Case Name: TRANS-WESTERN EXPRESS, LTD., Petitioner-Appellant, v. The PUBLIC UTILITIES COMMISSION of the STATE of Colorado, Respondent-Appellee
Court: Colorado Supreme Court
Jurisdiction: Colorado
Decision Date: 1994-07-11
Citations: 877 P.2d 350
Docket Number: No. 93SA271
Parties: TRANS-WESTERN EXPRESS, LTD., Petitioner-Appellant, v. The PUBLIC UTILITIES COMMISSION of the STATE of Colorado, Respondent-Appellee.
Judges: ROVIRA, C.J., dissents.
Reporter: Pacific Reporter 2d
Volume: 877
Pages: 350–363

Head Matter:
TRANS-WESTERN EXPRESS, LTD., Petitioner-Appellant, v. The PUBLIC UTILITIES COMMISSION of the STATE of Colorado, Respondent-Appellee.
No. 93SA271.
Supreme Court of Colorado, En Banc.
July 11, 1994.
Jones & Keller, P.C., Edward T. Lyons, Jr., David E. Driggers, Denver, for petitioner-appellant.
Gale A. Norton, Atty. Gen., Stephen K. ErkenBrack, Chief Deputy Atty. Gen., Timothy M. Tymkovieh, Sol. Gen., Merrill Shields, Deputy Atty. Gen., Richard Djokic, First Atty. Gen., Jeffery A. Froeschle, Asst. Atty. Gen., Denver, for respondent-appellee.
. Miller Brothers, Inc. also filed a notice of intervention as a matter of right but subsequently withdrew its motion to intervene.

Opinion:
Justice ERICKSON
delivered the Opinion of the Court.
Trans-Western Express, Ltd. (TWX) appeals the decision of the district court which upheld the ruling of the Public Utilities Commission of Colorado (PUC). The PUC denied TWX's application for extension of its common-carrier authority. TWX asserts that the PUC applied the wrong standard of "public need" by finding that the testimony of a single shipper does not establish the requisite public need to amend a common-carrier's certificate of public convenience and necessity. TWX also claims that the decision of the PUC was arbitrary and capricious, internally and externally inconsistent, and without a rational basis in the record. We disagree and affirm the judgment of the district court.
I
TWX is a common carrier of goods that provides trucking service within the State of Colorado. One of TWX's primary customers is Target Stores, Inc. (Target). TWX holds common-carrier authority pursuant to Certificate of Public Convenience and Necessity No. 205 & I (PUC No. 205) which allows TWX to operate between Target's Pueblo distribution center and Target's retail stores located within Colorado. PUC No. 205 states:
I. Transportation — on schedule — of
A. General Commodities
6. Between the facilities owned or controlled by Target Stores, Incorporated, located within a ten-mile radius of the intersection of 5th and Main Streets, Pueblo, Colorado, and between said points on the one hand, and on the other hand, the facilities owned or controlled by Target Stores, Incorporated, located within the State of Colorado;
II. Transportation — on call and demand — of
J. General Commodities
Between the facilities owned or controlled by Target Stores, Inc., located within a ten-mile radius of the intersection of 5th and Main Streets, Pueblo, Colorado, and between said points on the one hand, and on the other hand, all points within the State of Colorado.
PUC No. 205 also contains restrictions that prohibit TWX from shipping to the counties served by other carriers. TWX sought to strike Restriction A which provides:
RESTRICTIONS: This certificate is restricted as follows:
(A) Items (I) (A) (6) and (II) (J) are restricted against providing service into or out of points in the Counties of Boulder, El Paso, Phillips, Logan, Morgan, or Sedg-wick, State of Colorado.
Pursuant to common-carrier authority, Star Motor Freight Lines, Inc. (Star Motor) serves Target's Boulder County retail outlet; HVH Transportation, Inc. (HVH) serves Target's El Paso County retail distributor; and Platte Valley Freightways, Inc. (Platte Valley) has common-carrier authority in all other counties. Thus, PUC No. 205 limits TWX's ability to serve all of Target's retail outlets in Colorado.
