Title: Oilfield Fluid Motor Carriers v. KANSAS CORP. COMM'N
Citation: 234 Kan. 983, 677 P.2d 982
Docket Number: 55,691
State: Kansas
Issuer: Kansas Supreme Court
Date: February 18, 1984

234 Kan. 983 (1984)
677 P.2d 982
OILFIELD FLUID MOTOR CARRIERS, (Participants in K.M.C.A. Tariff 90-E, KCC No. 80) Appellees/Cross-Appellants,
v.
THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS, R.C. LOUX, Chairman, JANE T. ROY, and PHILLIP R. DICK, Commissioners and their respective successors in office as members of the STATE CORPORATION COMMISSION OF THE STATE OF KANSAS, Appellants/Cross-Appellees.
No. 55,691

Supreme Court of Kansas.
Opinion filed February 18, 1984.
Robert M. Fillmore, special assistant attorney general and assistant general counsel for KCC, argued the cause, and Brian J. Moline, general counsel for KCC, was with him on the briefs for appellants/cross-appellees.
William L. Mitchell, of Mitchell and Henry, of Hutchinson, argued the cause and was on the brief for appellees/cross-appellants.
John E. Jandera, of Jandera, Gregg &amp; Barker, of Topeka, argued the cause and was on the brief for intervenors Holton Transport, Inc., Capitol City Moving and Storage, Inc., Darnall Truck Service, Inc., Cyrus Truck Line, Inc., Prouty Truck Line, Inc., and Hofer, Inc.
The opinion of the court was delivered by
HOLMES, J.:
The State Corporation Commission of Kansas (KCC) appeals from a district court judgment invalidating a 3% rate increase order issued by the KCC and granting an 18% rate increase as sought by the plaintiffs. The plaintiffs have cross-appealed from the district court's findings that the order of the KCC was timely issued and that the 3% rate granted by the KCC was reasonable and supported by substantial competent evidence. The case was transferred from the Court of Appeals pursuant to K.S.A. 20-3018(c).
The plaintiffs are intrastate motor carriers, parties to Kansas Motor Carriers Association Tariff No. 90-E, KCC No. 80, involved in the transportation of crude oil, fresh water and salt water needed for oil and gas operations. On January 27, 1982, the motor carriers filed an application and suggested tariffs with the KCC seeking an 18% increase in rates. Hearings were held in the spring and on September 21, 1982, the KCC issued its order granting a 3% increase. The motor carriers filed a motion for rehearing September 30, 1982, which was denied on November 1, 1982. The September 21, 1982, order of the KCC provided in part:
....
On November 29, 1982, the motor carriers filed in Butler County District Court an application for judicial review of the KCC orders. Plaintiffs challenged the agency action on three grounds: First, there was no final order within 240 days of the original application as required by K.S.A. 66-117(b); second, the orders were unlawful, unreasonable, arbitrary, and not supported by any evidence; and finally, permitting carriers to charge less than the maximum rate increase without filing a new tariff violated K.S.A. 66-108 and 66-109. For these reasons plaintiffs claimed the agency decisions were void, and the proposed increase of 18% should be deemed approved and effective under K.S.A. 66-117(b). Following oral arguments, heard on March 10, 1983, the trial court in a memorandum opinion issued March 25, 1983, found that the KCC's September 21, 1982, order was a final order and within the 240-day limitation of K.S.A. 66-117(b). On the second question, the court found that the KCC's 3% rate increase was supported by substantial competent evidence, in that the agency had considered all of the evidence before it and arrived at a reasonable rate from the evidence.
However, the court found for plaintiffs on the final issue, the legality of permitting motor carriers to charge less than the maximum approved rate without filing such lesser rates with the KCC. The trial judge stated:
In an order entered May 5, 1983, the trial court denied a motion by the KCC for clarification of the court's prior order and further found and ordered:
The KCC now appeals from that portion of the trial court's judgment declaring the agency order unlawful and implementing the 18% rate increase. The motor carriers cross-appeal from that portion of the judgment finding the KCC action to be timely within the 240-day limitation of K.S.A. 66-117(b), and the 3% rate increase reasonable as based upon substantial competent evidence.
The rules governing judicial review of an order of the KCC were set out by the Court of Appeals in Midwest Gas Users Ass'n v. Kansas Corporation Commission, 3 Kan. App.2d 376, 595 P.2d 735, rev. denied 226 Kan. 792 (1979), wherein the court stated:
Furthermore, for the purpose of determining whether a district court has observed the requirements and restrictions placed upon it, an appellate court will make the same review of the administrative tribunal's action as does the district court. Kelly v. *987 Kansas City, Kansas Community College, 231 Kan. 751, 754, 648 P.2d 225 (1982).
As the first issue on appeal we will consider the cross-appellants' contention that the original order of the KCC was not timely issued. K.S.A. 66-117(b) provides in part:
The September 21, 1982, order of the KCC granting the 3% increase in rates was issued on the 237th day after the filing of the application by the motor carriers.
We have not previously considered the question of precisely what action on the part of the KCC qualifies as a "final order" within the dictates of K.S.A. 66-117(b). The essence of the motor carriers' argument is that the statute can only be satisfied by KCC action upon, approval and implementation of an authorized rate by the end of the 240th day after an application is filed or the order is not timely and the requested rate, in this case an 18% increase, is automatically effective. It is the position of the KCC that a "final order" for purposes of the statute is one disposing of the issues raised by the initial rate application rather than one issued in response to an application for rehearing.
