Amicus Curiae Brief — Gulf States Utilities Co. v. Coalition of Cities for Affordable Utility Rates

RIED

KAR 27 Wt

OFFICE OF THE CLERK

No. 90-1338 x

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1990

GULF STATES UTILITIES Co..

Vv.

COALITION OF CITIES FOR AFFORDABLE

UTILITY RATES, ef al..

Re sponde ji is.

On Petition for Writ of Certiorari

to the Supreme Court of Texas

BRIEF AMICUS CURIAE FOR NORTH STAR STEEL

TEXAS, INC. IN SUPPORT OF RESPONDENTS

DANIEL C. KAUFMAN

Counsel of Record

RITTs, BRICKFIELD & KAUFMAN

Watergate 600 Building

Suite 915

Washington, D.C. 20037

(202) 342-0800

March 27, 1991

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

7 see) oe oe ae y Ss

*

TABLE OF CONTENTS

Page

SRASEAIEE GP THD GAGE cnccocccceccscccessscccccsccccccesesees l

THE INTEREST OF AMICUS CURIAE ..........ccccseeeeeeseeeeeees 5

REASONS FOR DENYING THE WRIT ..........:ccceceeeeeeeeee 6

A. Gulf States Failed To Properly Raise And

Preserve Its Federal Claims Below ....... 6

B. The Claim that the Commission Denied

Gulf States Due Process is Premature .. .

C. The Petition Presents No Substantial And

Important Federal Question .................... 9

9 ae IEEE eee eA re SAS aca ne See RE 20

TABLE OF AUTHORITIES

CASES

Board of Directors of Rotary International v. Ro-

tary Club, 481 U.S. 537 (1987) ........seseeeeees

Brown v. Felsen, 442 U.S. 127 (1979) ..........:++++

Cromwell v. County of Sac, 94 U.S. 351 (1877) ...

Morrison v. Chan, 699 S.W.2d 205 (Tex. 1985) ....

United States v. Utah Construction & Mining Co.,

ES CT

University of Tennessee v. Elliott, 478 U.S. 788

(1986) .......ccccccccccssccrererencessceccersceeessesssscsseseeseees

Watson v. Glen Falls Insurance Co., 505 S.W.2d

TQB (Tek. 1974) ..-..ccccercccrsccccccccccscvecccscoseescoseess

STATUTES

28 U.S.C. § 1257 (a) (1988) ............ecccceceeeesererereeeneees

Tex. Rev. Crv. Stat. ANN. art. 1446c (Vernon

Supp. 1990) ........c.ccecseeesersceresessnsesccsesersssnssereess

Tex. Rev. Crv. Stat. ANN. art. 1446c § 40 (Vernon

Supp. 1990) .......-ccccceseensesrcessesessesccsersnssssnesesess

(Vernon Supp. 1990) .........-scesscesssessreescesreeseees

COURT RULES

Supreme Court Rule 14.1() ............sccsccssseeeesersees

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1990

No. 90-1338

GuLF StaTes UtTmities Co.,

Petitioners,

We

COALITION OF CITIES FOR AFFORDABLE

Utiity RATES, &T AL.,

Respondents.

BRIEF AMICUS CURIAE FOR NORTH STAR STEEL

TEXAS, INC. IN SUPPORT OF RESPONDENTS

North Star Steel Texas, Inc. (“North Star”) respectfully

opposes the petition for writ of certiorari filed by Gulf

States Utilities Company (“Gulf States”), seeking review

of a final judgment of the Supreme Court of Texas. The

opinion below was issued on September 12, 1990 and re-

ported at 798 S.W.2d 560.

Statement of the Case

The decision below concludes one of two separate and

distinct judicial proceedings before the courts of Texas

rooted in a single decision and order of the Public Utility

Commission of Texas. Since one of those judicial proceed-

ings is not before this Court, a brief sketch of the pro-

cedural history would be appropriate.

Gulf States is an investor-owned public utility engaged

in the business of providing electric service to end-users

in Texas and Louisiana. As such, its retail rates in Texas

are subject to regulation by the Commission under the

Texas Public Utility Regulatory Act (“PURA”’), Tex. Rev.

