Court Opinion

ID: 9647380
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:34:33.200867+00
Date Added: 2024-06-11T18:11:48.592219
License: Public Domain

POWERS, Justice,
dissenting.
I withdraw my dissenting and concurring opinion dated May 25, 1994, and substitute the following in its place. Believing Gulf States has been deprived of property without due process of law, I respectfully dissent.
THE RIGHT TO AN AGENCY ADJUDICATION
Under the Fourteenth Amendment to the Constitution of the United States, Gulf States possesses a property interest in an agency decision in the contested case now before us — a written decision arrived at according to the terms of the Public Utility Regulatory Act (PURA)1 and the Texas Administrative Procedure Act (APA).2 See Logan v. Zimmerman Brush Co., 455 U.S. 422, 428-33, 102 S.Ct. 1148, 1153-56, 71 L.Ed.2d 265 (1982). Under the Fourteenth Amendment, the State may not fix Gulf States’ rates without a decision on the prudence issue by the only state organ — the Public Utility Commission — having the power to make such a decision. See Logan, 455 U.S. at 434-35, 102 S.Ct. at 1156-58; see also West Ohio Gas Co. v. Public Utils. Comm’n, 294 U.S. 63, 55 S.Ct. 316, 79 L.Ed. 761 (1935).
It is indisputable that only the Commission may adjudicate the prudence of the $1.453 billion of River Bend construction costs. No court may do so. It is also indisputable that the Commission never intended that its final order should adjudicate the prudence issue regarding the $1.453 billion. According to the supreme court, the Commission’s final order, in its Conclusion of Law Number 10, attempted “a deferral rather than a determination of the [prudence] issue.” Coalition of Cities for Affordable Util. Rates v. Public Util. Comm’n, 798 S.W.2d 560 (Tex.1990), cert. denied, 499 U.S. 983, 111 S.Ct. 1641, 113 L.Ed.2d 736 (1991).
The majority in this appeal hold, however, that the Commission constructively adjudicated, whether it intended to or not, the prudence of the $1.453 billion of River Bend construction costs. Not only was the Commission’s attempted deferral of the issue invalid, the majority hold, the same agency order adjudicated the very issue deferred for future adjudication. The majority reach this conclusion based on the following passage of the opinion in Coalition of Cities:
In this rate case, the PUC declared that GSU failed to meet its burden of proof to show that the entire $4.5 billion expense was prudently incurred.... A party who fails to meet its burden of proof loses. The party who has the burden but fails to persuade the trier of fact is not entitled to a second trial to present more evidence. By stating that GSU failed to meet its burden of proof on the prudence of the $1.453 billion, the PUC effectively disallowed that amount from the rate base.
Coalition of Cities, 798 S.W.2d at 563-64 (emphasis added). I believe the majority reach their conclusion because they think the quoted passage is binding by way of res judicata, but it is immaterial whether they believe that or whether they believe it is binding by way of stare decisis or by way of persuasive dictum. I believe the passage is obiter dictum that we are free to disregard save to the extent we find it persuasive;3 I do not find it persuasive at all, for reasons I shall point out below. I shall first explain, however, why the statement is dictum only.
THE DICTUM IN COALITION OF CITIES
It is undisputed that the decision in Coalition of Cities adjudicated a collateral attack upon the Commission order now before us on direct attack pursuant to PURA section 69— while the present suit was pending in district court, certain of the appellees sued in district *758court for an injunction restraining the Commission from attempting to adjudicate the prudence of the $1,453 biliion of River Bend construction costs that the agency had previously deferred for future adjudication. The district court issued the injunction; the supreme court affirmed that action in Coalition of Cities. What was necessary for the supreme court to decide in that appeal? 4
A collateral attack upon an agency order may be maintained successfully on one ground alone — that the order is void. An agency order may be void in the requisite sense on either of two grounds: (1) the order shows on its face that the agency exceeded its jurisdiction, or (2) a complainant shows that the order was procured by extrinsic fraud.5 Since Coalition of Cities was indisputably a collateral attack upon the Commission’s order, the sole issue the supreme court was required to decide — the only issue before the court at all and the only issue that court could decide , without overruling numerous of its previous decisions — was whether the Commission’s final order was void because the agency exceeded its jurisdiction in some respect. (It has never been contended that the order was procured by extrinsic fraud.) Any statements in the supreme court opinion not required to decide that issue are dicta.6
And, indeed, the supreme court decided that the Commission exceeded its jurisdiction because the face of the agency’s order showed that the Commission had divided the River Bend construction costs, adjudicated the prudence of $2,273 billion of such costs, and postponed to another proceeding an adjudication as to the remaining $1,458 billion: “[LJimited by statute and lacking any inherent power, the PUC was powerless to defer its decision to a future proceeding” because no statute conferred such power expressly or by necessary implication. Coalition of Cities, 798 S.W.2d at 564. Consequently, the Commission order was void to the extent the agency had exceeded its jurisdiction by such actions.
JUDICIAL DICTUM
Even though dictum, the court’s statement in Coalition of Cities, to the effect that the Commission had constructively decided the prudence of the $1,453 billion expenditure, requires our adherence if it appears to be “judicial dictum” — a statement by the supreme court made very deliberately after mature consideration and for future guidance in the conduct of the litigation. See Parker v. Bailey, 15 S.W.2d 1033, 1035 (Tex.Comm’n App.1929, holding approved). We cannot say that is the case here. The supreme court expressly declared that “[a]ll issues relating to the merits of the administrative order, including the prudence of all elements of construction costs, remain to be addressed by the trial court,” while noting that the court’s decision did not disallow permanently the $1,453 billion of River Bend construction costs. Coalition of Cities, 798 S.W.2d at 565 n. 7.
WHETHER THE DICTUM IS PERSUASIVE
The text of the supreme court’s opinion, as a whole, does not permit in my view the meaning and effect which the majority assign to the court’s dictum. I will assume, however, that the dictum has that meaning and effect. Even though dictum, the supreme court’s statement is entitled to our adherence to the extent we find it persuasive. I do not *759find the dictum persuasive because it requires that one believe the court overruled by implication certain well-established rules of law.
I.