Pi'ior to September 1991, Target decided to eliminate its use of multiple carriers. In order to improve its service and cut its costs, Target issued a request for proposals of all its common carriers for "just in time" transportation service. "Just in time" transportation service is service where carriers transport goods from a central warehouse to retail outlets as they are needed. Target sought the proposals to find a carrier that would provide an exclusive, specialized, and dedicated transportation service, moving all of Target's commodities from its Pueblo distribution center to all eighteen Target retail outlets in the State of Colorado early each morning, just as'the commodities are needed, thereby eliminating the need for the retail outlets to maintain costly inventory. Target asserts that the reduced costs would be passed along to the customer in the foim of lower prices. In order to achieve the desired results of "just in time" service, a ninety-nine percent on-time delivery rate was required and, at the time Target sought a carrier to provide this specialized service, all the carri ers had achieved better than ninety-nine percent on-time delivery.
On September 30, 1991, TWX filed an application seeking authorization to extend its operations under PUC No. 205 by removing Restriction A, which prohibits TWX from providing service into or out of Boulder, El Paso and other counties currently served by other earners. After the PUC published notice of the application, HVH, Platte Valley, and Star Motor filed a joint notice of intervention as a matter of right.
On March 10 and 11, 1992, a hearing was held before an administrative law judge (ALJ) to consider whether the PUC should grant TWX's application to remove Restriction A. The ALJ found that TWX did not establish the requisite public need for the proposed service and therefore recommended that the PUC enter an order denying TWX's application. Specifically, the ALJ found that the existing carriers serving Boulder and El Paso counties were providing adequate service and that while Target "presented evidence of its preference for a tailored, dedicated, and specialized 'just in time' transportation service . no evidence of the broader public need" was offered.
TWX filed exceptions to the ALJ's recommended decision on October 13, 1992, and HVH, Platte Valley, and Star Motor responded to the exceptions. The PUC denied TWX's exceptions and affirmed the recommended decision of the ALJ. Subsequently, TWX filed a petition in the district court to review the decision of the PUC. After the parties filed briefs and the court heard oral arguments, the district court entered an order affirming the PUC's decision that TWX had not demonstrated a public need to remove Restriction A.
II
TWX contends that the ALJ, the PUC, and the district court applied the wrong standard for determining public need in this case, that an improper new rule of evidence was arbitrarily established, and that the PUC's decision was not supported by the record. We disagree.
A
Common-carrier certificates of public convenience and necessity are governed by the doctrine of "regulated competition" pursuant to section 40-10-105(2), 17 C.R.S. (1993). See D & G Sanitation, Inc. v. Public Util. Comm'n, 185 Colo. 386, 388, 525 P.2d 455, 456 (1974) (applying the doctrine of "regulated competition"); Miller Bros., Inc. v. Public Util. Comm'n, 185 Colo. 414, 430, 525 P.2d 443, 451 (1974) (same); Red Ball Motor Freight, Inc. v. Public Util. Comm'n, 185 Colo. 438, 441, 525 P.2d 439, 440 (1974) (same). The doctrine of regulated competition requires the PUC to deny an application for common-carrier authority if granting the application would create "excessive" or "destructive" competition. See Morey v. Public Util. Comm'n, 629 P.2d 1061, 1066, 1068 n. 9 (Colo.1981) (Morey II). "Under the doctrine of 'regulated competition,' the controlling consideration is the public need." Morey v. Public Util. Comm'n, 196 Colo. 153, 156, 582 P.2d 685, 687 (1978) (Morey I) (emphasis in original).
Section 40-10-105(2) sets forth the controlling statutory language for granting common-carrier authority and provides:
The granting of any certificate of public convenience and necessity to operate a motor vehicle for hire for the transportation of property shall not be deemed to be an exclusive grant or monopoly, and the doe- trine of regulated competition shall prevail. The commission has authority to grant more than one certificate of public convenience and necessity to operate motor vehicles for the transportation of property over the same route or a part thereof or within the same territory or a part thereof if the commission finds that the present or future public convenience and necessity requires or will require such operation.
(Emphasis added.) Thus, under the regulated competition standard applicable to common-carrier authorities, the PUC may grant more than one common-carrier authority on a route if it finds public need for the authority. § 40-10-105(2), 17 C.R.S. (1993).