Crv. Stat. ANN. art. 1446c (Vernon Supp. 1990). In No-

vember of 1986, Gulf States applied to the Commission

for authority to increase its rates for retail electric service

rendered in Texas so as to recover the costs associated

with its $4.5 billion investment in the River Bend nuclear

generating station placed in commercial service several

months earlier.' Extensive evidentiary hearings were con-

ducted before three presiding officers, who filed their re-

port about one year later, containing hundreds of factual

findings and dozens of legal conclusions they recommended

for adoption by the Commission. App. 109a-284a.? After

consideration of the examiners’ report, and the exceptions

taken thereto by the participants, the Commission issued

its final Order on May 16, 1988. App. 38a-108a.

In its final Order, the Commission found and concluded

as follows:

[Findings of Fact):

164. The preponderance of the evidence in this

case establishes that $2.273 billion of River Bend

capital costs were prudently and reasonably in-

curred. The evidence is inadequate to support a

finding of either prudence or imprudence with

regard to construction costs in excess of $2.273

billion, [with one exception not here pertinent].

164A. GSU’s share of all River Bend capital costs

in excess of $2.273 billion should be excluded

from plant in service at this time for lack of

‘The administrative proceeding on that application was assigned

Docket No. 7195 and was consolidated with pending Docket No. 6755.

* The form “App. __ a” will be utilized to cite record extracts re-

produced in the separately bound appendix which accompanied the

petition for writ of certiorari.

sufficient evidence as to the prudence and rea-

sonableness of those costs. The amount which

should be included in plant in service, given

GSU’s 70 percent share of the plant, is $1.5911

billion.

[Conclusions of Law]:

15. Under PURA Section 40 a utility must prove

its conduct to have been prudent when decisions

or expenditures are reasonably challenged.

18A. GSU has not met its burden of proving that

the capital costs of River Bend above a reason-

able Definitive Cost Estimate of $2.273 billion

were reasonably and prudently incurred.

App. 64a & 85a-86a. On those issues, Commissioners

Campbell and Greytok concurred.* The Commission ac-

cordingly approved rates reflecting $2.273 billion of River

Bend investment in plant in service, excluding some $1.453

billion in excess of that amount. Gulf States changed its

rates in compliance with Commission’s action.

Gulf States and the respondent municipalities exhausted

their administrative remedies by applying for rehearing

before the Commission, which was denied by operation of

law after forty-five days had elapsed from entry of the

final Order without an explicit ruling on the respective

motions.‘ Gulf States and other participants thereafter per-

* Chairman Thomas, in dissent, would have finally disallowed nearly

$460 million of River Bend investment and “inventoried” almost $500

million more. App. 4la-42a.

* See Tex. Rev.Crv. Stat. ANN. art. 6252-13a § 16(e) (Vernon Supp.

1990). The petition for writ of certiorari claims at note 10 on page 7

that the two Commissioners then remaining in office “could not agree

on rehearing,”” but offers no supporting citation to the record.

fected appeals to the 250th District Court of Travis County,

Texas. Those appeals were consolidated and remain pend-

ing before that court.

Gulf States concurrently filed a new application with the

Commission to change rates for retail electric service ren-

dered in Texas so as to recover the capital costs associated

with the River Beud nuclear generating station in excess

of the $2.273 billion previously allowed. In addition to

intervening in Commission Docket No. 8702, respondents

filed an independent action in the 250th District Court of

Travis County, Texas, seeking declaratory and injunctive

relief against relitigation of River Bend prudence issues.

That court issued final judgment “permanently enjoin{ing

the Commission] from holding hearings on or reconsidering

the prudence of the cost to construct River Bend except

to @ie extent such proceedings are permitted as part of

a remand from the administrative appeal of Docket No.

7195.”” App. 30a-3la. The District Court’s judgment was

grounded on the following findings and conclusions:

4. The doctrines of res judicata and collateral

estoppel apply to administrative agencies.

5. The Commission directly ruled on the prudence

issues in its findings and conclusions.

6<ven if the Commission’s findings and conclu-

sions can be interpreted as lacking a direct ruling

on the prudence issues, the Commission must

have considered the issue to arrive at the findings

and conclusions it actually made.

7. Even if the Commission’s findings and conclu-

sions can be interpreted as not requiring consid-

eration of the issue, Gulf States had ample

opportunity to have the issue considered, liti-

gated, and decided.

*The administrative proceeding on that application was assigned

Docket No. 8702.

8. Any of the three scenarios mentioned imme-

diately above are sufficient to invoke the doc-

trines’ prohibition of subsequent relitigation.

