.,1 CA-CV 04-0079.
• Citation: Grand Canyon Trust v. ARIZONA CORP. COM'N, 107 P.3d 356, 210 Ariz. 30 (Ariz. App. 2005)
• Parties: GRAND CANYON TRUST; The Land and Water Fund of the Rockies, Plaintiffs-Appellants, v. ARIZONA CORPORATION COMMISSION, Defendant-Appellee, and Tucson Electric Power Company, Intervenor-Appellee.
• Court: Arizona Court of Appeals

107 P.3d 356

210 Ariz. 30

GRAND CANYON TRUST; The Land and Water Fund of the Rockies, Plaintiffs-Appellants, v. ARIZONA CORPORATION COMMISSION, Defendant-Appellee, and Tucson Electric Power Company, Intervenor-Appellee.

No. -0079.

Court of Appeals of Arizona, Division 1, Department D.

February 22, 2005.

Arizona Center for Law in the Public Interest By Timothy M. Hogan, Phoenix, Attorneys for Plaintiffs-Appellants.

Arizona Corporation Commission Legal Division, By Christopher C. Kempley, Timothy J. Sabo, Janice Alward, Phoenix, Attorneys for Defendant-Appellee.

Roshka Heyman & DeWulf, PLC, By Raymond S. Heyman, Darlene M. Wauro, Phoenix, Attorneys for Intervenor-Appellee Tucson Electric.

OPINION

SNOW, Judge.

¶ 1 Plaintiffs-Appellants Grand Canyon Trust¹ and The Land and Water Fund of the Rockies² (collectively "the Trust") appeal from the superior court's decision affirming a decision of the Arizona Corporation Commission ("the Commission") authorizing the construction of a fourth coal-powered electric generating unit at Tucson Electric Power's Springerville Generating Station. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2 In 1986, Tucson Electric Power ("TEP") filed an application for a certificate of environmental compatibility ("CEC") so that it could construct a fourth electric generating unit at its existing Springerville Generating Station. In Arizona, prior to constructing a plant or transmission line, a utility must obtain a CEC from the Power Plant and Transmission Line Siting Committee ("the Siting Committee").³ The CEC must be approved and promulgated in an order by the Commission. A.R.S. § 40-360.07(A) (2001).

¶ 3 In late 1986 the Siting Committee issued a CEC to TEP for the construction of Unit 4. The CEC was approved by the Commission in Decision No. 55477. As approved, the CEC was subject to several conditions, one of which required that, prior to undertaking any construction on Unit 4, TEP obtain from the Commission an order finding that the electricity to be produced by that unit was necessary to provide an "`adequate, economical and reliable supply of electric power' to its customers all in accordance with the requirements of A.R.S. § 40-360.07(B)."

¶ 4 Fourteen years later, in 2001, TEP's parent company announced plans to begin construction on Units 3 and 4 at Springerville.⁴ Grand Canyon thereafter filed with the Commission a Motion to Rescind, Alter or Amend its decisions granting CECs for the construction of Units 3 and 4. Grand Canyon argued that, given the substantial amount of time that had passed since those CECs had been issued, the Commission should require TEP to file amended CEC applications reflecting current environmental factors. The moving party also argued that there was no need for Unit 4. TEP filed a Motion to Dismiss Grand Canyon's Motion to Rescind. It also filed an Application for Hearing to address "the issue of the need for a fourth generating unit" at the Springerville location.

¶ 5 TEP and Grand Canyon stipulated that the parties could address in a single hearing updated environmental impact data for Units 3 and 4 and the need for Unit 4. The Commission then conducted an evidentiary hearing over five days in November 2001 on the stipulated subjects. The Commission ultimately issued decision No. 65347 determining that "TEP ha[d] made the requisite showing of need for Unit 4" and that the "conditions contained in Commission Decision No. 55477 concerning the authority to construct Springerville Generating Station Unit 4 have been met."

¶ 6 In its decision, the Commission rejected Grand Canyon's argument that only TEP's retail customers should be considered in determining whether the output of Unit 4 was needed. But, the order did further condition the construction of Unit 4 on "firm wholesale contracts for the power output from Units 3 and 4 [being] in place prior to commencement of construction." Applications for rehearing were denied by operation of law. A.R.S. § 40-254(A) (2001).

¶ 7 Pursuant to A.R.S. § 40-254 the Trust filed an action in superior court to modify or set aside the Commission's decision. TEP intervened. The parties stipulated that, given the substantial evidentiary record developed in proceedings before the Commission, the action should be submitted to the superior court on dispositive motions similar to appellate briefs. The superior court affirmed the Commission's decision and entered judgment in favor of the Commission and TEP, and the Trust timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(B)(2003).

