Case Name: CAJUN ELECTRIC POWER COOPERATIVE, INC., et al. v. LOUISIANA PUBLIC SERVICE COMMISSION
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1989-05-03
Citations: 544 So. 2d 362
Docket Number: No. 88-CA-1719
Parties: CAJUN ELECTRIC POWER COOPERATIVE, INC., et al. v. LOUISIANA PUBLIC SERVICE COMMISSION.
Judges: MARCUS, WATSON and COLE, JJ„ would grant a rehearing.
Reporter: Southern Reporter, Second Series
Volume: 544
Pages: 362–378

Head Matter:
CAJUN ELECTRIC POWER COOPERATIVE, INC., et al. v. LOUISIANA PUBLIC SERVICE COMMISSION.
No. 88-CA-1719.
Supreme Court of Louisiana.
May 3, 1989.
Rehearing Denied June 15, 1989.
John Schwab, Schwab & Walter, Baton Rouge, James J. Thornton, Johnston & Thornton, Shreveport, W.M. Shaw, Shaw & Shaw, Homer, Rudolph McIntyre, Winns-boro, James B. Supple, Darnall, Biggs, Trowbridge, Supple & Cremaldi, Franklin, James J. Davidson, III, Davidson, Meaux, Sonnier & McElligott, Lafayette, Wendell Miller, Millican, Miller & Buisson, Jennings, James Funderburk, and Duval, Funder-burk, Sundbery & Lovell, Houma, for plaintiffs-appellants.
Marshall Brinkley, Robert L. Rieger, Jr., Baton Rouge, Michael R. Fontham, Paul L. Zimmering, Noel J. Darce, and Stone, Pig-man, Walther, Wittmann & Hutchinson, New Orleans, for defendant-appellee.

Opinion:
ON REHEARING
DIXON, Chief Justice.
Rehearing was granted to reconsider whether article IV, § 21(B) of the state constitution, by explicitly granting to the commission the full authority over "all public utilities," removes the ability of the legislature to alter the commission's jurisdiction over any business defined as a public utility at the time the 1974 Constitution was adopted. We conclude that it does. Insofar as R.S. 45:1163 is inconsistent with this plenary authority, it is unconstitutional.
THE COMMISSION'S CONSTITUTIONAL JURISDICTION
Article IV, § 21(B) provides that the public service commission "shall regulate all common carriers and public utilities and have such other regulatory authority as provided by law." (Emphasis added). Our code provides that "[w]hen a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." C.C. 9 (previously article 13 (1870)). The code further provides that "[t]he words óf a law must be given their generally prevailing meaning." Id. article 11 (previously articles 14 and 15 (1870)). This court, when interpreting our constitution, should give effect to language that is plain and unambiguous. Bank of New Orleans and Trust Co. v. Seavey, 383 So.2d 354 (La.1980), on remand, 399 So.2d 642 (La.App. 4th Cir.1981), writ denied, 401 So.2d 1196 (La.1981). Explicit constitutional provisions are not subject to judicial construction and should be applied by giving words their generally understood meaning. State through Department of Highways v. Bradford, 242 La. 1095, 141 So.2d 378 (1962).
The cooperatives contend again, as they did in their original brief, that the words of article IV, § 21(B) are ambiguous. "When the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law." C.C. 10. If the words of a constitution are indeed ambiguous, a court may resort to the transcripts of the constitutional convention proceedings as an aid to find the purpose, intent, and meaning of those words. New Orleans Firefighters Association v. Civil Service Commission of City of New Orleans, 422 So.2d 402 (La.1982).
The majority in our original opinion, 532 So.2d 1372, did not address whether article IV, § 21(B) is ambiguous, agreeing instead with the cooperatives' contention that the drafters did not intend to change the jurisdiction of the commission in the new constitution. Article IV, § 21(B), however, is unambiguous. It clearly states that the commission shall have jurisdiction over all common carriers and public utilities and have such other regulatory authority as provided by law. The cooperatives' contention that the phrase "as provided by law" modifies the commission's jurisdiction over common carriers and public utilities would result in a solecism. The adverbial phrase, "as provided by law," defines the conditions under which the commission shall have the "other regulatory authority" that the legislature may choose to grant.
