Southwestern Bell Tel. Co. v. Public Utility Commission
| Decision Date | 07 December 1977 |
| Docket Number | No. 12656,12656 |
| Citation | 560 S.W.2d 157 |
| Parties | SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant, v. PUBLIC UTILITY COMMISSION of Texas et al., Appellees. |
| Court | Texas Court of Appeals |
Thomas M. Phillips, Robert A. Webb, Baker & Botts, Houston, Ford W. Hall, Jon Dee Lawrence, Darrell L. Barger, Dallas, for Southwestern Bell Tel. Co.
Robert J. Hearon, Jr., Graves, Dougherty, Hearon, Moody & Garwood, Austin, for appellant.
John L. Hill, Atty. Gen., Joyce B. Carpenter, Joe N. Pratt, Asst. Atty. Gen., Austin, for Public Utility Comm. Otis H. King, City Atty., Harriet E. Hubacker, Asst. City Atty., Houston, for appellee/intervenor City of Houston.
Don R. Butler, Sneed, Vine, Wilkerson, Selman & Perry, Austin, for intervenor Texas Municipal League, and City of Austin.
Southwestern Bell Telephone Company has appealed from the order of the district court of Travis County refusing to stay or suspend an order of the Public Utility Commission. The important issues concern (1) the character of judicial review accorded the administrative order under the Public Utility Regulatory Act, Tex.Rev.Civ.Stat.Ann. art. 1446c, and (2) the proper rate base to apply under the Act.
In September of 1976, the telephone company filed with the Commission its application and notice of intent to increase rates for the rendition of telephone services. After hearing and in December, 1976, the Commission entered its order fixing the rates to be charged by the telephone company. The rate allowed by the Commission represented a partial increase in rates, but not to the extent requested by the telephone company.
The telephone company then filed an appeal from the Commission's order in the district court of Travis County. In its first amended original petition, the telephone company alleged that the rate set by the Commission was inadequate to provide a fair return on the adjusted value of its invested capital devoted to serving its Texas customers, and that, as a matter of law, that rate was confiscatory. The telephone company requested the issue of confiscation be determined by a preponderance of the evidence as provided by " . . . Section 69 of the Public Utility Regulatory Act, and Section 19 of the Administrative Procedure and Texas Register Act."
The telephone company pleaded further that since under Texas law " . . . judicial review under the preponderance of the evidence standard can only be conducted in a trial de novo, Plaintiff (the telephone company) requests that this cause be tried as a full civil trial on the facts as well as the law." In January, 1977, the telephone company made application to the district court for a "Stay or Suspension of Order of the Public Utility Commission." The telephone company's position was that by reason of § 19(b) (3) of the Administrative Procedure and Texas Register Act, Tex.Rev.Civ.Stat.Ann. art. 6252-13a, the filing of its petition in district court, as a matter of law, vacated the Commission's order. This was so, pleaded the telephone company, because § 19(b)(3) provides the filing of a petition vacates an agency decision for which trial de novo is the manner of review authorized by law. The further position of the telephone company was that because the Commission's order was vacated, it was entitled to place its proposed rate into effect, such rate being under an appropriate bond.
The district court denied the telephone company's application. In its order the district court concluded that the manner of review authorized by the Public Utility Regulatory Act was other than by trial de novo and that judicial review was limited to the record made before the Commission " . . . with the issue of confiscation to be determined thereon by a preponderance of the evidence . . ." The district court was of the further opinion " . . . that under the applicable statutes, and, as a matter of law, the filing of the Plaintiff's Petition herein did not and does not vacate the Agency Decision . . ."
In its trial petition and in its first amended application for stay or suspension of order of the Commission, the telephone company pleaded, alternatively, the failure of the Commission to fix rates which will produce a fair return on the adjusted value of its invested capital was "an enjoinable violation of constitutional guarantees," and that the company was entitled to a temporary injunction upon the showing (1) that there was a reasonable probability that the company would succeed on final hearing; (2) that the loss to the company resulting from a refusal to grant the temporary injunction would be irreparable; and (3) that the telephone customers could be adequately protected by bond.
In March, 1977, the district court heard the telephone company's first amended application for stay or suspension of the Commission's order. Consistent with its de novo theory of judicial review of the Commission's order, the telephone company tendered the testimony of three witnesses in an effort to show confiscation and its entitlement to a stay or suspension of the Commission's order. Equally consistent with its theory of judicial review of the Commission's order, the court refused to admit the testimony, but permitted the testimony to be taken by way of bill of exception. Considering only the record made before the Commission, the district court entered its order denying the telephone company's application for a "stay or suspension or temporary injunction" of the Commission's final order.