The award of common-carrier authority is a legislative prerogative granted to the PUC by the Colorado Constitution and by the General Assembly. Colo. Const. art. XXV; § 40-10-104 & 40-10-105(2), 17 C.R.S. (1993); Morey II, 629 P.2d at 1065. We are not precluded, however, from reviewing the guidelines promulgated and applied by the PUC to ensure that they are not unconstitutional, arbitrary, capricious, unreasonable or vague. Morey II, 629 P.2d at 1065; Miller Bros., 185 Colo, at 435, 525 P.2d at 454.
We have held that the public interest or the public need is served by safe, efficient, and economical transportation services. Morey II, 629 P.2d at 1066; see also Wells Fargo Armored Serv. Corp. v. Public Util. Comm'n, 190 Colo. 204, 207, 545 P.2d 707, 709 (1976) (affirming the reasoning of Miller Brothers); Miller Bros., 185 Colo, at 434-35, 525 P.2d at 453-54 (approving a set of standards set forth by the PUC which examined efficiency, economics, sufficiency, and safety when determining public need). One factor the PUC may consider in determining whether there is a public need for common-carrier authority pursuant to the tenets of the doctrine of regulated competition is the adequacy or inadequacy of current service. Morey I, 196 Colo, at 156, 582 P.2d at 687. Another consideration we have held relevant is whether the needs of the public as a whole are served.
In Morey II, we held that the public need is broader than the individual needs and preferences of an applicant's customers. Morey II, 629 P.2d at 1066-67. In upholding the denial of an application based solely on the needs and preferences of the applicant's customers, we concluded:
That [the customer's] needs and preferences are probative of a "public need" for competitive services is indisputable. They are not, however, conclusive evidence of a "public need." . If certificates of public convenience and necessity were made available, as a matter of right, to any applicant who could prove that one or more customers needed or preferred its proposed services, the statutory mandate to regulate competition would be illusory. "Regulated competition" is not synonymous with deregulation.
Id. at 1066 (emphasis in original).
Thus, Morey II defines public need as "the needs of the public as a whole, not simply the needs of witnesses who testify in favor of an applicant's proposed service." Id. at 1067. While the needs and preferences of one shipper may be some evidence of public need, they are neither necessarily dispositive nor immaterial. Therefore, the PUC may consider testimony of a single shipper concerning public need, weigh the testimony, and determine its significance.
B
In determining whether TWX demonstrated a public need for removing Restriction A, the ALJ and the PUC did not announce a new evidentiary standard that would foreclose the testimony of a single shipper, as a matter of law, from establishing public need. Contrary to TWX's contention, the PUC merely found a lack of support for TWX's assertion that there was a public need to grant its application.
In Kuboske v. Public Util. Comm'n, 187 Colo. 38, 528 P.2d 248 (1974), we reversed a PUC decision that an applicant's testimony alone could not establish public convenience and necessity. The PUC incorrectly stated that the absence of supporting testimony from customers was fatal to the application. We held that it was patently arbitrary and capricious for the PUC to base its ruling on the number of witness produced by an applicant and noted that substantial evidence required to show a need for a proposed extension of service may be met solely from the applicant's testimony. Id., 187 Colo, at 39-40, 528 P.2d at 249.
Similarly, in Public Utilities Commission v. Donahue, 138 Colo. 492, 335 P.2d 285 (1959), we rejected as unlawful and unconstitutional a PUC rale precluding a finding of public convenience and necessity unless a shipper or passenger testified. We stated: "If the rule means that no application can be granted without passenger testimony, no matter how strong other proof might be, then such a rule would defeat the purpose of a trial and constitute a denial of due process." Id. at 138 Colo. 504, 335 P.2d at 291. The PUC may not "under the pretense of regulating evidence . establish rules of evidence which prevent a party from exhibiting his rights . by virtually excluding evidence in his behalf." Id.
The PUC in this case, however, has not established a new rule of evidence or excluded evidence. Although the ALJ found that TWX "failed to establish any public need for the service here requested," the PUC recognized this fact and noted that there was "some" evidence of a "possibility" of public need presented by TWX. The PUC then found that the evidence in the record supported the fact that the type of public need TWX presented was not dispositive. While the decision of the ALJ may not have been entirely clear, there was ample evidence in the record that supported the ALJ's conclusion. See Miller Bros., 185 Colo, at 425, 525 P.2d at 448 (stating that the PUC decision was not "a model of clarity" but evidence in the record supported its decision and the lack of clarity did not render the PUC decision infirm).
