Court Opinion

ID: 6471987
Source: CourtListenerOpinion
Date Created: 2022-06-26 14:21:09.078404+00
Date Added: 2024-06-11T15:53:50.520056
License: Public Domain

McKINNON, Justice dissenting. 25. The decision of the majority that the Commission lacked subject matter jurisdiction to rule on Gas Company of New Mexico’s (GCNM) rate application finds no support either in provisions of the Public Utility Act or decisions of this Court. The fact that Southern Union was not an operating utility at the time its successor, GCNM, applied for the rate increase on Southern Union’s behalf is neither relevant to nor determinative of the jurisdictional issue. Given the legislature’s mandate that we construe the Act liberally, NMSA 1978, § 62-3-2(B) (1985), that the Commission consider “the history and development of the property and business” of a public utility in the course of “fixing and setting of rates,” § 62-6-14(A) (1983), and that the Commission must “do all things necessary and convenient” to ensure that rates are just and reasonable, § 62-6-4(A) (1993), the Commission had jurisdiction to rule on the merits of the application. 26. Prior to January 28,1985, GCNM was owned and operated by Southern Union. (R.P. at 28.) On that date, Public Service Company of New Mexico (PNM) acquired the assets and business of GCNM, and now owns and operates GCNM under the name PNM Gas Services. (R.P. at 28, 458.) Uni-con Production Company sued PNM and Southern Union to recover $70 million allegedly owed under a 1954 gas purchase contract covering the period 1982 through 1988. (R.P. at 29.) In 1989, the parties settled for $11.7 million, or 17 cents on the dollar, which GCNM alleges was well below the average of similar settlements made at that time. (R.P. at 111.) Southern Union agreed to pay its proportionate share of the settlement costs for the pre-January 28, 1985 period, during which it owned GCNM, and PNM agreed to pay the balance for the period after January 28, 1985. (R.P. at 29-30.) According to GCNM, this settlement allowed Southern Union to avoid the legal fees, exposure to substantial liability, and uncertainty that a trial would have entailed. (R.P.’ at 112.) GCNM alleges that Southern Union exercised prudent business judgment in settling with Unicon, (R.P. at 114), and that the agreement benefitted New Mexico ratepayers, (R.P. at 43, 46, 116), because Unieon would not have settled its post-1985 claims with PNM without inclusion of the pre-1985 claims against Southern Union, (R.P. at 43). 27.In ruling on the motions to dismiss, the Commission construed the challenge to subject-matter jurisdiction as a facial challenge, (R.P. at 455), see 2A James W. Moore et al., Moore’s Federal Practice ¶ 12.07[2.-1] at 12-50 to -52 (2d ed. 1996) (distinguishing facial challenges to subject-matter jurisdiction from factual challenges),’ and consequently accepted as true GCNM’s allegations, (R.P. at 455). See also NMPUC Rule 110.25 (providing for dismissal for lack of jurisdiction). On review, we must accept all of GCNM’s material factual allegations as true and “view them, along with all reasonable inferences therefrom, in the light most favorable to [GCNM].” Freiburger v. Emery Air Charter, Inc., 795 F.Supp. 253, 257 (N.D.Ill.1992). See also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974) (“[I]n passing on a motion to dismiss ... on the ground of lack of jurisdiction over the subject matter, ... the allegations of the complaint should be construed favorably to the pleader.”); Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir.1995) (same). The majority utterly fails to acknowledge, much less apply, this fundamental legal principle. 28. According to GCNM’s application, the costs for which it sought recovery were incurred when GCNM was owned by Southern Union and regulated by the Commission. GCNM also alleges these costs were incurred while providing public utility services to New Mexico ratepayers. The majority suggests these facts are irrelevant and emphasizes that Southern Union does not now meet the statutory definition of “public utility.” See § 62-3-3(G) (1993). This emphasis, however, is misplaced. The issue is not whether Southern Union is currently a public utility, which it clearly is not. The issue is whether these costs were incurred by a public utility regulated by the Commission. Under Section 62-3-3(G), Southern Union was a public utility subject to the Commission’s authority when these costs were allegedly incurred. Not only does the majority’s resolution confuse personal jurisdiction with subject-matter jurisdiction, see Moore’s, supra, ¶ 12.07[2.-1] 12-48 to -67, [2.-2] 12-68 to -77, it runs counter to express provisions in the Act. 29. The Act gives the Commission broad authority to consider an application to recover costs incurred in the course of providing utility services. See § 62-6-4(A) (granting the Commission “general and exclusive power and jurisdiction to regulate and supervise every public utility in respect to its rates and service regulations ... and to do all things necessary and convenient in the exercise of its power and jurisdiction”); § 62-3-2(B) (mandating liberal construction of the Act “to carry out its purpose”); Public Serv. Co. of N.M. v. New Mexico Envtl. Imp. Bd., 89 N.M. 223, 227, 549 P.2d 638, 642 (Ct.App.1976) (requiring that the Commission’s authority be construed to permit the fullest accomplishment of legislative intent or policy). Insofar as GCNM seeks recovery for utility expenses that allegedly benefitted New Mexico ratepayers, the Commission is required to exercise its jurisdiction and consider the merits of the application. The majority, however, construes the Commission’s authority narrowly, thwarting the purpose of the Act: to ensure that “reasonable and proper services ... are available at fair, just and reasonable rates,” § 62-3-l(B) (1967). See also § 62-8-1 (1941) (requiring that every rate be “just and reasonable”). 