Public Se. Comm N. v. Dist. Court

• Court: Montana Supreme Court
• Decided: June 8, 1973
• Docket: 12512
• Status: Published

Opinion

No. 12512

I N T E SUPREPIE C U T O THE STATE O MONTANA H OR F F

PUBLIC SERVICE COMMISSION O MONTANA, F LOUIS G. BOEDECKER, Chairman; ERNEST C. STEEL and ROBERT E. McTAGGART, a s Members ehereof and c o n s t i t u t i n g s a i d P u b l i c S e r v i c e Commission,

Applicant,

THE DISTRICT C U T O THE FIRST JUDICIAL OR F DISTRICT O T E STATE O MONTANA, I N AND F H F FOR THE C U T O LEWIS AND CLARK, and t h e O NY F HONORABLE PETER G. MELOY, P r e s i d i n g Judge,

Respondent.

ORIGINAL PROCEEDING:

Counsel o f Record :

For Applicant :

William E. 0 ' ~ e a r yargued, Helena, Montana

AMICUS CURIAE. -

Honorable Robert L. Woodahl, Attorney General, Helena, Montana

For Respondent :

C. W. Leaphart, Jr. argued, Helena, Montana James A. Robischon argued, B u t t e , Montana

Submitted: May 17, 1973

Decided : JUN - 8 1973 Filed : 3UN - 8 1973 Mr. Justice Wesley Castles delivered the Opinion of the Court.

This is an original proceeding brought by the Public Service Commission of Montana seeking a writ of supervisory control directed to the district court of the first judicial district, Lewis and Clark County, Judge Meloy presiding. The writ sought would direct the respondent court to sustain objections to interroga- tories submitted by plaintiffs in district court causes No. 36398 and No. 36402. Plaintiffs in the district court are: The Anaconda Company; Anaconda Aluminum Company; Hoerner Waldorf Corporation of Montana; City of Helena; and C. W e Leaphart, Jr. Plaintiffs were protestants to certain electric and gas rate increases granted The Montana Power Company by relator Public Service Commission by its order No. 4068, in Docket No. 6100. Plaintiffs filed suit seeking a review of that order under section 70-128, R.C.M. 1947. Plaintiffs, purportedly acting under Rule 33, M.R.Civ.P., served written interrogatories upon the Public Service Commission. Objections, with a supporting brief, to all interrogatories were filed by the Commission. Oral argument was had before the respon- dent district court. Following oral argument, the court issued its order with a "~emorandumOpinion". The om mission's objec- tions were sustained to some thirty-five interrogatories in one cause, and ordered answers to be made to four. In the other cause, objections were sustained to two, and answers ordered on some thirty-six interrogatories. Essentially, the commission's objections were that it was acting in a legislative capacity and all of its proceedings and methods of determination are exempt and privileged except as to its formal order, No. 4068. Additionally, section 70-128, R.C.M. 1947, which provides for Q review of actions of the Public Service Commission, is a special proceeding excepted by Rule 81, M.R.Civ.P., Z I -. Y.