Since the provision is unambiguous, this court ought not base its decision on words used in argument at the convention proceedings but should instead rely on the product that the convention ultimately produced. City of New Orleans v. Scramuzza, 507 So.2d 215 (La.1987). The language that the voters of this state adopted granted, in mandatory language, constitutional jurisdiction to the commission over all common carriers and public utilities. The legislature cannot by statute modify that jurisdiction. City of Baton Rouge v. Short, 345 So.2d 37 (La.1977).
PUBLIC UTILITIES
If electric cooperatives are public utilities, then the commission has regulatory jurisdiction over them. In 1970, the legislature amended R.S. 45:121 to include electric cooperatives on the list of businesses classified as public utilities. 1970 La. Acts No. 34, § 1. Thus, at the time the 1974 constitution was drafted and adopted, electric cooperatives were statutorily de- fined as public utilities and were under the jurisdiction of the commission. See R.S. 12:426; Dixie Electric Membership Cooperative v. Louisiana Public Service Commission, 509 So.2d 1002 (La.1987). Electric cooperatives remain statutorily defined as public utilities. R.S. 45:121.
Even though they are statutorily defined as being public utilities, the cooperatives contend that they are not the kind of public utility for which regulation by the commission was intended. Indeed, the constitution does restrict the commission's regulatory jurisdiction over one type of public utility, that being a utility owned, operated, or regulated by a political subdivision's governing body. La.Const. Art. IV, § 21(C). But neither the plain language of this constitution nor the record of the framers' debates indicates that the commission's jurisdiction over electric cooperatives should be curtailed. As noted above, the legislature defined cooperatives as public utilities at the time of the drafting and the adoption of the 1974 Constitution. Had the framers intended to except another kind of public utility from the commission's jurisdiction, they could have done so.
In addition, the cooperatives' argument that they are not the kind of utilities intended to be subject to regulation is undercut by the very statute they seek to have upheld as constitutional. R.S. 45:1163(B) allows electric cooperatives to choose to have rates and services regulated by the commission under the provisions of R.S. 12:426. If the structure and function of these cooperatives were such that regulation were unnecessary, it would be illogical for the legislature to have exempted them from regulation in R.S. 45:1163(A) and yet provided for them to choose to be regulated in R.S. 45:1163(B) and R.S. 12:426.
PREEMPTION OF STATE REGULATION BY THE REA
In 1935, President Roosevelt established the Rural Electrification Administration (REA) in order to provide government loans at low interest rates to encourage electric service development in rural areas. As the Supreme Court has noted, the REA is a "lending agency rather than a classic public utility regulatory body...." Arkansas Electric Cooperative Corporation, 461 U.S. at 386, 103 S.Ct. at 1913. As such, it performs its role within state regulatory schemes. Id. Accordingly, state rate regulation of REA-finaneed cooperatives is not preempted by the Rural Electrification Act. Id. at 385, 103 S.Ct. at 1913.
ATTORNEYS FEES
Although the author of this opinion would decide the attorneys fees issue in favor of the commission, the majority has determined otherwise. The other justices of the court, three of whom subscribe fully to this opinion, and three of whom dissent on the jurisdictional issue but concur in the denial of the commission's claim for attorneys fees, conclude that the fee award should be denied for the following reasons.
The issue was decided in South Central Bell Telephone Co. v. La. Public Service Comm'n, 412 So.2d 1069 (La.1982), wherein it was determined that La.R.S. 45:1180 and 1181 did not authorize the commission to be reimbursed for attorney fees except in cases involving rate-making disputes. While La.R.S. 45:1180 and 1181 were amended by Act 561 of 1985, that amendment did not have the effect of broadening the types of cases in which the commission is entitled to attorney fee reimbursement. Instead, by amending R.S. 45:1180 and 1181, and enacting R.S. 45:1163.3, the Legislature created an economics and rate analysis division, and provided that in certain circumstances the commission could be reimbursed by parties examined by the economics and rate analysis division in rate-making matters. This case, a declaratory judgment action brought by the cooperatives, involves a jurisdictional dispute, not a rate-making examination by the economics and rate analysis division, so there is no statutory authority for an award of attorney's fees to the commission under these circumstances.
Therefore, the request of the commission to have the cooperatives cast for the fees that the commission incurred in defending this declaratory judgment action is denied.
DECREE
Accordingly, the opinion of this court on original hearing is vacated, and the opinion of the district court concerning the jurisdiction of the commission is affirmed. The opinion of the district court awarding attorneys fees to the commission is reversed, and each party will bear its own costs.
