Court Opinion

ID: 8247079
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:37:34.639383+00
Date Added: 2024-06-11T16:42:06.183167
License: Public Domain

DIETZEN, Justice
(concurring).
I join in the opinion of the court but write separately to address the Minnesota Public Utilities Commission’s finding that Minnesota Power’s service area had suffered “the worst economic downturn in the past 60 years” to support its conclusion of exigent circumstances. Because I conclude that the finding regarding the economic downturn is an argumentative assertion not supported in the record, I would disregard that finding in determining whether substantial evidence supports the Commission’s decision setting interim rates. But because other evidence supports the Commission’s decision, I join in the court’s decision to affirm.
Generally, we will uphold an administrative agency’s decision if the reasons given *764for the decision are legally sufficient and those reasons are factually supported in the record. See Minn.Stat. § 14.69 (2012). In determining whether the reasons given for an agency’s decision are factually supported in the record, we apply the substantial evidence standard of review. In re N. States Power Co., 416 N.W.2d 719, 724 (Minn.1987). Under this standard, we give deference to the fact-finding of the administrative agency and will uphold the agency’s findings if they are “supported by the evidence in the record, considered in its entirety.” In re Excess Surplus Status of Blue Cross & Blue Shield of Minn. (Blue Cross), 624 N.W.2d 264, 279 (Minn.2001) (quoting Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 825 (Minn.1977) (emphasis added)). Generally, the term “evidence” refers to things such as testimony, documents, and tangible objects that “tend[ ] to prove or disprove the existence of an alleged fact.” Black’s Law Dictionary 635 (9th ed.2009). In contested cases, an agency “may admit and give probative effect to evidence which possesses probative value commonly accepted by reasonable prudent persons in the conduct of their affairs.” Minn.Stat. § 14.60, subd. 1 (2012).
Here, the Commission found that Minnesota Power’s service territory suffered “the worst economic downturn in the past 60 years” and relied in part on that finding to conclude that exigent circumstances existed. The only support for the Commission’s finding regarding the economic downturn in the service territory comes from the comments of the intervening parties. But without any documentation or substantiation, comments from parties are not evidence; they are merely unsupported assertions and do not possess probative value commonly accepted by reasonable, prudent persons in the conduct of their affairs. As such, the unsubstantiated statements of the intervening parties cannot provide substantial evidence to support the Commission’s conclusion of exigent circumstances.
In its order setting interim rates, the Commission noted that the fact that an economic downturn existed was “generally known and based on publicly available information.” But that does not excuse the requirement that the agency’s conclusion be supported by “evidence in the record, considered in its entirety.” Blue Cross, 624 N.W.2d at 279 (emphasis added). Generally, in a contested agency case, “[n]o factual information or evidence shall be considered in the determination of the case unless it is part of the record.” Minn. Stat. § 14.60, subd. 2 (2012). Unless an agency’s finding has evidentiary support that is traceable to the record, there is no way for a court to evaluate the finding and perform its reviewing function properly. Moreover, while “[ajgencies may take notice of judicially cognizable facts,” Minn. Stat. § 14.60, subd. 4 (2012), the specific economic condition of Minnesota Power’s geographic service territory is not a judicially cognizable fact.1
Because the Commission’s finding relating to the “economic downturn” was not supported by evidence in the record, it should be disregarded. Nevertheless, the Commission’s conclusion that exigent circumstances existed was based on two other reasons and, consequently, I concur in the court’s decision to affirm the court of appeals.
*765ANDERSON, Justice.
While I agree with the majority that the Minnesota Public Utilities Commission (Commission) did not exceed its statutory authority when it considered factors other than those listed in Minn.Stat. § 216B.16, subd. 8(b) (2012), in determining whether exigent circumstances existed, I conclude that the interim rate assigned by the Commission was arbitrary and capricious, and thus violated Minn.Stat. § 14.69 (2012). While that conclusion, standing alone, is sufficient to require a remand for recoupment, I also conclude that the court has extended undue deference to the Commission based upon flimsy claims of technical expertise, and that the Commission’s interim rate determination failed to properly account for Minnesota Power’s constitutional right to a reasonable return on its property. For these reasons, I respectfully dissent.
