Public Se. Comm N. v. Dist. Court ( 1973 )

No. 12512
I N T E SUPREPIE C U T O THE STATE O MONTANA
H OR F F
1973
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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