9. The Commission is without authority to permit

or sponsor additional litigation or consideration

of the issue.

App. 29a-30a.

On appeal taken by Gulf States, the Third District Court

of Appeals reversed and dissolved the trial court’s injunc-

tion. The opinion of the intermediate appellate court is

reported at 777 S.W.2d 814 (1989). That tribunal there

analogized the Commission’s action to severing a claim and

proceeding separately with it, a procedure under which

the severed-out claim would not be precluded in subsequent

litigation. 777 S.W.2d at 817.

Respondents perfected a writ of error to the Supreme

Court of Texas, which reinstated the injunction. The

Supreme Court of Texas held that the failure of Gulf States

to meet its burden of proof precluded further administra-

tive proceedings to plug the evidentiary gap. See 798

S.W.2d at 563-64. It rejected the severance analogy in-

voked by the court of appeals as inconsistent with Texas

practice, holding that the Commission lacked authority un-

der PURA to defer its decision. See id. at 564-65. A motion

for rehearing filed by Gulf States was overruled without

opinion on November 28, 1990.

The Interest of Amicus Curiae

North Star owns and operates an electric steel-making

facility near Beaumont, Texas. That plant utilizes elec-

tricity supplied by Gulf States to power arc furnaces, roll-

ing mills,and other equipment used to convert steel scrap

into useful products. As such, North Star is Gulf States’

largest retail customer in Texas. North Star has intervened

and actively participated in numerous Commission pro-

ceedings involving Gulf States, including Docket No. 7195

and Docket No. 8702. North Star filed briefs amicus curiae

below, as well as briefing the issues to the court of first

instance and intermediate court of appeals.

North Star accordingly has a direct interest in the rates

Gulf States is authorized to charge to end-users in Texas.

North Star likewise has a direct interest in assuring that

participants in Commission proceedings are shielded from

the expense and uncertainty incident to repetitious liti-

gation.

Reasons for Denying the Writ

A. Gulf States Failed To Properly Raise And Pre-

serve Its Federal Claims Below

Gulf States failed to properly raise and preserve its

federal claims below, rendering discretionary review here

inappropriate. “It is well settled that this Court will not

review a final judgment of a state court unless ‘the record

as a whole shows either expressly or by clear implication

that the federal claim was adequately presented in the

state system.’ Board of Directors of Rotary International

v. Rotary Club, 481 U.S. 537, 550 (1987) (citation omitted).

Indeed, Supreme Court Rule 14.1(h) unambiguously re-

quires Gulf States to specify where and how any federal

question for which review is sought was asserted in the

state court proceedings with sufficient particularity “‘as

will show that the federal question was timely and properly

raised so as to give this Court jurisdiction to review the

judgment on a writ of certiorari.” Gulf States has fallen

short on that score.

The opinion and final judgment of the Supreme Court

of Texas embody no adjudication of Constitutional claims,

as the petition for writ of certiorari concedes at page 9.

This should have come as no surprise to Gulf States, be-

cause it had presented no such claims to that tribunal. At

page 9 of its petition, Gulf States notes that it filed briefs

in the courts below wherein it “expressly relied on a de-

cision of this Court, United States v. Utah Construction &

Mining Co., 384 U.S. 394 (1966), for the proposition that

preclusion could not apply.” One searches those briefs in

vain for bare mention of the Constitution or other sug-

gestion of a federal claim. Utah Construction was instead

cited as illustrative of common-law jurisprudence. Indeed,

in its brief to the court of first instance and to the Supreme

Court of Texas, Gulf States included Utah Construction as

the first citation in a string, the others being state ap-

pellate decisions. App. 303a & 307a. Nothing there pre-

sented reasonably alerted the courts of Texas that Gulf

States was seeking a ruling on any Constitutional issue,

much less the specific questions which are now presented

in its petition for writ of certiorari. Such “casual refer-

ences” to federal precedent wholly fail to apprise a state

court that Constitutional claims are being presented. Ro-

tary International, supra at 550 n. 9.