I.
I begin with the question of whether the Commission’s decision on the interim rate was arbitrary or capricious, in violation of Minn.Stat. § 14.69. Because this proceeding merely set rate levels and did not involve the creation of a new rate design, the majority declines to apply the arbitrary or capricious standard. While such a distinction can indeed be found in Henry v. Minnesota Public Utilities Commission, 392 N.W.2d 209, 216 (Minn.1986), cited by the majority, the underlying basis for that distinction is unclear, and it cannot be reconciled with Minn.Stat. § 14.69.1 would therefore conclude that the present dispute is subject to our general standard of review for challenges to administrative action, which, under both the plain language of the Administrative Procedure Act and our prior case law, includes arbitrary and capricious review.
A.
Before I evaluate whether the Commission’s decision in this case was arbitrary or capricious, I begin my analysis by examining the principles that should govern our court’s review of agency action. The Minnesota Administrative Procedure Act, Minn.Stat. ch. 14, provides that a court “may reverse or modify the decision [of an agency] if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decisions are ... (e) unsupported by substantial evidence in view of the entire record as submitted; or (f) arbitrary or capricious.” Minn.Stat. § 14.69. The statutory language contains no indication that courts are to refrain from reviewing a decision challenged as arbitrary or capricious in rate-setting cases — or any type of contested administrative law cases, for that matter.
Our prior decisions have recognized that, as the statutory language would suggest, arbitrary or capricious review is appropriate for any challenge to agency “finding[s], inferences, conclusion^], [and] decisions.” Minn.Stat. § 14.69. In Reserve Mining, we held that courts should review decisions of the Pollution Control Agency and Department of Natural Resources under a standard of “lawful and reasonable, a test which we equate with whether or not they are affected by errors of law; and whether or not their findings are unsupported by substantial evidence; and whether or not their conclusions are arbitrary or capricious.” Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 827 (Minn.1977) (emphasis added). Though our holding was limited to review of those two agencies, our syllabus goes further, stating that “[i]n reviewing the decisions of administrative agencies, the district court and the supreme court are governed by the provisions of the Administrative Procedure Act *766... and shall determine inter alia whether the agencies’ findings are supported by substantial evidence and whether their conclusions are arbitrary and capricious.” Id. at 811; cf. Honn v. City of Coon Rapids, 313 N.W.2d 409, 416-17 (Minn.1981) (recognizing that though our case law has expressed our standards in various ways, the substantive principles of arbitrary or capricious review are always applicable).
We recently reaffirmed the broad and general applicability of arbitrary or capricious review of administrative action. In Citizens Advocating Responsible Development v. Kandiyohi County Board of Commissioners, we said that “[a]gency decisions are reversed when they reflect an error of law, the findings are arbitrary and capricious, or the findings are unsupported by substantial evidence.” 713 N.W.2d 817, 832 (Minn.2006) (citing Minn.Stat. § 14.69). We stated that “[o]ur role when reviewing agency action is to determine whether the agency has taken a ‘hard look’ at the problems involved, and whether it has ‘genuinely engaged in reasoned decision-making.’ ” Id. (quoting Reserve Mining, 256 N.W.2d at 825) (emphasis added).
The term “hard look,” used in both Reserve Mining and Citizens Advocating Responsible Development, is a reference to the type of arbitrary or capricious review practiced by the federal courts. Although we have not explicitly adopted the federal doctrine, these references reflect our understanding that the federal courts have considerable experience implementing a very similar standard of review, and that we therefore find those federal decisions to be persuasive authority in many of our own administrative law cases.
Minnesota Statutes § 14.69 is very similar to the “scope of review” section in the federal Administrative Procedure Act (APA), 5 U.S.C. § 706 (2006), which provides that a “reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions found to be — (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; [or] ... (E) unsupported by substantial evidence.” For questions of fact, the federal APA’s arbitrary or capricious standard and substantial evidence standard are widely understood to be very similar, and perhaps identical. See Ass’n of Data Processing Serv. Orgs., Inc. v. Bd. of Governors of Fed. Reserve Sys. (ADAPSO), 745 F.2d 677, 683-84 (D.C.Cir.1984) (Scalia, J.) (“[I]n their application to the requirement of factual support the substantial evidence test and the arbitrary or capricious test are one and the same. The former is only a specific application of the latter.... [T]he distinction between the substantial evidence test and the arbitrary or capricious test is ‘largely semantic[.]’ ”) (quoting Aircraft Owners and Pilots Ass’n v. FAA, 600 F.2d 965, 971 n. 28 (D.C.Cir.1979)).