The refusal of the court to admit into evidence the testimony of the telephone company's witnesses is the procedural basis for the initial question on appeal. Whether or not the court erred in refusing to admit the testimony, of course, depends upon the character of judicial view accorded the Commission's order.
Section 69 of art. 1446c provides for judicial review of the Commission's orders. Section 69 provides as follows:
(Emphasis added).
Section 69 contemplates two types of judicial review. The type of review to be employed in a given case depends upon the nature of the order appealed from. The district court is to determine the issue of confiscation by a preponderance of the evidence. Review of other orders and issues is to be conducted under the substantial evidence rule.
The question is, then, what character of judicial review is intended by the provision in § 69 providing that the issue of confiscation is to be determined "by a preponderance of the evidence." The telephone company's position is that § 69 assures it a trial de novo on the issue of confiscation because the only review possible by a preponderance of the evidence is a de novo one. The company's further position is that because a de novo review is provided, the filing of its petition in district court nullified the Commission's order, and its proposed rates were placed in effect immediately pending the completion of judicial review.
The State's view, like that of the district court, is that judicial review is confined to the record made before the agency with the issue of confiscation to be determined thereon by a preponderance of the evidence. In support of its position, the State relies upon § 19 of the Administrative Procedure and Texas Register Act, Tex.Rev.Civ.Stat.Ann. art. 6252-13a (1976). This provision, argues the State, allows for only two forms of judicial review: (1) pure de novo review and (2) substantial evidence review limited to the record made before the agency. Any review that does not result in an automatic nullification of the agency order must, of necessity, be a substantial evidence review under § 19(d)(3). The argument then is that because there is no automatic nullification of the agency order in rate cases, the only possible review, even as to the issue of confiscation, is a substantial evidence review limited to the record made before the agency.
The State's argument largely ignores the force of § 4 of the Public Utility Regulatory Act. Section 4 provides that the Administrative Procedure and Texas Register Act applies to all proceedings under the Public Utility Regulatory Act when the two acts are consistent. Review of an administrative order "by a preponderance of the evidence" is entirely inconsistent with a substantial evidence review, because a review under a preponderance of the evidence is a feature of de novo review. Southern Canal Co. v. State Board of Water Eng., 159 Tex. 227, 318 S.W.2d 619 (1958). Accordingly § 19(d) of the Administrative Procedure and Texas Register Act does not apply to this appeal.
Prior to the enactment of the Public Utility Regulatory Act, rate cases always occupied a special category in the jurisprudence of this State. Southern Canal Co. v. State Board of Water Eng., supra. The courts of this state, historically, have required a trial de novo of rate orders claimed to be confiscatory. Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941), see Southern Canal Co. v. State Board of Water Eng., supra. The de novo review accorded in those cases did not suspend or nullify the agency order. Instead, the court made its own independent findings of fact, but did not substitute its decision for the agency decision. Lone Star Gas Co. v. State, supra; Railroad Commission v. Oil Field Haulers Association, Inc., 373 S.W.2d 394 (Tex.Civ.App.1963, no writ).
The provision for judicial review involved in Lone Star Gas Co., Tex.Rev.Civ.Stat.Ann. art. 6059, is similar to the provision at bar. Article 6059 requires in an appeal to the district court of Travis County from an order of the Railroad Commission in a natural gas case, that the dissatisfied party must show " . . . by clear and satisfactory evidence . . ." that rate complained of was...
To continue reading
Request your trial
-
Southwestern Bell Tel. Co. v. Public Utility Commission
...judicial review accorded the Commission's administrative order. The court of civil appeals also declined to grant the temporary relief. 560 S.W.2d 157. We granted writs of error filed by both Southwestern Bell and the Utility Commission. We reverse the judgment of the court of civil appeals......
-
City of Houston v. Public Utility Commission of Texas
...4 of PURA provides that the APA applies to all proceedings under PURA when the two acts are consistent. Southwestern Bell Telephone Company v. Public Utility Commission, 560 S.W.2d 157 (Tex.Civ.App. Austin), rev'd on other grounds, 571 S.W.2d 503 (Tex.1978). As a party must show a justiciab......