MARCUS, WATSON and COLE, JJ" would grant a rehearing.
LEMMON, J., subscribed to the opinion the concurring reasons of CALOGERO, J.
WATSON, J., dissented and assigned reasons.
CALOGERO, J., subscribed to the majority opinion and assigned additional concurring reasons.
DENNIS, J., assigned additional reasons.
COLE, J., dissented in part and concurred in part and assigned reasons.
DIXON, C.J., assigned dissenting reasons on attorney fee issue.
. Adverbial clauses, although usually available for various stylistic placements in a sentence, are more restricted when, as here, a sentence contains more than one verb. In such sentences, the rule of propinquity dictates that the adverbial clause follow the verb modified. See Buckler, American College Handbook of English Fundamentals § 39-39a. pp. 253-258 (2d ed. 1965).
. Even if resort to the convention proceedings were appropriate in this case, those proceedings would only affirm the clear language of the provision. Justice Cole in his concurrence to our original opinion correctly pointed out that the majority of the delegates wanted to maintain the status quo insofar as the commission's jurisdiction was concerned. A careful reading of the transcripts reveals, however, that the "status quo" was not the dual approach to the commission's jurisdiction under the 1921 Constitution. Instead, the "status quo" the delegates sought to protect was the commission's plenary constitutional jurisdiction over all public utilities.
Article IV, § 21(B) as originally drafted provided that the commission would regulate "all common carriers and public utilities as provided by law." Delegate Arnette proposed an amendment that would have deleted "as provided by law" in order to preserve the commission's jurisdiction:
"[Tjhere is definite constitutional jurisdiction in the old 1921 Constitution. Under the new proposal, there is none whatsoever. The Legislature must provide any jurisdiction that the Public Service Commission has by virtue of these four words." Louisiana Constitutional Convention Records Commission, Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts, vol. IX, p. 3008 (1977). Delegate Arnette's amendment was defeated. But several days later, Delegate Juneau was still concerned that the section as proposed had indeed changed the law and stripped the commission of constitutional jurisdiction. He proposed as a second amendment the language that became § 21(B):
"[I]f we're going to put into the constitution a commission which will regulate common carriers and public utilities, you have, in effect, destroyed the constitutionality of that provision by in turn saying, 'as provided by law.' It makes sense that by a mere legislative act, you could strip away the authority of the Public Service Commission to regulate common carriers and public utilities. I might further add that if we were to leave this language alone, you are making a drastic change in the current law.... I think the intent was, of this convention, to put the authority to regulate common carriers and public utilities in the exclusive jurisdiction of the Public Service Commission." Id. at 3346. Juneau then offered his amendment to preclude "in the future . the legislature completely stripping the Public Service Commission of duties that I think we fully intend to give them." Id.
Both Delegate Jenkins and Delegate De Blieux spoke against the Juneau amendment, emphasizing that the amendment limited the power of th,e legislature to control the commission's regulation of common carriers and public utilities. Id. at 3349. Delegate Derbes also emphasized in his objection to the amendment that it prevented the legislature from defining the term "public utilities." Without the Juneau amendment, Derbes contended, the legislature retained control over the definition of common carriers and public utilities. But with the amendment, the jurisdiction of the commission could not be modified by legislative act: "If you [define public utility or common carrier] by judicial interpretation you give the Public Service Commission jurisdiction, and there's no way we can get something that's been given such jurisdiction away . even though we might pass a legislative act doing so, it could not modify this constitution once the courts so declared it." Id. at 3348.
Nevertheless, the amendment so restricting the legislature was adopted by the delegates and later by the people.
. Although we base our decision in this case on the existence since 1970 of a legislative definition of electric cooperatives as public utilities, we do recognize that an approach often used by economists and by the highest courts in other states in defining "public utility" focuses not on legislative definition but rather upon the nature of the service rendered that makes regulation appropriate. Similarly, this court, in Gulf States Utilities Co. v. Louisiana Public Service Commission, 222 La. 132, 145, 62 So.2d 250, 254 (1954 [1952]), determined that an investigation of the characteristics of a business is essential to determine "whether a particular business is or has become a public utility_"
The concept of a public utility is a legal one that has developed from the conflict between the economic, social, and political forces seeking to control monopolies and those businesses regularly providing the essential services and commodities that are most efficiently produced in a monopoly setting. See Bonbright, Principles of Public Utility Regulation 8 (1961); see also generally Phillips, The Regulation of Public Utilities ch. 1 (1988); Barnes, The Economics of Public Utility Regulation 42 (1942):
"Public utilities are distinguished from other businesses by the formal obligations to the public which are imposed upon such companies. Utility enterprises must serve all who apply for the service at reasonable and non-discriminatory prices. They must be prepared at all times to render a service that is adequate both in quality and in quantity, and moreover the services must be immediately available when consumers demand service. In the absence of an alternative, the consumer must take service from the only available utility, and it is, therefore, appropriate that the company should be under a legal obligation to provide the service at a reasonable price."