Where the substantial evidence test and arbitrary or capricious test differ is in their breadth. Arbitrary or capricious review is not limited solely to questions of fact. Rather, it is a “catchall, picking up administrative misconduct not covered by the other more specific paragraphs.” Id. at 683. In other words, an agency action may be supported by substantial evidence, but still be arbitrary or capricious. Id.
This arbitrary or capricious review under the federal APA has evolved into the doctrine of “hard look.” See, e.g., Nevada v. Dep’t of Energy, 457 F.3d 78, 93 (D.C.Cir.2006) (“Although the contours of the hard look doctrine may be imprecise, our task is simply to ensure that the agency has adequately considered and disclosed the environmental impact of its actions and that its decision is not arbitrary or capricious.” (citation omitted) (internal quotation marks omitted)). The canonical case *767describing hard look review is Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co.:
The scope of review under the arbitrary and capricious standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made. In reviewing that explanation, we must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (citations omitted) (internal quotation marks omitted). Of particular relevance to the present dispute, the Court specified that it did “not view as equivalent the presumption of constitutionality afforded legislation drafted by Congress and the presumption of regularity afforded an agency in fulfilling its statutory mandate.” Id. at 43 n. 9,103 S.Ct. 2856.
Another common way by which agency action can be arbitrary or capricious under the hard look doctrine is if it constitutes “an abrupt and unexplained departure from agency precedent,” ADAPSO, 745 F.2d at 683, although the Court has loosened this standard recently. See F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009) (stating that an agency “need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates”). The Court was careful, however, to specify that greater justification is needed when the agency’s new policy depends upon a factual finding that contradicts a factual finding underlying the previous policy, or when significant reliance interests have been created. Id. at 515-16, 129 S.Ct. 1800.
Given the similarity in statutory language between MinmStat. § 14.69 and 5 U.S.C. § 706, the decades of development in the doctrine at the federal level, and the need to ensure transparency, accountability, and reasoned decision making amongst the state’s various administrative agencies, I believe it may be time to adopt a version of hard look review in Minnesota. Though this would formalize, and perhaps expand, our inconsistently applied standard of arbitrary or capricious review, I believe a strong, explicit standard would prove beneficial to regulated parties, courts, and even agencies. To expect an agency to consider all of the relevant evidence and demonstrate the ability to cogently explain its reasoning is not, as some might claim, an undue burden. It is merely a prudent safeguard against administrative abuse.1
*768B.
Having delineated the proper scope of our review, I now turn to the Commission’s interim rate determination.
There are several issues in the present dispute with inadequate development in the record. To be sure, the Commission may be able to offer the necessary eviden-tiary support for its conclusions, but that is part of the benefit of adopting a less deferential form of review — it forces agencies to produce a more detailed record, which would allow us to better understand and evaluate administrative decisions and ensure that just outcomes are reached. For example, the present record lacks any detailed explanation for the Commission’s adoption of an interim rate that totaled 60 percent of the increase Minnesota Power sought. Perhaps this was the proper result, reached through full, impartial consideration of all available evidence — but perhaps not. Because the Commission has failed to produce a record that would allow us to verify its conclusions, neither I nor the majority can say. Similarly, the Commission has provided no legitimate explanation for its selection of a group of prior rate cases that conveniently include determinations supporting its desired outcome — while excluding decisions that support the utility’s position.2
Given these inadequacies in the record and in the agency determination here, it would be appropriate to reverse and remand to the Commission for recoupment proceedings even under our current standard. In In re Minnegasco, 565 N.W.2d 706, 711 (Minn.1997), we held that despite a lack of explicit statutory authorization, recoupment was an available remedy:
The central issue in this case is whether the applicable statutes authorize the Commission, on remand, to order a recoupment remedy to compensate a public utility for lost revenue occasioned by a rate order reversed on appeal as exceeding the Commission’s statutory authority. Guided by the statutory language, our case law, and the need for a sensible and fair construction of the statutes, we hold that the Commission has implied statutory authority to order such a remedy.3
*769But if the judiciary is to serve as a meaningful check against the possibility of error, abuse, and overreach in the ever-expanding administrative state, I believe we will need to adopt a more robust and assertive program of judicial review of agency action, including the implementation of an arbitrary and capricious review practice resembling the hard look doctrine.
