Opinion ID: 1174031
Heading Depth: 1
Heading Rank: 3

Heading: commission proceedings on remand

Text: This Part concerns whether the terms of our remand order in Wexpro I permitted the parties to negotiate a settlement that the Commission could approve without a de novo determination of the principal factual premises upon which it was based. Citing the obvious proposition that an inferior tribunal must conform to the mandate of a superior court, Powerine Co. v. Zion's Savings Bank & Trust Co., 106 Utah 384, 148 P.2d 807 (1944); Briggs v. Pennsylvania Railroad Co., 334 U.S. 304, 306, 68 S.Ct. 1039, 1040, 92 L.Ed. 1403 (1948), the Department and the Coalition contend that the settlement violated this Court's mandate in Wexpro I in four respects: (1) The ratepayers did not get all of the profits from the properties (595 P.2d at 876); (2) The Commission's order allows MFS's shareholders to operate two unregulated oil companies as wholly owned subsidiaries (Wexpro and Celsius) ( id. at 878 n. 8); (3) The Commission failed to determine whether the properties in question were utility assets in accordance with the tests set forth by the Court ( id. at 878); (4) The Commission failed to hold a hearing and make an independent determination of the market value of the assets in which the ratepayers had an interest ( id. ). The short answer to the first argument is that this Court did not require that the ratepayers receive all of the net profits from the properties in which they had a proprietary interest. The Court's statement that the ratepayers were the primary source of risk capital for the exploration of these properties, [22] and the statement that the ratepayers were entitled to share in the benefit, 595 P.2d at 876, do not add up to a ratepayers' vested right to all of the net profits from production on these properties. The extent of the interest the ratepayers would receive was subject to negotiation and inclusion in a package, as was done. The second argument will be discussed in Part IV of this opinion. The third and fourth arguments challenge the Commission's power to approve a settlement that resolves the disposition of the contested properties by negotiation rather than by the process contemplated in the Court's opinion: determining whether particular properties were utility assets according to three specified criteria, and, if so, determining their market value in order to protect the ratepayers' interests. The Department and the Coalition characterize the Commission's action in approving the settlement as a deviation from this Court's mandate that is fundamentally repugnant to the judicial process of the State  an affront that threatens the maintenance of respect for the Court's decisions. The Commission, on the other hand, obviously saw the negotiated settlement as a means of resolving not only the questions remanded from this Court, but also other important controversies whose speedy and economical resolution would serve the public interest. Thus, in its findings of fact, the Commission accepts the Stipulation and Agreement as [a] means of dealing with the `Wexpro' case and related matters, and finds that [r]esolution of the many issues involved in this proceeding and the related pending litigation is in the public interest. In that context, the Commission's order concludes that the Commission has jurisdiction to resolve cases before it on the basis of a negotiated settlement, and that the settlement resolves the disputes between the parties and the issues of the remanded case in a reasonable and lawful manner that is consistent ... with the opinion of the Utah Supreme Court in [ Wexpro I ]. As noted in Part IIA herein, the question of whether the Commission has departed from our mandate is a question of general law, which we determine without weight to the decision or deference to the expertise of the Commission. The law has no interest in compelling all disputes to be resolved by litigation. International Motor Rebuilding Co. v. United Motor Exchange, Inc., 193 Kan. 497, 499, 393 P.2d 992, 995 (1964); Lomas & Nettleton Co. v. Tiger Enterprises, Inc., 99 Idaho 539, 542, 585 P.2d 949, 952 (1978). One reason public policy favors the settlement of disputes by compromise is that this avoids the delay and the public and private expense of litigation. The policy in favor of settlements applies to controversies before regulatory agencies, [23] so long as the settlement is not contrary to law and the public interest is safeguarded by review and approval by the appropriate public authority. Pennsylvania Gas & Water Co. v. Federal Power Commission, 463 F.2d 1242 (D.C. Cir.1972); Continental Oil Co. v. Federal Power Commission, 373 F.2d 96 (10th Cir.1967). The policy in favor of settlements also applies to cases remanded by appellate courts, even though settlements in this circumstance invariably involve some deviation from the course of events contemplated in the mandate. If that deviation were considered an affront to the reviewing court, the policy favoring settlements would be frustrated. In this circumstance, the important consideration is not whether the settlement deviates from the process contemplated in the mandate, but whether the terms of the settlement achieve the result sought to be achieved by the mandate. [24] In addition, where the controversy involves public regulation, the settlement must be consistent with the public interest. That question is addressed in Part IV of this opinion. The result sought to be achieved by the Court's mandate concerning the determination of utility assets and fair market value was clearly stated in Wexpro I: so an appropriate benefit [from any transfer] will redound to the credit of the ratepayers. 595 P.2d at 878. We conclude as a matter of law (Part IIA) that whether the stated goal has been achieved is a question to be resolved by the Commission, which could do so either by hearing witnesses and reaching its decision in an adversary proceeding or by reviewing the outcome of highly adversary and good faith negotiations between the parties. [25] The Commission's findings on the questions pertaining to the market value of the transferred properties and benefits to ratepayers are as follows: The Settlement will allow the properties to be explored and developed to the benefit of all parties. The interests of MFS and its customers in benefits from the properties are protected and realized in the Settlement. The transfer of properties is for fair market value as that value is typically determined in the industry. Adequate benefits from the Settlement redound to the benefit of customers of MFS. There is abundant evidence to support those findings  ample to satisfy the scope of review described in Parts IIB and C of this opinion for questions of basic fact like market value and for questions of application like benefits to ratepayers. For example, every witness who testified on this subject affirmed that a production royalty was the accepted means of valuing interests in unexplored oil and gas properties, that 7% was a fair figure in the circumstances, and that the overall settlement was fair to the ratepayers. [26] The Department's argument that the settlement was not a reliable measure of market value because it was coerced by the prospects of continued litigation is not evidence of that fact, and, not being supported by evidence presented to the Commission, could not be a basis for upsetting the Commission's findings in any case. Since  as decided by the Commission  the settlement achieves the result sought by the Court's mandate, the Commission's deviation from the process contemplated in the mandate was appropriate. This is especially true because the public authority empowered to regulate and supervise all of the business of a public utility, U.C.A., 1953, § 54-4-1, is the Commission, not this Court. Mountain States Telephone & Telegraph Co. v. Public Service Commission, 107 Utah 502, 510-12, 155 P.2d 184, 187-88 (1945). The mandate we issue in a particular case does not displace that statutory division of responsibility. The Commission is not an automaton, free only to act as programmed by the mandate of the reviewing court. Especially in the circumstances of this case, where the settlement resolves not only the case remanded to the Commission but also other pending controversies and problems posed by subsequent events, the mandate does not prevent the Commission from enforcing the legislative policy committed to its charge. F.C.C. v. Pottsville Broadcasting Co., 309 U.S. 134, 145-46, 60 S.Ct. 437, 442-43, 84 L.Ed. 656 (1940); N.L.R.B. v. Food Store Employees Union, 417 U.S. 1, 9-11, 94 S.Ct. 2074, 2079, 2080, 40 L.Ed.2d 612 (1974). Consistent with that principle, the Commission has the latitude to approve a settlement resulting from arm's length bargaining in good faith, whose terms are consistent with the result sought to be achieved by the mandate of the reviewing court and in the public interest.