30. The Act requires the Commission to consider the fact that Southern Union was the owner of GCNM when these costs were incurred. See § 62-6-14(A) (“[I]n the fixing and setting of rates for a utility, the commission shall give due consideration to the history and development of the property and business of the particular public utility____”). The Commission must also balance the interests of GCNM’s customers against the interests of Southern Union’s shareholders. See Behles v. New Mexico Pub. Serv. Comm’n, 114 N.M. 154, 161, 836 P.2d 73, 80 (1992) (requiring Commission to “balance the investor’s interest against the ratepayer’s interest”). The Commission neither considered the history of GCNM nor balanced these interests. The majority’s affirmance allows the Commission to evade these statutory responsibilities by declaring it lacks jurisdiction. 31. Despite the broad language chosen by the legislature, the majority holds that the Commission has jurisdiction only over entities which function presently as public utilities, and since Southern Union ceased functioning as a public utility in 1985, the Commission has no jurisdiction to rule on GCNM’s application. (Op. at ¶¶ 8-9.) In support of the holding, the majority cites three decisions of this Court, not one of which holds that jurisdiction is lacking where a previously regulated utility’s claim is handled by a successor. See El Vadito de los Cerrillos Water Ass’n v. New Mexico Pub. Serv. Comm’n, 115 N.M. 784, 858 P.2d 1263 (1993); Llano, Inc. v. Southern Union Co., 75 N.M. 7, 399 P.2d 646 (1964); Attorney Gen. of N.M. v. New Mexico Pub. Serv. Comm’n, 101 N.M. 549, 685 P.2d 957 (1984) (hereinafter “Attorney General ”). 32. In El Vadito, 115 N.M. at 788, 858 P.2d at 1267, we considered whether Sanitary Projects Act (SPA) associations, which were extensively regulated by the New Mexico Environmental Improvement Division of the Health and Environment Department (NMEID), should be concurrently regulated by the Commission. Because the SPA grants control of these associations to the NMEID, id, at 788-89, 858 P.2d at 1267-68, and because of the “impractical[ityj” of concurrent jurisdiction, id. at 789 n. 2, 858.P-2d at 1268 n. 2, we held that the Commission lacked jurisdiction over SPA associations. The only question decided in El Vadito was whether the Commission would ever have jurisdiction over SPA associations, which is hardly the issue presented here. 33. In Llano, 75 N.M. at 9, 399 P.2d at 647, the question was whether a company that provides natural gas to only one private customer is a public utility. We held that it was not. Id. at 18-19, 399 P.2d at 653-54. Clearly Llano’s holding does not bar the Commission from considering GCNM’s application, because GCNM is a public utility. Nor does it preclude GCNM from seeking recovery for expenses incurred under its previous owner, Southern Union, which was regulated by the Commission when the costs were allegedly incurred. The majority’s decision is certainly not assisted by the holding in Llano. 34. Finally, the majority cites Attorney General, supra, in which PNM sought a rate increase to recover the cost of purchasing coal from an affiliate, 101 N.M. at 551, 685 P.2d at 959. The issue was whether these costs were reasonable, and we held that they were. Id. We also noted that a utility seeking recovery for costs incurred in transactions with its affiliates must show not only that the costs were incurred; it must also prove they were reasonable. Id. at 552, 685 P.2d at 959. The issue in Attorney General had nothing to do with the scope of the Commission’s jurisdiction. Accordingly, the decision provides no' support for the majority’s claim that the Commission’s jurisdiction to consider rate increase applications may be exercised only in those instances where the public utility applying for the rate increase has itself incurred the costs. 35. Nothing in the Act or any of these cases precludes the Commission from considering an application simply because the costs were incurred prior to the sale of the applicant public utility to its current owner. We have never held that a public utility must show that it, as opposed to its predecessor, incurred the costs for which it seeks recovery in order to invoke the Commission’s jurisdiction. On the contrary, the Act requires the Commission to consider the history of a public utility in setting rates. See § 62-6-14(A). If the Commission, after reviewing GCNM’s request on the merits, were to decide that the evidence does not justify a rate increase, that is the Commission’s prerogative. But to decline to exercise jurisdiction because the rate increase is designed to compensate for expenses GCNM incurred while under the ownership of a company no longer operating as a public utility is without precedent and contravenes the legislature’s intent as expressed in the Act. 36. It is indeed ironic that the Commission would now assert it lacks jurisdiction to consider this application. The Commission expressly approved the Purchase and Sale Agreement transferring ownership of GCNM from Southern Union to PNM. See § 62-6-12(A) (1989) (requiring the Commission’s “prior express authorization” for such transactions). That agreement obligated PNM to pursue on Southern Union’s behalf recovery for expenses “which Southern Union reasonably determines it would have sought to recover through such regulatory applications and proceedings had Southern Union owned [GCNM].” (PSA § 2.4 at 6.) Furthermore, the Commission also stated it had subject-matter jurisdiction to consider GCNM’s original application on Southern Union’s behalf.1  37. To the extent that this ease involves issues of the proper balance of the interests of ratepayers and investors and whether current rates are just and reasonable, consideration of GCNM’s application falls squarely within the Commission’s jurisdiction. See § 62-3-KB); Behles, 114 N.M. at 161, 836 P.2d at 80. Therefore, I would vacate and annul the Commission’s order dismissing the application and remand for findings of fact and conclusions of law on the merits. The majority having determined otherwise, I dissent.  . GCNM applied for this rate increase in Commission Case No. 2361. The Commission dismissed the application without prejudice for failure to meet the burden of proof and expressly stated it “has jurisdiction over the parties and the subject matter of this case.” (S.R.P. Tab 7A at 2.) GCNM filed this amended application in Commission Case No. 2639, which seeks the same relief and involves the same parties.