The PUC did not hold that evidence of broad public need could not come from the shipper or any other person. The PUC found that the testimony presented by Target concerning possible lower prices constituted evidence of public need: "That somewhat attenuated 'public need' is the possibility of lower prices to Target's customers if the allegedly more efficient service offered by TWX were granted may constitute some evidence of the public evidence of public benefit for the services." Nor did the PUC state that evidence from a shipper, without public support, could not meet the applicant's burden of proving public need. The district court recognized that the PUC and the ALJ determined that TWX did not present sufficient evidence of public need and stated:
This finding is merely a statement of the sufficiency of the evidence, after consideration of weight to be given certain evidence, in this case. A close examination of the findings of the ALJ adopted by the PUC, shows that this finding is applicable to this particular case and is not a general statement imposing an arbitrary and capricious standard of proof in [a] hearing involving common-carrier certificate.
The PUC and the ALJ observed that there was not sufficient evidence from anyone on the issue of broad public need, as opposed to the private needs of Target.
Great weight must be given to the interpretation which the Commission gives to its own language, and unless such interpretation is clearly erroneous, arbitrary or in excess of its jurisdiction, the courts may not interfere.
Miller Bros., 185 Colo, at 427-28, 525 P.2d at 449 (quoting McKenna v. Nigro, 150 Colo. 335, 337, 372 P.2d 744, 745-45 (1962)). Accordingly, we hold that the PUC did not act in an arbitrary and capricious manner in finding TWX's proof of public need insufficient.
TWX's assertion that the PUC announced a new evidentiary standard that forecloses the testimony of single shipper to establish public need is erroneous. Therefore, the sole issue is whether substantial evidence in the record supports the ALJ's findings.
C
The final issue before us is whether evidence in this case constitutes a public need. The ALJ, the PUC, and the district court all held that by itself, evidence of Target's needs and preferences does not constitute a public need. We agree.
Findings and conclusions of the PUC are presumed to be reasonable and valid, Caldwell v. Public Util. Comm'n, 200 Colo. 134, 137, 613 P.2d 328, 330 (1980), and we will not disturb them when they are supported by substantial evidence in the record. Morey II, 629 P.2d at 1068; Sangre De Cristo Elec. Ass'n v. Public Util. Comm'n, 185 Colo. 321, 324, 524 P.2d 309, 310 (1974). Evidence is reviewed in the light most favorable to the PUC's findings. Peoples Natural Gas Div. of N. Natural Gas Co. v. Public Util. Comm'n, 193 Colo. 421, 427, 567 P.2d 377, 381 (1977). Finally, considerable weight is given to findings of the PUC because of its expertise and judgment.
The PUC is required to balance conflicting inferences and weigh findings, Colorado Mun. League v. Public Util. Comm'n, 197 Colo. 106, 111, 591 P.2d 577, 580 (1979); Atchison, Topeka & Santa Fe Ry. Co. v. Public Util. Comm'n, 194 Colo. 263, 267, 572 P.2d 138, 141 (1977), and a reviewing court is prohibited from substituting its judgment for that of the PUC. Public Serv. Co. v. Public Util. Comm'n, 644 P.2d 933, 940 (Colo.1982); North Eastern Motor Freight, Inc. v. Public Util. Comm'n, 178 Colo. 433, 436, 498 P.2d 923, 924 (1972). The standard of review on a question of whether a decision of the PUC is supported by the evidence is whether the PUC's conclusions are in accordance with the evidence. Ace West Trucking, Inc. v. Public Util. Comm'n, 788 P.2d 755, 762 (Colo.1990).
In the hearing before the ALJ, TWX contended that the proposed "just in time" transportation service would result in substantial savings to Target, and Target would in turn, pass those savings along to the customer in the form of lower prices. According to TWX, this was evidence of the public need.
The ALJ rejected this contention, however, stating:
The public need in issue in this proceeding is the broad public need for transportation service, rather than Target's preference for a dedicated, tailored, specialized transportation service, which may provide transportation costs savings to Target. Accordingly, it is concluded that TWX has failed to establish any public need for the service here requested.