from the civil rules insofar as it is inconsistent or in con- flict as listed in Table A of the Rules of Civil Procedure. Since section 70-128 authorizes a review, no new or additional evidence can be considered independent of the Commission's determination. On ex parte application, this Court granted an alternative writ and return was made, briefs filed, and oral argument had. The return includes a motion to quash the alternative writ on the ground that supervisory control is not proper, as the remedy of appeal is adequate. The primary issue is whether the Commission is required to answer interrogatories relative to the methods and procedures utilized in reaching a decision to allow a rate increase. Commission Order No. 4068 in Docket No. 6100 is a fifty-three page order. It is divided essentially into two parts, gas and electricity. As to each of these, it includes findings of fact. The findings reflect the total valuations used by the Commission, the net earnings, the rate of return presently, the rate of return found fair, and the amount of increase needed; together with a schedule of rates and charges. Preliminary to these findings, the Commission recited some detail of the Company's valuations put into evidence and what consideration the Commission gave in reaching its results, The order recites considerable matters entering into the Commission determinations. The interrogatories under consideration here are lengthy, A few samples will show the general thrust. The interrogatories sought: present value of gas production facilities; transmission facilities; distribution facilities; recoverable gas reserves; volume of gas reserves; original cost of gas reserves; amount eliminated from valuation for future expectations of inflation; reserves and accruals found available for working capital needs, etc. Each of the items sought was an item included or excluded from the total amounts found by the Commission. The trial court filed a memorandum which, curiously, quoted from the dissenting portion of Cascade County Consumers Assn. v. . Public Service Commission, 144 Mont. 169, 204, 394 P.2d 856, t h a t " f u r t h e r c l a r i f i c a t i o n should be had a s t o e x a c t l y what was included i n t h e r a t e base". The t r i a l c o u r t i n i t s memorandum then went on t o say t h a t t o make a meaningful review of t h e t r a n s - c r i p t of t h e evidence and t h e e x h i b i t s b e f o r e t h e Commission it, t h e c o u r t , needed t h e d e t a i l s making up t h e omm mission's f i n d i n g s of f a c t . The t r i a l c o u r t i n i t s r e t u r n h e r e described t h e record t1 before t h e Public Service Commission a s voluminous and extensive" and t h e o r d e r being reviewed a s "cryptic and b r i e f " . It then went on t o observe t h a t each i n t e r r o g a t o r y which seemed t o invade o r delve i n t o t h e mental processes of t h e Commission had been s t r i c k e n , b u t i n t e r r o g a t o r i e s with r e s p e c t t o questions o f f a c t had been allowed. Respondent c o u r t observed t h a t t h e answers t o t h e i n t e r r o g a t o r i e s would "merely i s o l a t e c e r t a i n f a c t u a l matter which, i f answered, would save t h e time of t h e Court and expedite t h e proceedingstt. Be t h a t a s i t may, i t may a l l be so, t h e evidence presented t o t h e Commission r e q u i r e s t h e c o u r t t o review i t a l l under t h e normal r u l e s . To say t h a t i n d i v i d u a l i t e m s going t o make up t h e whole i s n o t a p a r t of t h e mental processes of the Commission i s not r e a l i s t i c . I f t h e whole a s found by t h e Commission i s sup- ported by t h e record, t h e i n d i v i d u a l p a r t s and t h e v a r i o u s methods of computation t o a r r i v e a t t h e whole must c e r t a i n l y be a p a r t of t h e mental processes. C e r t a i n l y i n considering l e g i s l a t i v e pro- ceedings, t h e myriad of d e t a i l going t o t h e thought processes of i n d i v i d u a l l e g i s l a t o r s cannot be t h e s u b j e c t of i n t e r r o g a t o r i e s . W make i t c l e a r t h a t we a r e not d e a l i n g with p a r t i e s t o t h e a c t i o n , e b u t r a t h e r with t h e Body whose d e c i s i o n s a r e being reviewed. Previously h e r e i n , we have s e t f o r t h examples of t h e general t h r u s t of t h e i n t e r r o g a t o r i e s . Three of t h e examples seek present value of "recoverable gas r e s e r v e s t t , volume of "recoverable gas reserves", and o r i g i n a l c o s t of gas r e s e r v e s . I n t h e Commission's o r d e r , under Part A, i t s t a t e d : ''lncluded in the RCN and RCND valuations were recoverable natural gas reserves of the company. These reserves were valued at 5.13 cents per MCF. This value of 5.13 cents per MCF was based on two transactions occurring in 1971. "The company had purchased 2.79 billion cubic feet of recoverable gas reserves in the South Devon field at a cost of $152,000. The company also pur- chased 5.26 billion cubic feet in the Lait field in southern Canada at a cost of $261,150. The weighted average cost of these purchased reserves was 5.13 cents per MCF. This unit value was then used for all the recoverable gas reserves in place of the company in arriving at the reproduction cost valuations of the company, "The commission is of the opinion that these re- serves are of tremendous importance to the customers of the company and certainty have a value in any re- production cost determination of the company's natural gas properties. No other unit valuation was proposed at the hearings. "The change in the natural gas reserve picture adds to the tremendous importance of the natural gas re- serves of the company. In 1950 the known reserves of gas were 185 trillion cubic feet (TCF) and the annual production of gas was 6.9 TCF, so that reserves were almost 27 times annual use, Reserves climbed slowly until 1968, but annual use climbed faster. "BY 1960 the reserve to production ratio had de- clined to 20 times, and by 1965 to 17.5 times. In 1971 annual use was over 22 TCF. Excluding Alaska, reserves were 247 TCF and the ratio of reserves to production dropped to 11. Including the Alaskan reserves would bring the 1971 ratio to only 12.6. I1 Only recently the Federal Power Commission authorized the importation of LNG from Algeria, After liquefaction, cryogenic transportation, and regasification costs are considered it is estimated that this gas will be delivered to eastern pipelines at about $1.00 per MCF. The comrnis- sion points this out merely to emphasize the importance of the gas reserves of the company to the consumers. 1I The commission will include the natural gas reserves in its determination of the reproduction cost depreciated valuation of the company's natural gas properties.

