Wisconsin Cent. Ltd. v. Public Service Com'n of Wisconsin

• Decision Date: 13 August 1992
• Docket Number: No. 91-0637,91-0637
• Citation: 490 N.W.2d 27,170 Wis.2d 558
• Parties: , Util. L. Rep. P 26,247 WISCONSIN CENTRAL LTD., Petitioner-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, Wisconsin Southern Gas Company, Inc., Northern States Power Company, Wisconsin Gas Company, Wisconsin Electric Power Company, and Wisconsin Natural Gas Company, Wisconsin Power & Light Company, Municipal Electric Utilities of Wisconsin, and City of Plymouth, Wisconsin Public Service Corporation, Respondents-Respondents.
• Court: Wisconsin Court of Appeals

Page 27

490 N.W.2d 27

170 Wis.2d 558, Util. L. Rep. P 26,247

WISCONSIN CENTRAL LTD., Petitioner-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, Wisconsin Southern Gas Company, Inc., Northern States Power Company, Wisconsin Gas Company, Wisconsin Electric Power Company, and Wisconsin Natural Gas Company, Wisconsin Power & Light Company Municipal Electric Utilities of Wisconsin, and City of Plymouth, Wisconsin Public Service Corporation Respondents-Respondents.

No. 91-0637.

Court of Appeals of Wisconsin.

Submitted on Briefs Dec. 10, 1991.

Opinion Released Aug. 13, 1992.

Opinion Filed Aug. 13, 1992.

For the petitioner-appellant the cause was submitted on the briefs of James A. Fletcher and Michael D. Dabertin of Oppenheimer, Wolff & Donnelly of Chicago.

For the Public Service Com'n of Wisconsin the cause was submitted on the brief of Steven Levine of Public Service Com'n of Wisconsin of Madison.

For Wisconsin Southern Gas Co., Inc., the cause was submitted on the brief of Hugh H. Bell and William C. Williams of Bell, Metzner, Gierhart & Moore, S.C. of Madison.

For Northern States Power Co. the cause was submitted on the brief of Joseph R. Mirr of Garvey, Anderson, Johnson, Gabler & Geraci, S.C. of Eau Claire.

For Wisconsin Gas Co. the cause was submitted on the brief of Gregory A. Wheeler and Charles J. Cummings of Milwaukee.

For Wisconsin Elec. Power Co. and Wisconsin Natural Gas Co. the cause was submitted on the brief of Walter T. Woelfle of Milwaukee.

For Wisconsin Power & Light Co. the cause was submitted on the brief of Barbara J. Swan of Wisconsin Power & Light Co. of Madison.

For Municipal Elec. Utilities of Wisconsin and the City of Plymouth the cause was submitted on the brief of Michael P. May and Anita T. Gallucci of Boardman, Suhr, Curry & Field of Madison.

For Wisconsin Public Service Corp. the cause was submitted on the brief of Allen W. Williams, Jr., Michael D. Flanagan and Joseph E. Dannecker of Foley & Lardner of Milwaukee.

For the Soo Line R. Co. an amicus curiae brief was submitted by Patrick J. Nugent of Soo Line R. Co. of Minneapolis.

For Green Bay & Western R. Co. an amicus curiae brief was submitted by Gerald M. O'Brien of Anderson, Shannon, O'Brien, Rice & Bertz of Stevens Point.

Before EICH, C.J., and DYKMAN and SUNDBY, JJ.

DYKMAN, Judge.

Wisconsin Central Ltd. ("WCL") appeals from a judgment affirming an order of the Public Service Commission of Wisconsin ("the commission"). Pursuant to sec. 196.04(4), Stats., ¹ the order specifies the terms by which Wisconsin Southern Gas Company ("WSG") is allowed to cross WCL's tracks with its gas transmission pipelines. WCL raises the following issues on appeal: (1) whether the commission abused its discretion by prescribing its own terms and conditions without first finding those contained in WCL's license agreement to be unreasonable and inequitable; (2) whether the commission acted outside the scope of its authority by not allowing WCL to recover "indirect" costs of administering the license agreements; (3) whether the commission misinterpreted the statute by basing compensation for the crossing right on the diminution in value of WCL's property; (4) whether the commission's determination that the diminution in value due to the pipeline installations at private crossings was nominal was supported by substantial evidence; and (5) whether the commission erred as a matter of law in concluding that installation of WSG's facilities at a public crossing did not impose an additional burden on WCL's property.

We conclude that the statute does not require the commission to find that WCL's terms are unreasonable and inequitable before prescribing terms of its own. We also hold that the commission acted within the scope of its authority when it determined that WCL should be compensated for the diminution in value of its property and any consequential costs incurred directly as a result of WSG's installations. Finally, we conclude that there is substantial evidence to support the commission's finding of a nominal diminution in value at private crossings and that the commission's determination that there is no additional burden imposed at the public crossings is not erroneous as a matter of law. Therefore, we affirm.