The dictum declares “the PUC effectively disallowed” the $1,458 billion of construction costs because Conclusion of Law 18A, found in the agency’s final order, stated “that GSU failed to meet its burden of proof to show that the entire $4.5 billion expense was prudently incurred.” In this single conclusion of law, the majority say, the supreme court determined that the agency had adjudicated the prudence of the $1,458 billion. But the agency order also contained other conclusions of law which demonstrate without any possible doubt that the Commission did not in fact adjudicate the prudence of that sum. As the supreme court itself declared, the Commission’s order, in Conclusion of Law 10, attempted “a deferral rather than a determination of the [prudence] issue” regarding the $1,453 billion. Coalition of Cities, 798 S.W.2d at 563 (emphasis added).
A reviewing court must adhere to the agency’s intention and interpret an agency order according to the principles of statutory construction to discover that intention. Texas Liquor Control Bd. v. Attic Club, Inc., 457 S.W.2d 41, 45 (Tex.1970), appeal dismissed, 400 U.S. 986, 91 S.Ct. 459, 27 L.Ed.2d 435 (1971); Trapp v. Shell Oil Co., 145 Tex. 323, 198 S.W.2d 424, 439 (1946). This means that the court must seek the agency’s intention from a general view of the whole order, and the meaning inferred from the order must be one that is suggested by the language of the' order itself and one that the text will fairly sanction and clearly sustain. See Citizens Bank v. First State Bank, Hearne, 580 S.W.2d 344, 348 (Tex.1979). The language of the Commission’s order as a whole, when fairly read, will not sustain a conclusion that the agency has adjudicated the prudence of the $1,453 billion; that is a tortured inference. The supreme court itself conceded that the order expressly deferred making that very adjudication. How is it logically possible that the agency simultaneously adjudicated an issue and deferred an adjudication of that very issue? The majority do not explain.
One cannot in law or in fairness seize upon the single Conclusion of Law 18A, rather than the order as a whole and the other conclusions of law, to hold that Conclusion of Law 18A in isolation demonstrates an agency intention to adjudicate the prudence of the $1,453 billion expenditure.
II.
The only sure inference from the supreme court’s opinion in Coalition of Cities is that it held, necessarily, that the Commission lacked jurisdiction to divide the River Bend construction costs into two parts which the agency would adjudicate separately regarding prudence; consequently, at least that part of the agency order was void. The collateral attack could have been sustained on no other basis. “Void” means that the agency order has no force or effect, binds no one, affects no person’s rights, confers no right or protection; it is, in short, an absolute nullity. See 49 C.J.S. Judgments § 449, at 879 (1947). The supreme court did not explain how a void act by the agency can constitute an adjudication of any issue.
III.
By assigning to the Commission’s Conclusion of Law 18A a legal effect that the agency manifestly did not intend, as indicated by the face of the agency’s order as a whole, the supreme court in effect fixed the rate base. This is an invasion of the administrative sphere — a usurpation of the legislature’s prerogative acting through its agent the Commission. A court is forbidden to make such determinations. See Tex. Const. art. II, § 1; Gerst v. Nixon, 411 S.W.2d 350, 353-54 (Tex.1966); Davis v. City of Lubbock, 160 Tex. 38, 326 S.W.2d 699, 714 (1959); Marrs v. Railroad Comm’n, 142 Tex. 293, 177 S.W.2d 941, 950 (1944).
IV.
The supreme court’s theory, adopted by the majority, is that Gulf States bore the burden of persuasion regarding the prudence of the $1,453 billion expenditure, a burden not carried merely by introducing the *760company’s books in evidence to show that such amount was expended on River Bend for specified items. Coalition of Cities, 798 S.W.2d at 563. That theory is not correct unless the supreme court intended to change the law without saying so.
The Commission is bound by statute to calculate a utility’s rate base or “invested capital” on the basis of the “original cost of property ... as recorded on the books of the utility.” PURA § 39(a) (emphasis added). These books must be kept in a manner prescribed by statute and regulation. See PURA §§ 27-34; 16 Tex.Admin.Code §§ 23.-11-17 (1994). While PURA § 40 places upon a utility the “burden of proof to show that [a] proposed [rate] change ... is just and reasonable,” the ordinary interpretation of this statutory language is that it refers only to the burden of going forward with the evidence. The burden of persuasion falls upon the party claiming the utility’s expenditures, as reflected in its books introduced in evidence, were imprudent in one or more particulars. This interpretation accompanied the very origin of the prudent-investment requirement. See Southwestern Bell Tel. Co. v. Public Serv. Comm’n, 262 U.S. 276, 289 n. 1, 43 S.Ct. 544, 547 n. 1, 67 L.Ed. 981 (1923) (Brandeis, J., concurring). It remains the correct interpretation. See Environmental Defense Fund, Inc. v. Environmental Protection Agency, 548 F.2d 998 (D.C.Cir.1976), cert. denied, 431 U.S. 925, 97 S.Ct. 2199, 53 L.Ed.2d 239 (1977); 2 Kenneth C. Davis & Richard J. Pierce, Jr., Administrative Law Treatise § 10.7 at 165-66 (1994); Ron Moss, Ratemaking in the Public Utility Commission of Texas, 44 Baylor L.Rev. 825, 852-54 (1992); 1 A.J.G. Priest, Principles of Public Utility Regulation 412 (1969).
Under the contrary theory stated as dictum in Coalition of Cities, the utility’s books carry “no presumption that the expenditures reflected therein have been prudently incurred.” Coalition of Cities, 798 S.W.2d at 563. This then requires that the utility persuade the agency as to the prudence of each and every expenditure shown on the utility’s books, even those not challenged as being imprudent. This is an unreasonable manner of proceeding; I cannot believe the legislature intended to place upon the Commission such a time-consuming and expensive burden. And, in truth, the Commission apparently follows the general rule and disregards the “overbroad dictum” of Coalition of Cities. Moss, supra, at 853.
The majority and the supreme court are able to say on one ground only that the Commission adjudicated the prudence of the $1.453 billion — since Gulf States faded to prove the prudence of that amount, it “loses.” But this cannot be the case, of course, if that burden lay instead upon those who claimed the expenditures were imprudent. I believe that is plainly where the burden lay under the authorities cited above. That I personally failed to detect a contrary statement in another judge’s opinion by this Court, in another appeal, is hardly grounds for perpetuating the error.
CONCLUSION
Because the prudence of the $1.453 billion has never been adjudicated and can never be adjudicated by the Commission, under the majority’s theory, I would hold Gulf States has been deprived of property without due process of law.