The motor carriers point to the decision in Sunflower Pipeline Co. v. Kansas Corporation Commission, 3 Kan. App.2d 683, 600 P.2d 794 (1979), for the principle that a new rate increase granted by the KCC becomes effective only after appropriate tariffs are formulated, filed with, and approved by the KCC. Plaintiffs assert that by implication under K.S.A. 66-117(b), all of these steps must be completed within the 240-day period to avoid automatic implementation of the proposed rate change initially *988 requested by a common carrier. Plaintiffs have ignored the proviso of 66-117(b) to the effect that if the hearings on the application have not been completed and are still in process on the 240th day, then the period shall be extended to the end of such hearings plus an additional 20 days for the KCC to prepare and file its final order. Obviously, the final order contemplated by the statute is the initial order on the original application and not an order issued after a rehearing and the other filings that are necessary for the rate change to become effective. We hold that the final order contemplated by 66-117(b) is the order on the petitioner's application and not subsequent orders issued as a result of a rehearing or other proceedings. As the order of the KCC granting the 3% increase was issued within the 240-day period, it was timely under the statute. The trial court was correct in so finding.
The next issue raised by the motor carriers is their contention that the KCC order is unreasonable and unlawful because it is not supported by any competent evidence and because the KCC did not make sufficient findings of fact to support its order. The principal contention is that as the KCC did not present any testimony it should have accepted the testimony of the petitioners' expert, Bruce Myers, C.P.A., as being true and conclusive. The KCC in its order went into considerable detail to point out the areas of the testimony which the commissioners found to be lacking. Suffice it to say the KCC discovered a number of problems with the data underlying the testimony, which was based upon a revenue/expense analysis of sixteen of the motor carriers. The problem areas included inadequate records; reliance on estimates of the carriers' costs rather than actual figures; lack of independent verification of amounts; the use of projected cost increases without considering subsequent mitigating trends; the use of replacement costs to estimate future expenses, based on the assumption the carriers were actually going to replace their equipment; and reliance on frequently incomplete balance sheets submitted by the carriers. For these reasons the KCC rejected some of the underlying data, disregarded some of Myers' figures, and adjusted others. The KCC relies upon Union Gas System, Inc. v. Kansas Corporation Commission, 8 Kan. App.2d 583, 663 P.2d 304, rev. denied 233 Kan. 1093 (1983), for authority that it may reject expert testimony even if uncontroverted. In that case the court stated:
In considering its scope of review the court in Midwest Gas Users Ass'n v. Kansas Corporation Commission, 3 Kan. App.2d at 381, stated:
The trial court found the KCC order to be supported by substantial competent evidence and we agree.
The next issue on appeal is the validity of the KCC action in establishing the 3% increase as a maximum rate to be charged by the motor carriers and authorizing individual carriers to charge less than the maximum rate without filing such lower rates with the KCC. The motor carriers contend that throughout the history of KCC rate regulation it has always been the practice for the commission to establish fixed rates rather than a range or a ceiling. K.S.A. 1983 Supp. 66-1,112 provides in part:
The contention that the KCC exceeded its authority in allowing motor carriers to charge less than the maximum "without being required to file a new tariff with the Commission" has merit. It is the position of the motor carriers that such a provision violates the clear mandates of K.S.A. 66-108 and 66-109. Those statutes provide in pertinent part:
The KCC relies upon K.S.A. 66-117(a) which states in part:
for the argument that the KCC may make effective a change in rates without either publication or filing. We do not agree. The clause "[u]nless the state corporation commission otherwise orders" would appear to grant the KCC authority to authorize less than 30 days for the implementation of the rate change if it is *991 approved by the KCC. It does not contain any provision which would eliminate the filing requirements of 66-108. The trial court, in addressing this issue, stated:
We concur that there are sound and compelling reasons behind the statutory requirement of a filing of all schedules of rates and changes therein. While under the KCC order for a maximum rate anything less than the maximum would presumably be valid, nevertheless any variation from the 3% allowed by the KCC still requires at least filing with the KCC so the information is available to the public. A liberal construction of the act as required by K.S.A. 66-141 and the rule-making authority granted the KCC are not sufficient to warrant a departure from clear statutory requirements established by the legislature. We hold that if the motor carriers intend to charge rates under the maximum authorized by the KCC order then such rates must be filed with the KCC and published as ordered by the KCC or as mandated by the statutes.
Finally we are faced with the ultimate disposition of this case as made by the trial court. The trial court found the KCC order void due to the lack of a filing provision and authorized the implementation of an 18% increase in rates as originally requested by the carriers. In this we think the court erred. Provisions for review of orders of the KCC are set forth in K.S.A. 66-118a et seq. 66-118d provides in part:
66-118k provides:
When the provisions of all of the statutes are read together it appears that the extent of the power of the court on review is to determine whether the order is lawful and reasonable and if the court determines the order is unlawful or unreasonable then the court has the power to vacate, modify or set aside the order. Then under 66-118k the judgment of the court is filed with the KCC and the motor carriers must seek further relief through the administrative process before the KCC. The district court was not authorized to find the order void and then proceed to implement the 18% increase. In State, ex rel., v. Flannelly, 96 Kan. 372, 152 Pac. 22 (1915), this court said:
More recently, the Court ruled in Southwestern Bell Tel. Co. v. State Corporation Commission, 192 Kan. 39, 386 P.2d 515 (1963), that:
The judgment is affirmed in part and reversed in part in conformance with the views expressed in this opinion.