II.
The majority also defers to the Commission’s determination that exigent circumstances existed, concluding that such a determination is an exercise of the agency’s technical knowledge and expertise. I believe such deference is unwarranted. Moreover, I view the court’s uncritical acceptance of the Commission’s position as a troubling — but not atypical — demonstration of our long-standing failure to subject agency claims to appropriately vigorous examination.
The majority states that agency decisions “enjoy a presumption of correctness, and deference should be shown by courts to the agencies’ expertise and their special knowledge in the field of their technical training, education, and experience.” The critical question we face here, not directly addressed by the majority, is this: whether the Commission’s determination that exigent circumstances existed is, in fact, a situation requiring the application of the Commission’s technical knowledge and expertise. I do not believe that it is.
The three “extraordinary circumstances” the Commission cited to justify its determination of an exigency were: (1) “the unprecedented size of the proposed rate increase”; (2) “the extremely short window ... between the effective date of [Minnesota Power’s] last rate increase and this rate increase request”; and (3) “the worst economic downturn in the past 60 years.” The first two factors require no expertise or technical knowledge beyond basic arithmetic and the use of a calendar. And the third factor, the economic downturn, might call for some technical knowledge, but not of any type in which the Commission can be said to specialize.
It is, of course, true that Minnesota Power and its customers, like other Minnesotans, have experienced significant economic challenges as a result of the post-2008 recession and the limited recovery. But the record here does not reveal what special expertise the Commission actually applied to arrive at this common-sense observation. If expert status is shown by noticing a bad economy in 2009, few Minnesotans would lack expert credentials. And although listening to the concerns of affected individuals and the regulated utility is undoubtedly important, it does not *770employ complex technical skills exceeding the competence of Minnesota courts. To defer to the agency, as the majority does here, simply because the issue involves the Commission’s general area of responsibility, is to grant it discretion far beyond the expertise we have said justifies such deference in the first place.
The majority assembles a long list of cases supporting the proposition that we defer to agencies when a conclusion requires the application of technical expertise. But my argument is not that we should abandon this standard; I believe, rather, that we should enforce it. The only argument the majority musters in support of deferring in this case is this: because “[t]he Legislature has committed the question of exigency to the Commission as part of the Commission’s interim rate making function,” determining whether exigent circumstances exist “therefore necessarily requires application of the Commission’s technical knowledge and expertise to the facts presented.” Why does the question of an exigency “necessarily require” technical knowledge and expertise? The majority does not say.
The mere fact that the Legislature has authorized an agency to take some action certainly does not establish that the action is of a technical nature or requires that agency’s specialized knowledge. Such broad reasoning effectively immunizes every agency action — or, at least, every conclusion made as part of an agency action— as the product of technical knowledge and expertise. However appropriate this kind of deference might have been at the dawn of the bureaucratic era, it eviscerates the judiciary’s ability to conduct meaningful review of agency action, and thus cannot be tolerated in the modern age of ever-expanding administrative authority.
The majority argues that such broad deference to agencies reflects a proper respect for separation of powers principles. But I do not propose, as the majority contends, that we substitute the judgments of courts for those of agencies. To require an agency to demonstrate that sound reasoning underlies its conclusions does not violate separation of powers or infringe upon executive branch prerogatives; rather, it is a proper application of the judiciary’s duty, as a co-equal branch of government, to protect the rights of all parties from agency overreach, error, and abuse. See City of Arlington v. F.C.C., 569 U.S. -, -, 133 S.Ct. 1863, 1886, - L.Ed.2d - (2013) (Roberts, C.J., dissenting) (“[T]he obligation of the Judiciary not only to confine itself to its proper role, but to ensure that the other branches do so as well” is “firmly rooted in our constitutional structure.”).