. Tex.Rev.Civ.Stat.Ann. art. 1446c, § 69 (West 1994).

. Tex.Gov’t Code Ann. § 2001.174 (West 1994).

.Dictum is not binding on another cotut because it does not represent an adjudication. Grigsby v. Reib, 105 Tex. 597, 153 S.W. 1124, 1126 (1913).

. "Dictum” is a statement by a court concerning a matter the court is not required to decide. Grigsby, 153 S.W. at 1126. In Coalition of Cities, the supreme court was required to decide only whether the Commission order was void. Which party bore the burden of proof on the issue of prudence and the consequence of failing to carry that burden, seem to me utterly unrelated to the question of the agency's jurisdiction. Indeed, those issues necessarily assume the agency has jurisdiction to do what it did.

. These are venerable rules. See, e.g., Alamo Express, Inc. v. Union City Transfer, 158 Tex. 234, 309 S.W.2d 815 (1958); Thompson v. Railroad Comm’n, 150 Tex. 307, 240 S.W.2d 759 (1951); Railroad Comm’n v. Marathon Oil Co., 89 S.W.2d 517 (Tex.Civ.App.—Austin 1935, writ ref'd); Alpha Petroleum Co. v. Terrell, 122 Tex. 257, 59 S.W.2d 364 (1933); Texas Steel Co. v. Fort Worth & D.C. Ry., 120 Tex. 597, 40 S.W.2d 78 (1931); First Federal Sav. & Loan Ass’n v. Vandygriff, 576 S.W.2d 904 (Tex.Civ.App.—Austin), rev'd on other grounds, 586 S.W.2d 841 (Tex.1979).

.See note 4, supra.