Gulf States closes its statement of the case by insisting

that its motion for rehearing below had “reiterated that

federal issues were present and had been left unaddressed

by the Court’s opinion.” Petition at 11. However, Gulf

States could not have there “reiterated’’ what it had failed

to iterate before. The extracts from its motion for re-

hearing below included in its appendix diverge markedly

from its earlier presentation.* Indeed, Utah Construction

goes entirely unmentioned in those extracts. Moreover, the

one line minute entry overruling that motion fails to es-

tablish that the Supreme Court of Texas actually decided

these newly presented questions on the merits. See Rotary

International, supra at 550. Under the circumstances, “‘it

will be assumed that the omission was due to want of

proper presentation in the state courts, unless the ag-

grieved party in this Court can affirmatively show to the

contrary.”’ See id.

The questions which Gulf States presents in its petition

for writ of certiorari were not raised and decided below.

The writ should accordingly be denied for want of a prop-

erly preserved federal claim.

B. The Claim that the Commission Denied Gulf States

Due Process is Premature

Even where federal claims have been properly pre-

served, this Court’s jurisdiction to review state court pro-

ceedings is not untrammeled. Insofar as here pertinent,

certiorari jurisdiction extends only to “{flinal judgments

or decrees rendered by the highest court of a State in

which a decision could be had.” 28 U.S.C. § 1257(a) (1988).

The arguments grouped under Point II of the reasons given

by Gulf States for granting the writ are not ripe for review

in this Court, because they may be raised in the direct

appeals taken from the Commission’s Order in Docket No.

7195. Those issues have yet to be finally decided in the

first instance, much less by the highest appellate tribunal

in which a decision could be had.

Gulf States admonishes that administrative decision

makers may be “less concerned with procedural regularity

than are the courts.” Petition at 14. Gulf States goes on

to argue that the agency did not subjectively intend the

consequences of its findings and that it improperly altered

the standards of proof after the record had closed. We

will show, under heading C post, that these contentions

are insubstantial. However, even if we indulge the fiction

that the Commission erred in the manner Gulf States con-

tends and assume that the error has been preserved under

State procedures, the claimed defects are appropriately

raised as grounds for reversal on direct judicial review of

the final Order entered by the Commission in Docket No.

7195. Gulf States has already commenced such proceedings

in Travis County District Court. They are not, however,

implicated by the final judgment entered in the independ-

ent civil action from which the petition for writ of certiorari

has been taken. That judgment forecloses Gulf States from

collaterally attacking the Commission’s Docket No. 7195

decision in a subsequent rate case.

The final judgment of the Supreme Court of Texas nei-

ther adds to nor subtracts from the issues remaining un-

resolved on direct judicial review. The writ should

accordingly be denied for want of a final determination of

the claim in State court.

C. The Petition Presents No Substantial And Impor-

tant Federal Question

Putting the jurisdictional impediments to discretionary

review discussed above under headings A and B to one

side, no substantial and important federal questions are

presented by the petition. The arguments presented by

Gulf States boil down to the following logic:

(1) The fourteenth amendment strips a state ad-

ministrative order of preclusive effect unless

the precluded issue was actually decided by

the agency.

(2) The Commission did not actually decide

whether some $1.4 billion of River Bend cap-

ital costs had been prudently incurred.

On that two-part syllogism and for a variety of reasons

ostensibly cloaked in due process garb, Gulf States insists

that it must be afforded another opportunity to litigate

the excess costs. The petition for writ of certiorari asks

this court to establish the first premise and argues that

the second premise has been satisfied. We will address

10

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11

billion, the PUC effectively disallowed that

amount from the rate base.

798 S.W.2d at 563-64.’

In reaching for a question of Constitutional dimension,

the petition for writ of certiorari distorts Utah Construc-

tion beyond recognition. The “decision [t]hzre rest{/ed] upon

the agreement of the parties as modified by the Wunder-

lich Act,” but this Court noted that the result reached

was “harmonious with general principles of collateral es-

toppel.”” See 384 U.S. at 421 (footnote omitted).* The dic-

tum which followed likewise bespoke common-law, not

Constitutional law, doctrine:

When an administrative agency is acting in a

judicial capacity and resolves disputed issues of

fact properly before it which the parties have had

an adequate opportunity to litigate, the courts

have not hesitated to apply res judicata to en-

force repose.

Id. at 422. Utah Construction thus purported to delineate

no due process boundaries.

It has been settled for more than a century that res

judicata (“claim preclusion”) forecloses relitigation of all

that might have been litigated previously, whether or not

"The Commission accordingly had no power under State law to re-

serve the excess cost issue for later decision, as the Supreme Court

of Texas explicitly held. See id. In effect, the petition for writ of

certiorari asserts that due process conferred a vested right upon Gulf

States to the fruits of the Commission's error of Texas law. No au-

thority has been or can be cited for that proposition.

