State ex rel. Utilities Commission v. Boren Clay Products Co.

269 S.E.2d 234, 48 N.C. App. 263, 1980 N.C. App. LEXIS 3228
CourtCourt of Appeals of North Carolina
DecidedAugust 19, 1980
DocketNo. 7810UC1029
StatusPublished

This text of 269 S.E.2d 234 (State ex rel. Utilities Commission v. Boren Clay Products Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Utilities Commission v. Boren Clay Products Co., 269 S.E.2d 234, 48 N.C. App. 263, 1980 N.C. App. LEXIS 3228 (N.C. Ct. App. 1980).

Opinion

PARKER, Judge.

Under G.S. 62-75 the burden of proof at the hearing before the Commission rested upon the respondent railroads to show that the proposed rates were just and reasonable. Utilities Commission v. R.R., 267 N.C. 317, 148 S.E. 2d 210 (1966). The Utilities Commission found that respondents had met that burden. Upon this appeal the order of the Commission allowing the rate increase shall be deemed “prima facie just and reasonable,” and protestant bears the burden of showing some error of law. G.S. 62-94. See Utilities Com. v. R.R., 235 N.C. 273, 69 S.E. 2d 502 (1952).

Protestant Boren contends that in order to satisfy their burden of proving that the proposed rates for crude earth were just and reasonable, the respondents were required to, but did not: (1) supply the classes of evidence required by N.C.U.C. Rule R-17(l)-(ll); (2) produce evidence of North Carolina expenses and revenues separated from systemwide costs; (3) show actual cost of affected movements; and (4) show an emergency or change of circumstances justifying the proposed increases. We conclude that respondents were not required to do so.

G.S. 62-137 provides that, in setting a hearing, the Utilities Commission “shall declare the scope of the hearing by determining whether it is to be a general rate case, under G.S. 62-133, or whether it is to be a case confined to the reasonableness of a specific single rate, [or] a small part of the rate structure ... In the present case the hearing officer expressly found in the recommended order which was affirmed by the Commission that the proceeding involved only “a small segment of the re[267]*267spondents’ rate structure.” Thus, “the field of inquiry [was] limited to the comparatively narrow question of fair treatment to a group or to a class.” Utilities Commission v. Gas Co., 259 N.C. 558, 562, 131 S.E. 2d 303, 306 (1963).

In view of the nature of the proceeding, we reject protestante contention that respondents were required to furnish the classes of evidence required by N.C.U.C. Rule Rl-17(b), subsections (l)-(ll). Among the materials required by that rule are: evidence of the original cost of property, the present fair value of the utility’s property, balance sheets, and the amount of cash working capital. Rule Rl-17 in general substantially tracks the provisions of G.S. 62-133 and was clearly intended by the Utilities Commission to supplement that statute. Because the narrow scope of a complaint proceeding “does not justify the expense and loss of time involved,” Utilities Comm. v. Light Co., 250 N.C. 421, 431, 109 S.E. 2d 253, 261 (1959), it is well established that G.S. 62-133 is inapplicable to a case such as is here presented. Protestant reasons, however, that because N.C.U.C. Rule R1-17(b)(12) specifies the materials required to be furnished by Class I railroads in applying for general rate increases and states that such materials are in lieu of those required by N.C.U.C. Rule R-17(b)(1)-(ll), subsections (1) through (11) must be applicable to railroads which seek a change in a small part of their rate structure. We disagree. A logical reading of N.C.U.C. Rule Rl-17 leads to the conclusion that while subsection (12) applies to applications by railroads for general rate increases, subsections (1) through (11) were intended to apply to general rate cases involving utilities other than railroads.

Protestant’s challenge to respondents’ failure to separate intrastate revenues and expenses from systemwide data is based upon its assignment of error to the Commission’s finding that regional cost data was relevant and appropriate for use in costing the intrastate movement of crude earth in North Carolina. At the hearing respondents’ principal evidence in support of their proposed rate increases for crude earth consisted of unit cost data for railroad traffic in the “Southern Region,” including nine southern states plus half of Louisiana. It is true that, in a general rate case, separation of intrastate revenues and [268]*268expenses from systemwide data may be necessary, since operations of a regulated industry in two or more states are separate businesses for the purpose of rate regulation. Utilities Commission v. Telephone Co., 263 N.C. 702, 140 S.E. 2d 319 (1965). In support of its contention that separation of intrastate expenses from systemwide data is necessary even in a case where, as here, only a portion of the rate structure is involved, protestant relies upon the decision of our Supreme Court in Utilities Commission v. R.R., 267 N.C. 317, 148 S.E. 2d 210 (1966). In that case a group of railroads proposed a uniform increase in charges for switching services at all points in the State. At the hearing before the Commission following suspension of the proposed increases, the railroads .offered evidence of costs based upon only six of the fifty-one switching yards in the State to which the proposed rates would apply. The Court held that the Utilities Commission properly denied the proposed increases on the ground that the cost figures did not justify a uniform increase, stating: “We cannot accept evidence of costs in a seaport town such as Wilmington with its docks, wharves and drawbridges as valid in a hilly or mountain section, such as Asheville or even Winston-Salem.” 267 N.C. at 326, 148 S.E. 2d at 217. Subsequent to the filing of its decision in that case, the Supreme Court granted the railroads’ petition for rehearing and modified its earlier opinion to emphasize that the railroads were not required to present evidence of revenue and costs at each switching yard in order to obtain a rate increase. 268 N.C. 204, 150 S.E. 2d 337 (1966). We conclude that the case relied upon by protestant does not stand for the proposition that regional unit cost data may not be offered in support of a proposed rate increase. The Court held only that evidence of cost must be shown to be representative of the actual cost of the service to be provided. Thus, the issue in the present case is not whether the carriers separated intrastate expenses from regional data, but whether there was competent, material and substantial evidence in view of the entire record to support the Commission’s findings that evidence of systemwide costs is representative of North Carolina costs. If that finding is so supported, it is conclusive and binding on this appeal. Utilities Commission v. Coach Co., 269 N.C. 717, 153 S.E. 2d 461 (1967).

[269]*269The record, viewed as a whole, discloses the following: The existing scale of rates on crude earth was established in 1962 and was applicable to both interstate and intrastate traffic. Between 1962 and 1976 the rate increased only in accordance with general rate increases for all commodities. In the mid-1970’s, for the purpose of determining the cost-revenue relationship with respect to movements of crude earth, the Manager of the Commerce, Marketing and Planning Division of the Southern Railway System requested Frank Spuhler, a Senior Cost Analyst with the Southern Freight Association, to furnish data showing variable and fully allocated costs of single line and joint line movements of crude earth within the Southern Region. The costs which Mr. Spuhler furnished represented Southern Region unit cost figures for 1973 computed on the basis of a computerized cost formula which took into account accounting, statistical, and special study data for the twelve Class I railroads in the South. Those 1973 figures were further indexed to April 1976 wage and price levels. The costs were figured based upon the use of general open hopper cars with a lading weight of seventy-five tons.

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Bluebook (online)
269 S.E.2d 234, 48 N.C. App. 263, 1980 N.C. App. LEXIS 3228, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-utilities-commission-v-boren-clay-products-co-ncctapp-1980.