DISCUSSION

A. Standard Of Review

¶ 8 The Trust asserts that, because the superior court ruled against it as a matter of summary judgment, we must view all disputed issues of fact in its favor. See Tonto Creek Estates Homeowners Ass'n v. Ariz. Corp. Comm'n, 177 Ariz. 49, 55, 864 P.2d 1081, 1087 (App.1993) (citation omitted). That argument is correct only as to new evidence presented to the superior court.

¶ 9 The statute that provides for a challenge to a decision of the Commission in superior court specifies that the trial to be given such a challenge "shall conform, as nearly as possible, and except as otherwise prescribed by this section, to other trials in civil actions." A.R.S. § 40-254(C). However, one of the principal statutory exceptions to this right specifies: "In all trials, actions and proceedings the burden of proof shall be upon the party adverse to the commission... to show by clear and satisfactory evidence that [the commission's order] is unreasonable or unlawful." A.R.S. § 40-254(E).

¶ 10 This provision mandates several departures from normal civil procedure. Not only does it mandate a higher burden of proof for the plaintiff than otherwise exists in an ordinary civil case,⁵ but, because the plaintiff's burden of proof is to establish "in all proceedings" that the Commission's order is either unlawful or unreasonable, the superior court must evaluate the determinations already made by the Commission.

¶ 11 To be sure, "both the superior court and this court may depart from the Commission's legal conclusions or interpretation of a statute and determine independently whether the Commission erred in its interpretation of the law." Babe Invs. v. Arizona Corp. Comm'n, 189 Ariz. 147, 150, 939 P.2d 425, 428 (App.1997) (citation omitted). However, when the plaintiff challenges a factual determination of the Commission, the superior court is not free to overturn it unless the plaintiff demonstrates by "clear and convincing" evidence that the Commission's determination is unreasonable. In making this assessment Arizona courts uphold such determinations if they are supported by substantial evidence. Tucson Elec. Power, 132 Ariz. at 243-44, 645 P.2d at 234-35 (court may disturb Commission's finding of fact only if it is not reasonably supported by evidence, is arbitrary or is otherwise unlawful); Arizona Corp. Comm'n v. Citizens Util. Co., 120 Ariz. 184, 187, 584 P.2d 1175, 1178 (App.1978) (same). Such a review is very different from assuming that all facts alleged by the Trust are true. Havasu Heights Ranch & Dev. Corp. v. Desert Valley Wood Prods., Inc., 167 Ariz. 383, 387, 807 P.2d 1119, 1123 (App.1990) (citations omitted) ("In reviewing factual determinations, our respective roles begin and end with determining whether there was substantial evidence to support the administrative decision.... The question whether substantial evidence supports the state land commissioner's order does not raise material issues of fact; it presents a question of law.").

¶ 12 In an action challenging a Commission decision, the challenger may present evidence that was not presented to the Commission. Arizona Corp. Comm'n v. Pac. Motor Trucking Corp., 116 Ariz. 465, 467, 569 P.2d 1363, 1365 (App.1977).⁶ So long as the proferred evidence is admissible, and is uncontroverted, it is entitled to presumptions in favor of its truthfulness. Eastwood Elec. Co. v. R.L. Branaman Contractor, Inc., 102 Ariz. 406, 410, 432 P.2d 139, 143 (1967); Mortensen v. Knight, 81 Ariz. 325, 305 P.2d 463, 464 (1956). However, the presumption of truthfulness that may attach to such new evidence does not change the nature of the superior court's inquiry or the plaintiff's statutory burden of proof. The inquiry remains whether, even in light of the new evidence, there is substantial evidence supporting the Commission's decision. If so, the presumed truthfulness of the new evidence does not result in a modification of the Commission's order.

¶ 13 The parties here, by stipulation, submitted their appeal from the Commission's determination based on the record that was created in the Commission proceedings. Tonto Creek Estates, 177 Ariz. at 55, 864 P.2d at 1087. The Trust supplemented that factual record with the affidavit of SRP's Manager of Energy and Information, Charlie Duckworth, who described negotiations that were continuing between TEP and SRP on an amended joint development agreement and the likely terms of the amended agreement. Because the superior court resolved the action by motion, and the facts in the affidavit were not contested, we presume the truthfulness of the facts contained therein. We do not, however, presume the truthfulness of the Trust's factual allegations that were determined adversely to the Trust by the Commission. Instead, we determine, as presumably did the superior court, whether those determinations were supported by substantial evidence. Thus we evaluate the Commission's legal determinations de novo, and we review its factual conclusions to determine whether they are supported by substantial evidence taking into account any new uncontested evidence offered and assuming its truthfulness.

B. The Merits

¶ 14 In its appeal, the Trust argues first that the superior court erred when it did not apply the legal standard set forth in A.R.S. § 40-360.07(B) to the Commission's proceedings. Second, it...