* The cited case was a Government contracts appeal, the quoted pas-

sage suggesting no Constitutional holding, and the petition for writ of

certiorari is bereft of citation to caselaw reading more into Utah Con-

struction than symmetry with general common-law principles. Indeed,

University of Tennessee v. Elliott, 478 U.S. 788, 799 (1986) confirms

that this Court was “fashioning federal common-law rules of preclu-

sion.”

12

actually litigated. See Brown v. Felsen, 442 U.S. 127, 139

n. 10 (1979); Cromwell v. County of Sac, 94 U.S. 351, 352-

53 (1877). Gulf States suggests no Constitutional impedi-

ment to this long-standing doctrine. Although the petition

for writ of certiorari treats the decision below as grounded

on collateral estoppel (‘issue preclusion’’),? we are left to

speculate as to why the application of the fourteenth

amendment should turn on fine points of the common-law

of judgments. No requirement of “actual resolution’ may

arguably be crafted as an essential component of due proc-

ess.

Gulf States bemoans the supposedly “startling...

harshness” of the decision below, claiming that the Com-

mission held Gulf States to ‘“‘new and detailed proof re-

quirements” announced after the evidentiary record had

closed. Petition at 17. The petition for writ of certiorari

falls curiously silent in particularizing just where that hap-

pened and the administrative record will not support that

extravagant claim.

In the first place, the Commission engaged in garden

variety fact-finding, weighing the evidence adduced over

the course of more than one-hundred hearing days. The

Commission held the statistical evidence put on by Gulf

States wanting in credibility, while upholding the findings

of its presiding officers that Gulf States had not otherwise

carried its burden of proof by reconciling its costs with

legitimate reasons.’ Contrary to the implications of the

*The decision below supports its holdings in reference to “res ju-

dicata” standing alone or to “res judicata and collateral estoppel”

entwined together. Nonetheless, we may accept the characterization

employed by Gulf States for purposes of analysis.

“ The Commission apparently viewed the adjusted definitive cost es-

timate figure of $2.273 billion as a representative of a reasonable es-

timate of the investment required to build River Bend. Findings of

Fact 64-68 & 79-93; App. 55a-58a. It accordingly accepted costs up to

that figure as having been proved prudently incurred, but concluded

13

petition for writ of certiorari, no regulatory body is bound

by due process to provide a running critique to the persons

it regulates—guiding their counsel through the evidence

and confiding what will be required to make a convincing

showing. The Commission’s final Order held Gulf States

to nothing more stringent than a preponderance of the

evidence standard and did nothing to render admissible

any evidence which Gulf States had unsuccessfully tried

to adduce."'

The Commission had not previously announced that any

statistical proof, regardless of its flaws, would invariably

suffice. Nor, did the Commission categorically hold in

Docket No. 7195 that statistics could never carry a utility's

(Finding 163, emphasis added)."* Reliance on evidence of

that character carried with it litigation risks of which Gulf

States should have been aware."

that Gulf States had failed in its burden of proof as to the excess.

Conclusion of Law 18; App. 86a. Respondents have challenged that

rationale in the direct appeals pending in Travis County District Court.

“ The cases cited at page 18 of the petition for writ of certiorari

are accordingly inapposite.

in this proceeding.” App. 260a (Proposed Finding 163). In their dis-

cussion, the presiding officers damned the statistical evidence adduced

by Gulf States with faint praise, remarking that this regression analysis

was “the only means available, in this case,’ to compare River Bend

to its peers and that it was the “most credible” and based on the

‘most reasonable set of variables." App. 18la-82a. The Commission

simply ruled that Gulf States’ “best’’ was_not good enough.

“ Commissioner Greytok was not writing on a clean slate when she

spoke of the regression analysis model adduced by Gulf States in the

following terms: “there are lies, damned lies, in [sic and) statistics and

that one probably falls, in my view, very firmly into the latier cate-

14

In the second place, Gulf States gambled and lost with

a tactical decision to rest its case before the Commission

on the evidentiary record then accumulated." Bluntly put,

Gulf States set out to prove, was afforded fair opportunity

but failed to prove by a preponderance of the

evidence that the River Bend cost over-runs had been pru-

dently and reasonably incurred. In their report to the Com-

mission, the three presiding officers clearly reminded Gulf

States of its burden of persuasion:

-- It is up to GSU, not the intervenors, to

in

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Weigand of GSU observed...that “GSU

‘t know why River Bend cost so much.”

appears to be the case. GSU did not present

credible reconciliation of plant costs with spe-

ific causes, much less with specific regulatory

Ba?

