Southwestern Bell Tel. Co. v. Public Utility Commission

• Decision Date: 26 July 1978
• Docket Number: No. B-7308,B-7308
• Parties: SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. PUBLIC UTILITY COMMISSION of Texas et al., Respondents.
• Court: Texas Supreme Court

Page 503

571 S.W.2d 503

26 P.U.R.4th 61

SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. PUBLIC UTILITY COMMISSION of Texas et al., Respondents.

No. B-7308.

Supreme Court of Texas.

July 26, 1978.

Rehearing Denied Oct. 25, 1978.

Graves, Dougherty, Hearon, Moody & Garwood, Robert J. Hearon, Jr., Austin, Baker & Botts, Thomas M. Phillips, Houston, Wayne E. Babler, St. Louis, Mo., for petitioner.

John L. Hill, Atty. Gen., Joyce B. Carpenter and Joe N. Pratt, Asst. Attys. Gen., Austin, Don R. Butler, Austin, Otis H. King, City Atty., Harriet E. Hubacker, Asst. City Atty., Houston, Lee E. Holt, City Atty., Galan M. Sparks, Asst. City Atty., Dallas, for respondents.

DENTON, Justice.

This is a telephone rate case brought under the Public Utility Regulatory Act, Tex.Rev.Civ.Stat.Ann. art. 1446c. ¹ Southwestern Bell filed an appeal from the Public Utility Commission's order and asked for a temporary injunction or stay order, pursuant to Section 85 of the Public Utility Regulatory Act conditioned upon giving a bond sufficient to protect its customers. The trial court denied the application and held that the manner of review authorized by PURA was other than by trial de novo and that judicial review was limited to the record made before the Commission. The court of civil appeals affirmed that part of the judgment of the trial court which held the Commission applied the proper rate base under PURA, but reversed that part of the trial court judgment concerning the character of 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 and affirm the judgment of the trial court.

Southwestern Bell has requested this Court to grant a temporary stay or injunction as it did in the courts below. The stay requested is grounded on the telephone company's claim of "confiscation." In this Court the alleged elements of confiscation are: (1) miscalculation of revenues and expenses; (2) erroneous use of "original cost" rate base; and (3) exclusion of land held for future use. A review of decisions involving rates of public utilities show that a temporary injunction will issue when three things are made to appear: (1) that there is a reasonable probability that the utility will succeed on final hearing; (2) that the loss to the utility resulted from a refusal to grant the temporary injunction or will be irreparable; and (3) that the customers can be adequately protected by bond. It is also well settled that the sole question to be determined on appeal in the granting or refusing of a temporary injunction, is whether or not the trial court abused its discretion in rendering the order appealed from. State of Texas v. Southwestern Bell Telephone Co., 526 S.W.2d 526 (Tex.1975); City of Houston v. Southwestern Bell Tel. Co., 263 S.W.2d 169 (Tex.Civ.App.1953, writ ref'd). The record reflects that every finding of the trial court and the court of civil appeals necessary to support the judgment denying the temporary relief is supported by evidence of probative character. We, therefore, also deny the application to stay or suspend the order of the Public Utility Commission.

Judicial Review

The resolution of judicial review involves the proper interpretation of section 69 of PURA and section 19 of the Administrative Procedure and Texas Register Act. ² Section 69 of PURA provides judicial review of the Commission's orders as follows:

Any party to a proceeding before the Commission is entitled to judicial review under the substantial evidence rule. The issue of confiscation Shall be determined by a preponderance of the evidence. (Emphasis added)

The trial court determined that its review was limited to the record before the agency "with the issue of confiscation to be determined thereon by a preponderance of the evidence." The court of civil appeals disagreed and held that the utility is entitled to a de novo review "in the manner accorded by pre-existing law in rate appeals."