The PUC reviewed the ALJ's determination and agreed:
In this case, TWX did not present public witnesses, other than TWX and Target stating [] their private benefits for the proposed service. The administrative law judge may have overstated the matter when he found that TWX "failed to establish any public need for the service here requested." The somewhat attenuated "public need" is the 'possibility of lower prices to Target's customers if the allegedly more efficient service offered by TWX were granted may constitute some evidence of public benefit for the services....
Thus, while evidence of a benefit to the public from lower prices and a benefit to the shipper may be considered when determining if there is a public need for the granting of an application for a certificate of public convenience and necessity, the ALJ and the PUC did not find them dispositive.
The PUC applied the proper legal standard. It was within the PUC's authority to deny TWX's application. The ALJ took extensive testimony over the course of two days of hearings on the application. The record reveals that the only evidence of public need was Target's testimony. The PUC reviewed the ALJ's findings and stated, "[i]n recommending denial of the application, the dispos-itive factor for the administrative law judge was the lack of evidence from the public, as opposed to evidence merely from the shipper Target regarding its private needs, for the necessity of TWX's common carrier service."
The ALJ and the PUC did not determine that the "just in time" transportation service Target wanted TWX to provide would impact the public need by providing lower prices for Target's customers. Target claimed that it needed one shipper to provide efficient "just in time" transportation service to adequately meet the needs of Target's retail stores so that the retail stores would not be required to stock inventory. Target reasoned that an efficient carrier could meet this need and could therefore save Target the cost of keeping inventory. To accomplish on-time delivery, Target indicated that it required a ninety-nine percent on-time delivery rate to satisfy its "just in time" delivery requirements.
The ALJ determined, however, that all the common carriers were currently providing transportation services at a higher percentage on-time delivery rate than Target's "just in time" delivery requirements. The adequacy, availability, and competitive character of existing service are proper factors to consider in concluding that TWX's service is not "required" to serve public convenience and necessity. See Miller Bros., 185 Colo, at 434, 525 P.2d at 453 (approving the PUC's evaluation of the availability, adequacy, and competitive character of existing common-carrier service); see also § 40-10-105(2), 17 C.R.S. (1993) (stating that the PUC may grant certificates of public convenience and necessity to more than one carrier if the public need "requires " it). Because TWX could not provide more efficient service to Target as a single shipper than the other carriers, there would be no cost-savings to pass along to Target's customers. Therefore, the record supports the ALJ's finding that the claimed public need for lower prices would not be met by granting TWX's application.
The ALJ also considered the harm to the existing carriers when determining whether there was a public need to grant TWX's application. The ALJ found that HVH and Star Motor would lose "backhaul" traffic if the application were granted. Thus, under the doctrine of regulated competition, the ALJ properly considered the impact the additional competition might have on competing carriers and on the existing carrier's ability to provide safe and efficient transportation services to their customers and to the public generally. See Miller Bros., 185 Colo, at 435, 525 P.2d at 452-53 (discussing the ramifications of an application that would materially impair the operations of existing carriers). The impact or harm to common carriers is relevant, however, only if it affects the general public, of which the carrier is a part.
Finally, the ALJ and the PUC considered the broad public need in removing Restriction A from PUC No. 205. The PUC noted the public benefits from HVH and Star Motor providing service to Target as backhaul freight. According to the PUC:
HVH and Star [Motor's] backhauling of cargo from Target's Pueblo Distribution Center means that trucks are used to maximum capacity, and that energy is conserved and air pollution is minimized, a public benefit for not granting TWX a common carrier authority, because TWX, Star [Motor], and HVH would all apparently be empty on one part of them route to Pueblo if the application were granted.
Therefore, without more, the testimony that Target preferred the removal of Restriction A was not enough for the ALJ or the PUC to find a public need. The ALJ stated:
In this proceeding, Target presented evidence of its preference for a tailored, dedicated, and specialized "just in time" transportation service. However, no evidence of the broader public need for the proposed service was here offered. TWX contends that the highly efficient "just in time" transportation service here proposed will result in substantial cost savings to Target, which savings will ultimately be passed on to Target's customers in the form of lower prices for retail goods, and that this equates with a public need for the service here proposed. This contention is rejected. The public need in issue in this proceeding is the broader public need for transportation service, rather than Target's preference for a dedicated, tailored, and specialized transportation service, which may provide transportation cost savings to Target.