“ Gulf States was apparently then well satisfied with the evidentiary

record:

of exhibits were received in evidence. Every factual, legal,

and policy issue was thoroughly explored and canvassed.

Gulf States Reply to Exceptions to Examiners’ Report at 1-1.

15

changes. Even if the causes for change were le-

gitimate, it did not show that the amounts of

money spent to meet various goals were reason-

able. It did show more generally that regulatory

changes had a dramatic effect on the project’s

scope and cost. Yet from the evidence one cannot

tell how wisely and efficiently money was spent

on design development, scope changes, and meet-

ing regulatory changes.

....GSU has the burden of justifying the costs

of River Bend either by detailed analysis or by

showing that these costs are reasonable com-

pared with those of other plants. It failed to do

App. 18la (record citation and footnote omitted) & 192a."

Gulf States was told early on that its failure to explain

why River Bend ran so far over budget placed its case in

substantial jeopardy. At the January 18, 1988 public meet-

ing, Commissioner Greytok undertook a discussion of the

over-run with Gulf States’ counsel:

COMMISSIONER GREYTOK: Mr. Avery, there

are sections of the Examiners’ Report that state

clearly that they cannot give us any indication

whatsoever as to what happened with the esca-

lating cost of River Bend. And when we started

out the other day, I made the comment to you

right up front, so there would be no doubt in

“The presiding officers recommended adoption of explicit findings

that Gulf States “could have developed a far more complete and ac-

curate investigation” into River Bend’s cost over-runs and that the

non-statistical explanations for the plant’s high costs ‘were inadequate

and unconvincing.” App. 257a (recommended findings 131 & 132). The

Commission's final Order adopted these recommendations verbatim. See

App. 62a.

16

your mind as to where I was headed, that we

are missing $2.3 billion as far as being able to

account for it.

MR. AVERY: Unreconciled; right.

COMMISSIONER GREYTOK: Unreconciled, un-

documented, un-whatever; it’s not there.

MR. AVERY: But not found to be imprudent.

COMMISSIONER GREYTOK: Well. it depends

on whose finding—you know, the way—

COMMISSIONER CAMPBELL: I don’t have to

find it imprudent. If you haven’t proved it to be

prudent and to have been incurred through ef-

ficient operation, Mr. Avery, it would seem to

me that all I would have to do is convince one

other Commissioner to adopt the statement of

our expert that there is no evidence in the record

in which the Commission can either make a find-

ing of prudence or imprudence and all. As long

as I adopt that statement, you have lost on the

burden of proof.

Final Order Meeting Tr. 780-81 (emphasis added). Com-

missioner Campbell reiterated and re-emhasized the con-

sequences of Gulf State’s failure of proof. Jd. at 791-92 &

832.

Notwithstanding those admonitions, Gulf States unequi-

vocally disclaimed any need to reopen the record.

MR. AVERY: What I’m saying to you is, you

say we don’t want a remand.

What I’m saying to you is, I’m not going to tell

you anything but straight what we think. What

we think is, a remand isn’t necessary because we

met our burden of proof. And I can’t tell you that

I don’t think that if I do think that.

17

But, what I’ve also said to you—and I think this

is crucially important and what I don’t think I’ve

gotten across to you is—I’m also saying to you,

uf you think there should be a remand, we are

more than prepared to go about providing that

re pa

Id. at 834 (emphasis added).'* That Gulf States later ex-

perienced a change of heart after entry of the Commis-

sion’s final Order is readily understandable.'* Yet, due

process is not a license to hold back your proof until you

learn that you have lost.

As its final parry to the decision rendered below, Gulf

States accuses the Supreme Court of Texas of “under-

min{ing] the basic foundation of constitutional ratemak-

‘* Counsel had earlier disclaimed asking for an opportunity to adduce

further proof on remand:

MR. AVERY: I'm sorry, Commissioner; I don’t think I have

asked you to do that. I have said if you want a remand,

that’s open to you.