h he commission again had the valuable services of Mr. George Hess, consulting engineer of Minneapolis, Minnesota. Mr. Hess developed several methods by which the commission could'test the accuracy of the observed depreciation computa~ionsof the company. All tests found the observed depreciation to be dissimilar to the book depreciation studies upon which the book depreciation is based. 11The commission, after reviewing all the evidence sub- mitted, has come to the conclusion that the RCND valuations percent condition should be brought into closer proximity with the percent condition of the OCD valuations and has done so. This is in line with previous decisions and with the reserve requirement study of Mr. Hess. " A l l elements of value and t h e d e l e t i o n s s e t f o r t h above have been considered by t h e commission i n d e t e r - mining t h e p r e s e n t f a i r value of t h e company's n a t u r a l gas p r o p e r t i e s f o r t h e test year ending December 31, 1972. A f t e r t h e s e c o n s i d e r a t i o n s t h e commission f i n d s t h e pre- s e n t f a i r v a l u e of t h e company's combined n a t u r a l gas p r o p e r t i e s , United S t a t e s and Canadian, devoted t o t h e use of t h e public and a c t u a l l y used and u s e f u l f o r t h e convenience of t h e public a t $116,100,000 a s of December 31, 1972." A j u d i c i a l review would n e c e s s a r i l y have t o determine whether t h e evidence heard by t h e Commission was s u b s t a n t i a l , c r e d i b l e evidence s u f f i c i e n t t o uphold i t s o v e r a l l findings. Necessarily included a r e those p a r t s emphasized by t h e Commission a s h e r e t o f o r e quoted. I n o t h e r words, t h e answers t o t h e p a r t i c u l a r i n t e r r o g a - t o r y examples we have discussed a r e f a c t s and f i g u r e s considered b y t h e Commission i n i t s discussion j u s t i f y i n g i t s r e s u l t s . They a r e c l e a r l y p a r t of i t s thought processes. W have not y e t r e f e r r e d t o c a s e s c i t e d by t h e p a r t i e s . e P e t i t i o n e r here c i t e s a Colorado c a s e , Public U t i l i t y Commission v. D i s t r i c t Court, 163 Colo. 462, 431 P.2d 773, 777, f o r t h i s proposition : "There i s a s u b s t a n t i a l bady of law which holds t h a t o f f i c i a l s of an a d m i n i s t r a t i v e agency can n o t be compelled t o t e s t i f y concerning t h e pro- cedure o r manner i n which they made t h e i r f i n d i n g s and rendered a d e c i s i o n i n a given case. United S t a t e s e t a l . v. Morgan, 313 U.S. 409, 6 1 S.Ct.999, 85 L.Ed. 1429. For a c o l l e c t i o n of a u t h o r i t i e s on t h i s princip1.e see 18 A.L.R.2d, Section 10 a t page 624. While t h e r e a r e some d e c i s i o n s t o t h e con- t r a r y we b e l i e v e t h a t t h e g r e a t weight of a u t h o r i t y p r o h i b i t s i n q u i r i n g o r probing t h e mental processes o r procedure by which an a d m i n i s t r a t i v e d e c i s i o n i s reached, and t h e only exception t o t h i s r u l e i s where an a l l e g a t i o n has been made and t h e r e i s a c l e a r showing of i l l e g a l o r unlawful a c t i o n , m i s - conduct, b i a s o r bad f a i t h on t h e p a r t of t h e com- missioners o r a s p e c i f i c v i o l a t i o n of t h e a p p l i c a b l e s t a t u t e . I1 W agree with t h a t statement of t h e law. e P e t i t i o n e r a l s o c i t e s t h e r u l e of Board of Ed. of Sch. D i s t . No. 6 v. D i s t r i c t Court, 174 Colo. 255, 483 P.2d 361,362. I n t h a t c a s e members of a school board were sought t o be deposed a f t e r t h e Board had made i t s decision. I n denying t h a t , t h e Colorado Court after quoting from Public Utility Commission, said: " ~ we were to approve of the taking of these f depositions, it would mean that on judicial review of any administrative decision the person seeking review could go on a similar 'fishing . expeditionI I1 Under section 70-128(6), R,C.M. 1947, the burden of proof is upon the party attacking or resisting the order of the Commission to show that the order is unlawful or unreasonable. In State ex rel. Olsen v. Public Service Commission, 131 Mont. 104, 113, 308 P.2d 633, this Court stated: "Plaintiff next contends that the Commission did not make proper findings. 1The Commission's order contains seventeen findings ' of fact covering three pages of the transcript. 1I Our statutes do not require any findings of fact to be made by the Commission. Where findings are necessary their function is to inform the reviewing court of the basis of the order. [Citing cases] "The findings made by the Commission here were adequate to inform the court of the basis of its order and are sufficient. * * *.I1