Even if the legislature had not defined electric cooperatives as public utilities, under this analysis, we believe the outcome in this case would be the same. The record reflects that the plaintiffs are electric cooperatives with a monopoly in their respective service areas to market electricity, an essential product. As a condition of that monopoly, they must provide quantity and quality service on demand to all who are willing to become members of the cooperative. In return, the cooperatives enjoy protection from competition because other utilities cannot intrude on their service areas. See R.S. 45:123. Without such protections, the economics of scale and technology, coupled with the extensive capital outlays required for start-up alone, would make it impossible for the cooperatives to fulfill their commitments. See generally Schmalensee, The Control of Natural Monopolies 27-43 (1979).
. Since the 1974 Constitution does not make a distinction between cooperatives and other "types" of utilities, the question of whether they should be regulated is not before this court. Because our original opinion relied on this contention, however, we do recognize the theoretical underpinnings of the cooperatives' argument. The theory that electric cooperatives are not the kind of utilities that should be regulated has its genesis in Garkane Power Co. v. Public Service Commission, 98 Utah 466, 100 P.2d 571 (1940). In that case, the Utah Supreme Court determined that there was no conflict between consumer and producer interests as far as cooperatives were concerned. Such a conflict can arise in situations where rates are so high that many who need service can't afford it, or so low that investors do not get a fair rate of return on their investment and, consequently, do not reinvest to secure adequate service.
The court reasoned that consumer and producer interests were one and the same: "If rates are too high, the surplus collected is returned to the consumers pro rata. If rates are too low the consumers must accept curtailed service or provide financial contribution to the Corporation." Id. at 471, 100 P.2d at 573.
Although this reasoning was approved in Salt River Project Agricultural Improvement & Power District v. Federal Power Commission, 391 F.2d 470, 473 (D.C.Cir.1968), cert. denied, sub nom Arkansas Valley G & T, Inc. v. Federal Power Commission, 393 U.S. 857, 89 S.Ct. 104, 21 L.Ed.2d 126 (1968), the United States Supreme Court cast doubt upon the continued validity of that rationale in Arkansas Electric Cooperative Corporation v. Arkansas Public Service Commission, 461 U.S. 375, 103 S.Ct. 1905, 76 L.Ed.2d 1 (1983). In affirming the jurisdiction asserted by the commission over the cooperatives, the court recognized that the cooperatives' self-regulating method of ownership did not prevent them from engaging in "economically inefficient behavior." Id. at 394, 103 S.Ct. at 1917 (citing R. Schmalensee, The Control of Natural Monopolies 90-93 (1979)). The comment by Schmalen-see to which the court referred noted that "[c]ontrol by a board of amateurs from among the cooperative's membership . would likely encounter difficulties of ensuring that sufficient skills and resources were applied to the control function. If the enterprise is at all complex, managerial sloth . is difficult for outsiders to detect. Yet, under cooperative ownership, it, along with politically motivated pricing, seems a principal danger." Schmalensee at 92.
Accordingly, the Court declined to second-guess the state's judgment that some degree of oversight was needed. In the case at bar, the drafters of the constitution did not remove cooperatives from the commission's jurisdiction when the constitution was drafted. We, too, decline to second-guess their judgment.
. Executive Order No. 7037 (issued May 11, 1935).
. The author of this opinion expresses the following view on the attorney fee issue.
Since the cooperatives are public utilities under the plenary jurisdiction of the commission, the commission may certify to them the expenses it incurs in matters affecting the services they offer and the rates they charge. Under the provisions of R.S. 45:1163.3, the commission has the power to hire special counsel to assist the economics and rate analysis division "in making an examination of the affairs of any . public utilities business . concerning matters affecting services and rates . or for representing the Public Service Commission in [these matters] or the judicial review thereof." (Emphasis added). R.S. 45:1163.3(A). Subsection B empowers the commission to retain attorneys to assist the division if the division's own staff cannot or is insufficient to handle matters affecting services and rates.