Id. at 790. Counsel thereby reaffirmed his optimistic assessment of the

record—“‘We do not think that an order which disallowed everything

over the definitive cost estimate has a shred of a chance of being

sustained on appeal."’ See id. at 780.

" Even at the late stage, Gulf States did not request the Commission

defer ruling on recovery of any River Bend investment until the

s

evidentiary record could be reopened and supplemented. Gulf States

instead argued for a procedure whereby only the $1.453 billion excess

capital costs were to be reconciled, with the $2.273 billion consistent

with the definitive cost estimate “severfed]" and recovered from its

customers as part of a final decision in Docket No. 7195. See Gulf

States’ Motion for Rehearing of the Commission's Order of May 16

1988 at p. I1-36. Gulf States thereby sought to take the “sweet” and

reject the “bitter” aspect of the Commission's decision. Texas law does

not permit a unitary asset to be so casually split into separately litigated

I

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18

ing’’—which Gulf States equates with “a just and reason-

able end-result, which must balance ratepayer and investor

interests.”” Petition at 21. Such arguments founder on the

immutable reality so assiduously denied throughout the

petition for writ of certiorari: the Commission’s determi-

nation that Gulf States failed to carry its burden of proof

resolved prudence issues on the merits as a matter of State

law. Burden of proof was assigned by the Texas legislature

in categorical terms:

In any proceeding involving any proposed change

of rates, the burden of proof to show that the

proposed change, if proposed by the utility, or

that the existing rate, if it is proposed to reduce

the rate, is just and reasonable shall be on the

public utility.

Tex. Rev. Crv. Stat. ANN. art. 1446¢ § 40 (Vernon Supp.

1990) (emphasis added). That burden is not to be relaxed,

under the guise of “‘balancing,”’ merely because the reg-

ulated utility fails to meet it.

Gulf States portrays the Commission’s willingness to

hold the excess River Bend costs “in abeyance” as ‘“‘an

essential part of the Commission’s attempt to balance con-

sumer and investor interests.’’ Petition at 21. Gulf States

seemingly there suggests that evidence which Commis-

sioners Greytok and Campbell refused to credit would have

been transmuted into proof they believed, just because the

interests of Gulf States investors would have been thereby

advanced. That speculation has no foundation in the re-

cord. Indeed, they admonished Gulf States on the record

that they intended to uphold their sworn duty:

COMMISSIONER GREYTOK: ....I am not

about to say to the ratepayers in your service

area that I’m going to give you $2.3 billion based

on nothing. In this Examiners’ Report, we have

witnesses who clearly state that you cannot—that

there is no documentation.

19

Final Order Tr. 787.

COMMISSIONER CAMPBELL: Mr. Avery, you

know, I said when I came on this Commission I

was going to be fair to every utility, and I said

if you make your case, you would get it and if

you didn’t make your case, you didn’t get it, and

that the company shouldn’t look at me or any

other member of this Commission, they had bet-

ter look at the attorneys and witnesses that put

on their case.

Now, as far as I’m concerned, there are some

very critical issues that haven’t been proven up

in this case. And I feel that under the law—and

I’m a stickler on trying to apply the law—under

the law, I have absolutely no right to give you

anything you haven’t proven by a preponderance

of the evidence. ...

Id. at 790."

Compounding its misreading of the Commission major-

ity, Gulf States pretends that the Texas legislature au-

thorized such “balancing” in the agency’s fact finding

process. This Court must firmly turn aside Gulf States’

cynical suggestion that the Commissioners would have

voted differently had they only known that Gulf States’

failure of proof could not be cured later on.

Quite apart from the jurisdictional impediments to dis-

cretionary review discussed above under headings A and

B, the petition for writ of certiorari seeks nothing more

than another round of judicial review of the sufficiency of

the evidence presented to a state administrative agency.

“ Counsel for Gulf States responded to Commissioner Campbell by

reiterating that, under the company’s view of the law, ‘‘we think we've

satisfied our burden of proof. Now, you're the Commissioner; you have

to decide.” Jd. at 791.

20

The questions presented are unworthy of consideration on

the merits by this Court.

Conclusion

For the reasons stated above, the petition for writ of

certiorari should be denied.

Respectfully submitted,

DANIEL C. KAUFMAN

Counsel of Record

Ritts, BRICKFIELD & KAUFMAN

Watergate 600 Building

Suite 915

Washington, D.C. 20037

(202) 342-0800

March 27, 1991