The Supreme Court of the United States warned us, more than half a century ago, that “unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962) (citations omitted) (internal quotation marks omitted). Moreover, “[ejxpert discretion is secured, not crippled, by the requirements for substantial evidence, findings and reasoned analysis.” Greater Boston Television Corp. v. F.C.C., 444 F.2d 841, 850 (D.C.Cir.1970).4 “A court does not depart from its *771proper function when it undertakes a study of the record, hopefully perceptive, even as to the evidence on technical and specialized matters, for this enables the court to penetrate to the underlying decisions of the agency, to satisfy itself that the agency has exercised a reasoned discretion.” Id. While I recognize that the judiciary must refrain from invading the province of the executive branch, the “deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia.” Volkswagenwerk Aktiengesellschaft v. Fed. Mar. Comm’n, 390 U.S. 261, 272, 88 S.Ct. 929, 19 L.Ed.2d 1090 (1968) (quoting Am. Ship Bldg. Co. v. NLRB, 380 U.S. 300, 318, 85 S.Ct. 955, 13 L.Ed.2d 855 (1965)). A proper respect for separation of powers therefore forbids — and certainly does not mandate — our acquiescence to administrative impropriety under color of expertise, especially when, as here, that claim is of dubious merit.
To be sure, many cases will feature administrative conclusions that actually involve technical knowledge and expertise, and thus warrant some (limited) level of judicial deference. But when, as here, the agency bases a significant conclusion on individual determinations that do not fall within its area of special knowledge or require technical expertise, I would have us employ a more vigorous, searching review of the agency’s reasoning.
III.
Lastly, I turn to the constitutional implications of the majority opinion. The Supreme Court has said that rates that “are not sufficient to yield a reasonable return on the value of the property used at the time it is being used to render the service are unjust, unreasonable and confiscatory, and their enforcement deprives the public utility company of its property in violation of the Fourteenth Amendment.” Bluefield Water Works & Improvement Co. v. Pub. Serv. Comm’n of W. Va., 262 U.S. 679, 690, 43 S.Ct. 675, 67 L.Ed. 1176 (1923). “The guiding principle has been that the Constitution protects utilities from being limited to a charge for their property serving the public which is so ‘unjust’ as to be confiscatory.” Duquesne Light Co. v. Barasch, 488 U.S. 299, 307, 109 S.Ct. 609, 102 L.Ed.2d 646 (1989) (quoting Covington & Lexington Tpk. Rd. Co. v. Sandford, 164 U.S. 578, 597, 17 S.Ct. 198, 41 L.Ed. 560 (1896)). “If the rate does not afford sufficient compensation, the State has taken the use of utility property without paying just compensation and so violated the Fifth and Fourteenth Amendments.” Id. at 308, 109 S.Ct. 609. We have also recognized that rates insufficient to allow a utility to collect enough revenue “to meet the cost of providing service and to earn a fair and reasonable return upon its investment” are “unjust, unreasonable and confiscatory.” N. States Power Co. v. Minn. Pub. Utils. Comm’n, 414 N.W.2d 383, 388 (Minn.1987).
This constitutional requirement, which applies regardless of exigent circumstances, is the backdrop against which the Commission must set the interim rate. While the majority correctly rejects formulas and general limitations on what the Commission may consider when determining whether exigent circumstances exist, the court fails to consider whether the specific factors the Commission used to justify its decision actually did protect Minnesota Power’s constitutional right to recoup its costs of service — including costs imposed by the state itself through legislation and regulation — and earn a reasonable return. The record here suggests reasons *772for concern.5
As discussed earlier, the three “extraordinary circumstances” the Commission cites to justify its determination of an exigency, and thus to abandon the statutory formula, were: (1) “the unprecedented size of the proposed rate increase”; (2) “the extremely short window ... between the effective date of [Minnesota Power’s] last rate increase and this rate increase request”; and (8) “the worst economic downturn in the past 60 years.” In the Commission’s view, these three factors, considered together, carried “serious potential for rate shock — and even outright hardship — for [Minnesota Power’s] customers.” 6
The first factor — that Minnesota Power’s proposed rate increase was especially large — is irrelevant to the question of whether the proposed rate would yield the utility sufficient revenue to satisfy the constitutional requirement. If, for example, the State enacts new environmental mandates that significantly increase the cost of providing service (as Minnesota Power argues), the State could hardly then pivot and deny utilities the rate increases necessary to bring revenues back into line with expenses. Such a governmental imposition of costs upon a private entity to create a public benefit is exactly the sort of abuse the Takings Clause prohibits.