The court of civil appeals relies heavily on section 4 of PURA which provides that the Administrative Procedure Act applies to the proceedings before the Commission "except to the extent inconsistent with this Act." The court, concluding that section 69 of PURA cannot be harmonized with the Administrative Procedure Act, reasons that the Legislature must have intended by section Prior to the APA, there were at least four different methods of judicial review of administrative decisions. These four included (1) pure trial de novo, (2) substantial evidence trial de novo, (3) substantial evidence confined to the record, and (4) the rate case classification. The latter category was akin to the pure trial de novo review except that it was said that the agency's decision was admissible in evidence at trial. This had to be so because the issue in court was the "reasonableness" of the rates set by the administrative agency. This type has been referred to as a "de novo fact trial." Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681, 695 (1941).

69 to provide for judicial review of rate cases in the manner accorded prior to the Administrative Procedure Act.

Sections 13 through 19 of the APA set forth the minimum procedural requirements of "contested cases" hearings before administrative agencies. Included are the right to notice, the right to present evidence and argument and to cross-examine witnesses, the making of a full record of the proceedings, the taking of depositions, the issuance of subpoenas to compel attendance of witnesses, the application of the rules of evidence, the preparation of proposals for decision and the filing of exceptions and briefs, and the inclusion of separately stated findings of fact and conclusions of law in final agency decisions. Section 3(2) of the APA defines a "contested case" to include rate-making proceedings. Therefore, the full panoply of procedural safeguards in the APA is now applicable in administrative rate-making hearings. The record of the proceedings before the Commission in this matter is voluminous.

Section 19 of the APA provides for judicial review of contested cases, including rate-making proceedings. The full text of section 19 reads as follows:

(a) A person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case is entitled to judicial review under this Act. This section is cumulative of other means of redress provided by statute.

(b) Proceedings for review are instituted by filing of petition within 30 days after the decision complained of is final and appealable. Unless otherwise provided by statute:

(1) the petition is filed in a District Court of Travis County, Texas;

(2) a copy of the petition must be served on the agency and all parties of record in the proceedings before the agency; and

(3) the filing of the petition vacates an agency decision for which trial de novo is the manner of review authorized by law, but does not affect the enforcement of an agency decision for which another manner of review is authorized.

(c) If the manner of review authorized by law for the decision complained of is by trial de novo, the reviewing court shall try all issues of fact and law in the manner applicable to other civil suits in this state but may not admit in evidence the fact of prior agency action or the nature of that action (except to the limited extent necessary to show compliance with statutory provisions which vest jurisdiction in the court). Any party to a trial de novo review may have, on demand, a jury determination of all issues of fact on which such a determination could be had in other civil suits in this state.

(d) If the manner of review authorized by law for the decision complained of is other than by trial de novo:

(1) after service of the petition on the agency, and within the time permitted for filing an answer (or such additional time as may be allowed by the court), the agency shall transmit to the reviewing court the original or a certified copy of the entire record of the proceeding under review. By stipulation of all parties to the review proceedings, the record may be shortened. A party unreasonably refusing to stipulate to limit the record may be taxed by the court for the additional costs. The court may require or permit subsequent corrections or additions to the record (2) any party may apply to the court for leave to present additional evidence and the court, if it is satisfied that the additional evidence is material and that there were good reasons for the failure to present it in the proceeding before the agency, may order that the additional evidence be taken before the agency on conditions determined by the court. The agency may modify its findings and decision by reason of the additional evidence and shall file such evidence and any modifications, new findings, or decisions with the reviewing court;

(3) the review is conducted by the court sitting without a jury and is confined to the record, except that the court may receive evidence of procedural irregularities alleged to have occurred before the agency but which are not reflected in the record.

(e) The scope of judicial review of agency decisions is as provided by the law under which review is sought. Where the law authorizes appeal by trial de novo, the courts shall try the case in the manner applicable to other civil suits in this state and as though there had been no intervening agency action or decision. Where the law authorizes review under the substantial evidence rule, or where the law does not define the scope of judicial review, the court may not substitute its judgment for that of the agency as to the weight of the evidence on questions committed to agency discretion but may affirm the decision of the agency...