I. BACKGROUND

WCL is a privately held railroad which purchased a substantial portion of the assets of the Lake States Division of the Soo Line Railroad in 1987. WCL currently operates in Wisconsin, Michigan, Illinois, and Minnesota, with approximately two-thirds of its track located in Wisconsin. WSG is a public utility which provides natural gas service to approximately 42,000 customers in southeastern Wisconsin.

In mid-1988, WSG notified WCL that in order to serve customers in the Honey Creek area of Racine county, it intended to run its pipelines under WCL's tracks in three separate locations. The proposed crossings were located where public roadways also cross WCL's property and the pipelines were to be laid beneath and perpendicular to the railroad's tracks within the right-of-way of the public roadway.

WCL requested that WSG sign its standard license agreement for each crossing. The agreement calls for the payment of a one-time preparation fee of $250 and an annual license fee of $300, payable five years in advance. The preparation fee is designed to recover the actual costs WCL incurs on an average, system-wide basis for surveying and drafting a site print when a utility seeks to cross its property. The annual license fee is intended to recover WCL's costs in managing and administering the license agreement, such as recordkeeping, track inspection, and risk management, and to compensate WCL for the value of the rights granted to the licensee. The agreement also imposes numerous other conditions on the licensee, including WCL's right to terminate the agreement without cause on thirty-days' notice and the requirement that all carrier pipe under WCL's track be encased in a second steel pipe.

When WSG refused to sign the agreements, WCL threatened to obtain a court injunction to halt construction. To avoid delays in extending service to Honey Creek, WSG signed the agreements with an addendum that allowed WSG to seek review by the commission and provided that the agreements would be modified in conformity with any order entered by the commission (including any modification resulting from an appeal).

In August 1988, WSG filed its application with the commission for an order permitting extension of its pipelines under WCL's tracks. ² WSG requested the commission to order that no license agreement was required at public crossings or, in the alternative, that the commission determine reasonable and equitable terms and compensation. With respect to the private crossing, WSG asked that the commission determine reasonable and equitable terms and compensation.

Several utilities intervened in the case. A hearing was held over four days in February 1989, and in November 1989, the commission entered its order. The commission found that the installation of WSG's facilities within the public right-of-way imposed no additional burden on WCL's property and that WCL was not entitled to any compensation for these public crossings. For the private crossing, the commission concluded that WCL was entitled to compensation calculated by the diminution in property value after installation of the pipeline. The commission found the diminution in value in this case and in most cases of this nature to be negligible, awarding WCL the nominal amount of one dollar.

For all crossings, public or private, the commission ordered that WCL receive compensation for consequential damages that result directly from the placing of WSG's pipelines under WCL's tracks. These included expenses incurred to prepare, flag, or inspect the site before, during, or after construction, and administrative costs associated with marking and recording the pipeline's location. The commission stated specifically that consequential costs excluded indirect costs attributable to other WCL programs and operations and any profit component. Because the commission found that the record was not adequate to determine these costs precisely and that some of these costs would be incurred in the future, the commission directed WCL to bill WSG for the actual expenses incurred, including reasonable overhead. The commission retained jurisdiction to resolve any disputes over such billings.

The commission also made findings and prescribed terms on disputed matters other than compensation, such as liability insurance, requirements for maintenance and emergency repairs, and the termination of the crossing right. These issues are not before us on this appeal.

WCL sought review of the commission's order under ch. 227, Stats., in the circuit court for Portage county. Venue was changed to Dane county. After the filing of briefs and oral argument, the trial court affirmed the commission's order with the clarification that if circumstances changed so that the crossing materially impaired WCL's ability to serve the public, WCL could revoke the crossing right after obtaining commission approval.

II. SCOPE AND STANDARD OF REVIEW

Our scope of review under ch. 227, Stats., is identical to that of the trial court; we review the decision of the commission, not the court. Wisconsin Pub. Serv. Corp. v. Public Serv. Comm'n, 156 Wis.2d 611, 616, 457 N.W.2d 502, 504 (Ct.App.1990).

Section 196.04(4), Stats., has never been construed by a court or the commission prior to this case. The supreme court has stated that when an agency interprets a statute in a case of first impression and the agency lacks special expertise or experience, our review is de novo. Jicha v. DILHR, 169 Wis.2d 284, 290-91, 485 N.W.2d 256, 258-59 (1992). But where the legislature has specifically charged the agency with the duty of administering and applying the particular statute, we may infer that the agency is...