R.S. 45:1180(A) allows the commission to certify to the public utility being examined the expenses incurred by the commission in its examination of that business' affairs concerning matters affecting services and rates. Subsection B allows the commission to retain special counsel to assist in the evaluation and review of matters affecting services and rates and to represent the commission in judicial review proceedings.
R.S. 45:1181(A) restricts the commission's employment of special counsel to "necessary" attorneys and requires that the compensation paid be "reasonable and commensurate with the value of the services performed." Subsection B allows the business being examined to challenge by rule the fees certified to it by the commission within fifteen days of their certification.
The record in this case reflects that on November 23, 1987, special counsel for the commission presented its statement for $43,500.00 in professional services rendered and $1,928.75 in costs incurred in this matter to the commission. On January 8, 1988, the commission secretary certified pro rata those expenses to the seven plaintiffs in this suit, pursuant to the terms of R.S. 45:1180 and 1181. The plaintiffs then challenged the fees certified by a timely filed rule, contending that the certification of the fees was arbitrary, unreasonable, and unnecessary under § 1180 and 1181 because the fees were not incurred by the commission in a matter affecting service or rates. Instead, the cooperatives argued that the commission incurred the fees and expenses in defense of the plaintiffs' "Joint Petition for Declaratory Judgment and Relief," a proceeding they characterized as a jurisdictional matter rather than one affecting services and rates.
In support of their position, the cooperatives point to this court's decision in South Central Bell Telephone Co. v. Louisiana Public Service Commission, 412 So.2d 1069 (La.1982), holding that the commission could not certify to a utility the expenses incurred by special counsel in its intervention in a case only indirectly affecting the rates charged consumers in Louisiana. At that time, however, R.S. 45:1180 restricted the certification of special counsel expenses to those incurred "for the purpose of evaluating and reviewing proposed rate increases and for representing the Public Service Commission in rate making cases or judicial review thereof." In 1985, the legislature amended § 1180 to provide for the certification of all expenses incurred by the commission in its examination of a public utility concerning matters affecting services and rates charged. 1985 La. Acts 561, § 1. In the same act, the legislature added § 1163.3, establishing the economics and rate analysis division and empowering the commission to retain special counsel to assist it in matters affecting services and rates. 1985 La. Acts 561, § 2.
Under the broader terms of § 1180 and 1163.3, if the commission incurred the professional fees and expenses certified to the plaintiffs in a matter affecting services and rates, those fees and expenses are properly charged to the cooperatives, which are the public utilities being examined. The case now before this court began as a "Joint Petition for Declaratory Judgment and Injunctive Relief' filed by the plaintiffs in response to the commission's Special Order 8-87. In that order, the commission notified the seven plaintiff cooperatives that it had unanimously decided to assume jurisdiction over them pursuant to its constitutional authority. The order further directed the commission's staff and legal counsel to institute proceedings to examine the rates charged and the services rendered by the cooperatives. The commission's intended proceeding, thus, was a matter affecting services rendered and rates charged. The cooperatives' petition for declaratory and injunctive relief interrupted this proceeding to seek judicial review of a matter affecting services and rates. Accordingly, the professional fees ánd costs incurred by the commission's special counsel were properly certified to the plaintiff cooperatives.
The proceedings in this case also differ significantly from those in which the commission intervened in the South Central Bell case. Unlike the utilities in that case, the utilities in this case were called before the commission. They are also parties to the proceeding that has resulted in the certification of expenses. Finally, the commission's proceeding in this case would have had a direct effect on the cooperatives' rates.
The judgment of the district court in favor of the commission on the fee issue ordered the cooperatives to pay 90% of the fees and expenses certified to them and Vn of the remaining 10%, with the remaining /n certified pro rata to the other cooperatives involved in the commission's docket No. U-17753. Although the district judge gave no reason for this division of the fees, the cooperatives did not challenge this allocation percentage as unreasonable. Nor did they challenge the fees as being unnecessary or arbitrary, except in the context of their broader argument that this proceeding was not one affecting services and rates. Since this case constitutes judicial review of a commission proceeding that began as a rate and services inquiry, this court should find no basis for refusing to uphold the lower court judgment in favor of the commission concerning the commission's certification of fees and costs to the cooperatives.