The Commission’s second factor — that this rate increase comes swiftly on the heels of a previous increase — is also constitutionally irrelevant. The reasoning applied to the first factor would apply with as much force to the second — the enactment of costly mandates shortly after a ratemaking procedure does not somehow invalidate a utility’s constitutional right to recoup its costs. Furthermore, a utility expecting its newly established rate to provide insufficient revenue, perhaps because of new developments that occur during a proceeding, might also be justified in commencing a new ratemaking procedure as quickly as possible so as to present its case with the benefit of new data.
*773The third and seemingly most important factor — the severe economic downturn experienced by Minnesotans in the last few years — is worse than irrelevant. Although the majority rightly notes Minnesota Power’s argument that “rather than justifying a lower rate, the economic downturn necessitated a higher rate to mitigate the impact of reduced demand and to recover its cost of service based on costs previously incurred through mandatory capital improvements,” its response is to once again “defer to the ‘analytical approach’ chosen by the agency as ‘a matter for the agency’s expertise.’ ” (citation omitted).
But the Commission clearly, if implicitly, agrees with Minnesota Power’s position. The Commission argues that “[hjouseholds and business struggling under the current adverse economic conditions ... may face economic deprivations, business losses, and even disconnections” if subjected to an unduly large rate increase. These concerns are undoubtedly excellent reasons to avoid allowing utilities to charge rates greater than Minn.Stat. § 216B.16 permits, but they do not form a valid basis to find the constitutional minimum rate to be lower than it would otherwise be. In fact, these circumstances suggest the opposite: that the economic downturn and consequent drop in demand requires that utilities be allowed a higher rate to recoup fixed capital costs incurred with the expectation— ratified by the agency but rejected in the marketplace — of greater energy consumption.
In sum, the Commission justified its decision to find exigent circumstances, and thus to set aside the statutory rate formula, by considering three factors, none of which indicates any recognition of the overriding constitutional constraints under which the agency operates and at least one of which was employed in opposition to constitutional requirements. Nor can I find any other evidence in the record that would suggest that the Commission made any effort to calculate the minimum rate of return to which Minnesota Power was entitled, regardless of exigent circumstances.
The majority addresses the constitutional issue only briefly, distinguishing the interim ratemaking procedure in this case from two other decisions of our court that were based on a full administrative procedure. See Hibbing Taconite Co. v. Minn. Pub. Serv. Comm’n, 302 N.W.2d 5 (Minn.1980); St Paul Area Chamber of Commerce v. Minn. Pub. Serv. Comm’n, 312 Minn. 250, 251 N.W.2d 350 (1977). But while it is certainly correct that these precedents arise in different procedural circumstances than the present dispute, that distinction cannot -vitiate constitutional requirements.7 Determining that these cases do not control the question of whether exigency exists does nothing to establish what the Constitution does require here.
The majority ends with a discussion of Bluefield, 262 U.S. 679, 43 S.Ct. 675. It notes that Bluefield “allows for consider*774ation of ‘all relevant facts’ to reach a determination” of a reasonable return and that it is not a matter of specific formulas, but then concludes that the decision “does not support Minnesota Power’s assertion that the Commission erred in considering factors other than Minnesota Power’s cost of service.” But that was not the question. The majority’s own description of Minnesota Power’s argument was that “the constitutional due process requirement that rates be sufficient to recover the cost of service must inform the Commission’s discretion in determining whether ‘exigent circumstances’ exist.” Therein lies the correct application — there is no constitutional formula the Commission must apply in setting interim rates, but it must consider all of the relevant evidence in each proceeding in light of its overriding obligation to avoid assigning an unconstitutionally confiscatory rate.8
Finally, I note that this threat of constitutional violations in the interim ratemak-ing process is not merely abstract or theoretical. The majority actually concludes here that “the interim rate appears to have fallen short of covering Minnesota Power’s cost of service.” One would think that finding itself affirming a rate that is, in its own estimation, “unjust, unreasonable, and confiscatory” because it fails “to meét the cost of providing service,” N.S.P., 414 N.W.2d at 388 — affirming a plainly unconstitutional taking, in other words — would lead the majority to reconsider its approach to review of agency action.