While it is true that Olsen was prior to the adoption of the civil rules, as we have previously shown the rules are not meant to cover under Rule 81, M.R.Civ.P., special proceedings such as this where the matters are inconsistent or in conflict. Here, the materials sought are privileged and not relevant under Rule 2 ( ) 6b, M.R.Civ.P.,Interrogatories seeking amounts, values, costs, and details of parts of property are irrelevant to the main inquiry of "lawfulness" or 11reasonableness" of the rates found, A further reason along these lines appears when one considers that if it is sought to discover new or additional evidence that evidence would, under section 70-128, R.C.M. 1947, be resubmitted to the Commission. Such procedures are not consistent and thus under Rule 81 do not apply to the legislative Commission being reviewed here. We have carefully considered the effect of our ruling here. While we appreciate that detailed answers would indeed make the trial court's review of a voluminous record easier, yet questions obviously designed to probe the mental processes and procedures of a duly e l e c t e d a d m i n i s t r a t i v e body while performing a l e g i s - l a t i v e function a r e n o t proper. The r a t i o n a k of t h e Colorado Court i n t h e cases h e r e t o f o r e quoted i s proper. Previously we mentioned t h e motion t o quash t h i s Court's a l t e r n a t i v e w r i t on t h e ground t h a t s u p e w i s o r y c o n t r o l i s n o t proper a s t h e remedy by appeal i s adequate. O r d i s c u s s i o n demon- u s t r a t e s , we b e l i e v e , t h a t an appeal would n o t be an adequate remedy. The damage would have been done. The thought o r mental processes would already have been probed. Accordingly, t h e motion t o quash i s denied. The w r i t of s u p e w i s o r y c o n t r o l i s granted and t h e d i s t r i c t c o u r t ordered t o g r a n t t h e o b j e c t i o n s t o a l l i n t e r r o g a t o r i e s d i r e c t e d t o t h e Commission.

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