Because the ruling of the PUC is supported by substantial evidence in the record, TWX did not establish a public need for an extension of its common-carrier authority.
Ill
We hold that the PUC applied the correct standard of public need in denying TWX's application for extension of its common-carrier authority and that the decision of the PUC was not arbitrary or capricious, internally or externally inconsistent, and has a rational basis in the record. Accordingly, we affirm the judgment of the district court.
ROVIRA, C.J., dissents.
VOLLACK, J., joins in the dissent.
. TWX appeals to this court pursuant to § 40-6-115(5), 17 C.R.S. (1993) ("Appellate review may be obtained in the supreme court concerning any final judgment of the district court on review, affirming, setting aside, or modifying any decision of the commission....").
.Common carrier is defined as:
"Common carrier" means every person directly or indirectly affording a means of transportation, or any service or facility in connection therewith, within this state by railroad, motor vehicle, aircraft, or other vehicle whatever by indiscriminately accepting and carrying for compensation passengers or property....
§ 40-1-102(3), 17 C.R.S. (1993).
. Currently, of the counties that TWX does not serve, Target has retail outlets only in Boulder and El Paso counties.
. One of Target's main competitors, Wal-Mart Stores, Inc., utilizes "just in time" transportation service. Target viewed the need to utilize similar service as a requisite for remaining competitive.
. The regulated monopoly doctrine, which is still applicable to common carriers of passengers, was replaced by the General Assembly as the controlling theory governing intrastate trucking in 1967. Ch. 433, § 115-9-5(2), 1967 CoIo.Sess. Laws 974.
.Providing for the public need and regulating competition demands that some restraints be placed upon inter-carrier competition therefore avoiding destructive competition. Morey v. Public Util. Comm'n, 629 P.2d 1061, 1066 (Colo. 1981) (Morey II). "The obligation to safeguard the general public against the impaired services and/or higher rates accompanying destructive or excessive competition is at the heart of regulated competition." Id.
. In Miller Bros., Inc. v. Public Util. Comm'n, 185 Colo. 414, 435, 525 P.2d 443, 454 (1974) we said:
We are tempted to announce a set of guidelines, extracted from the statutes and decisions of other jurisdictions. This, however, lies solely within the province of the Commission. To repeat, the Commission is here acting in a legislative capacity. It needs to apply guidelines, and it is within our jurisdiction on appeal to see that it does.
. TWX asserts that the decision of the ALJ and the PUC was arbitrary, capricious, and internally and externally inconsistent. Because we hold that the ALJ and the PUC did not propound a new rule of evidence, that the PUC's decision to grant common-carrier authority is a legislative prerogative, and that the record supports the decision, see infra part 11(C), we disagree with TWX's contentions.
. TWX states the issue presented for review in this manner:
Whether the rule of evidence that the PUC adopted in denying TWX's application, which foreclosed proof of need for a common-carrier service based on the testimony of a single shipper, was erroneous as a matter of law and violated TWX's rights to due process?
. Additionally, the party challenging the validity of the order has the burden of proving that the PUC's order was improper. Public Util. Comm'n v. Weicker Transp. Co., 102 Colo. 211, 217, 78 P.2d 633, 636 (1938).
. The PUC notes that although TWX appears to be seeking authority more similar to a contract carrier authority to provide in-house, specialized transportation services, TWX's application is for common-carrier authority. Under the contract carrier standard, the PUC considers the "specialized needs" of the shipper, and gives considerable deference to the shipper's choice of a carrier, even when there are competing common carriers. See § 40-11-103, 17 C.R.S. (1993); Pollard Contracting Co. v. Public Util. Comm'n, 644 P.2d 7, 11 (Colo.1982) (citing PUC Guideline C which discusses the importance of discerning a contract carrier applicant's ability to serve a specialized need). A contract carrier may not charge rates less than "the rates prescribed for motor vehicle common carriers for substantially the same or similar service." § 40-11-105(2), 17 C.R.S. (1993). Therefore, under a contract carrier application, TWX would be precluded from charging rates lower than those charged by the existing common carriers and Target could only benefit from lower transportation costs if the common-carrier authority were granted. Because TWX applied for a modification of its existing common carrier authority, we analyze the application under the common carrier standards and not the standards relevant to contract-carrier authority.