I recognize that the Commission was confronted with sympathetic filings on behalf of businesses and individuals who would likely suffer significant hardship from the proposed rate increases. But as the Supreme Court has observed, “the enshrinement of constitutional rights necessarily takes certain policy choices off the table.” District of Columbia v. Heller, 554 U.S. 570, 636, 128 S.Ct. 2783, 171 L.Ed.2d 637 (2008). Even if we ignore Minnesota Power’s argument that these filings simply are not permitted under the interim rate statute, it is undisputed that the Fifth and Fourteenth Amendments protect the regulated utility and its property interests, even against a well-intentioned agency seeking to aid struggling consumers. Because I conclude that the Commission failed to operate within this constitutional framework in setting the interim rate here, I respectfully dissent.

. Additionally, before taking notice of facts outside the record in contested case hearings, agencies must notify the parties in writing of the material so noticed, and afford them an opportunity to contest the facts. Minn.Stat. § 14.60, subd. 4. The Commission did not follow these procedures in this case.

. I would note that we already employ a similar procedure when reviewing decisions by the tax court. Though we generally apply a clearly erroneous standard to its valuations, we do "not defer, however, when the tax court ... has failed to explain its reasoning.” Eden Prairie Mall, LLC v. Cnty. of Hennepin, 797 N.W.2d 186, 192 (Minn.2011). The fact that we have employed this heightened review requirement for at least 18 years without ap*768parent problem or difficulty leads me to believe that the adoption of a version of hard look review for all administrative actions could also be accomplished without undue hardship to agencies or other courts. See Harold Chevrolet, Inc. v. Cnty. of Hennepin, 526 N.W.2d 54, 58 (Minn.1995) (applying heightened explanation requirement).

. The Commission adopted a 22-year framework for measuring Minnesota Power's previous rate cases, which stopped just short of including a 1987 rate case in which Minnesota Power received approximately double what it requested. To be clear, I am not arguing that the Commission was wrong to exclude the 1987 case. An agency must draw a line somewhere, and the mere fact that some cases will be excluded by a particular choice does not make the decision arbitrary or capricious. The problem is that the Commission failed to "articulate with reasonable clarity its reasons for [the] decision.” Greater Boston Television Corp. v. F.C.C., 444 F.2d 841, 851 (D.C.Cir.1970). The Commission’s failure to explain itself — along with its conspicuous choice of a cutoff time that appears specifically designed to exclude the 1987 case— creates "danger signals which suggest the agency has not taken a hard look at the salient problems and has not genuinely engaged in reasoned decision-making.” Reserve Mining, 256 N.W.2d at 825 (citation omitted) (internal quotation marks omitted). If so, "it is the duty of the court to intervene” to ensure the use of "articulated standards ... in furtherance of even-handed application of law, rather than impermissible whim, improper influence, or misplaced zeal.” Id. (quoting Greater Boston Television Corp., 444 F.2d at 852).

. The majority argues that "recoupment is not available ... if we determine! ], as we have above, that the Commission did not err.” But the relevant question is whether Minneso*769ta Power would be entitled to recoupment if the court were to conclude, as I do, that the Commission did err in assigning the interim rate. The majority makes a fair point in noting the absence of statutory authority for recoupment under the interim rate statute, but I believe the broad language of Minnegas-co would support my suggested remedy of recoupment here.
Put another way, a holding that the interim rate was defective would not normally establish the correct rate that should have been assigned. We would therefore need to remand to the Commission with orders to conduct interim ratemaking proceedings untainted by the errors identified in its earlier effort. But when, as here, the Commission has already conducted a full final ratemaking procedure examining the same period, it would seem sensible to simply remand for recoupment consistent with the revenues that would have been generated had the final rate been assigned during the interim period. To do otherwise would require the parties to ignore the evidence presented, record developed, and conclusions drawn during a more extensive proceeding directed at the same result: a rate that protects both utilities and consumers by granting the utility a reasonable return on its property — and nothing more.

. We have specifically endorsed the D.C. Circuit's reasoning on these matters. See Reserve Mining, 256 N.W.2d at 825 (“We endorse the Federal court’s views as to the circumstances under which a court may properly closely scrutinize an administrative decision, as well as its views on the need for exercising judicial restraint and for restricting judicial functions *771to a narrow area of responsibility, lest it substitute its judgment for that of the agency.”).

. The majority contends that Minnesota Power's taking claim is waived. I am not so sure. At oral argument, I understood the utility’s counsel to be indicating that we do not need to reach the constitutional issue because we can reverse on statutory grounds, including arbitrary or capricious review. Such a sensible suggestion, see supra Part I, would seem at least as plausible as counsel choosing to forfeit a valid basis upon which his client could be granted relief. And while I concede that the claim is not presented with the specificity we would desire in Minnesota Power’s petition for review, I believe the fairest reading of its argument is that the constitutional claim was included within the broader question, properly raised and preserved, of whether "the Commission’s decision [was] contrary to law.” See Pet. for Review at 3 (filed Jan. 4, 2012) ("The Commission’s exercise of this new-found discretion in this case produced the very confiscatory effect that the interim rate statute was designed to prevent”); Appellant's Br. at 24 (filed Apr. 16, 2012) ("The Commission’s decision was in excess of its statutory authority, contrary to law, and arbitrary for any one of three independent reasons: ... 3. The reduction of interim rates below Minnesota Power’s documented costs for the interim period was confiscatory.”). Certainly the reference to "confiscatory” actions by the Commission implicates the taking claim. All of that said, even if the majority's observation that it is a "reach” to consider the constitutional argument here is credited, there are sufficient other grounds to reverse the Commission. The importance of the constitutional analysis in this dispute is not so much related to the outcome here as it is to preventing, in future rate cases, interim and otherwise, an assumption from taking root that property rights are secondary to the public policy choices of the government and its agents.

. Notably, there does not appear to be another case in which the Commission has found exigent circumstances based on factors other than cost of service to the utility.

. The majority argues that I fail to appreciate “the critical differences between interim and final rates, as evidenced in the distinction between the interim and final rate processes, the methods for determining interim and final rates, and the purpose for which interim and final rates were created by the Legislature.” But the Takings Clause focuses on results, not process. No amount of notice, opportunity to be heard, agency consideration, legislative approval, public policy concerns, or valid countervailing interests can relieve the State of its obligation to fully compensate an owner when it takes the owner's property. Moreover, it is puzzling, at best, to suggest that the Legislature can insulate the Commission's determination of interim rates from constitutional scrutiny by providing less process. The Constitution constrains the government — the government cannot reduce the scope of Constitutional protections.

. The majority questions whether the constitutional framework of the Fifth and Fourteenth Amendments even applies in the context of interim rate making. I would not have thought it controversial to assert that constitutional protections against the taking of property without compensation are always applicable. The Supreme Court has stated that to avoid a constitutional violation, the utility must receive a "reasonable return on the value of the property used at the time it is being used.” Bluefield, 262 U.S. at 690, 43 S.Ct. 675 (emphasis added). Thus, by its plain terms, Bluefield indicates that the constitutional obligation to provide a return greater than the cost of providing service is continuous, and is not subject to some sort of exemption during interim ratemaking procedures. Moreover, it is difficult to reconcile the majority’s apparent belief that interim rates cannot be confiscatory with its earlier statement that interim rates are designed to "protect utilities from the potentially confiscatory effect of regulatory delay.” Regulatory delay, in this context, means the previous rate remaining in effect during the final rate-making procedure. If operating under an insufficient rate while awaiting a new rate determination can be confiscatory, then the constitutional framework obviously applies. The administrative procedures involved are irrelevant.