Lead Opinion
In an action brought by Southwestern Bell Telephone Company, the district court (1) reversed a final order issued by the Public Utility Commission in a contested case and (2) dismissed the cause for want of subject-matter jurisdiction. The Commission and the City of McKinney (intervenor in the suit below) appeal. We will reverse the district-court judgment and remand the cause to that court.
THE CONTROVERSY
The Commission’s general counsel initiated a contested-ease proceeding under Commission Doсket 8585 to investigate SWBT’s rates and services and to establish new rates if necessary.
At the conclusion of Docket 8585, the City of McKinney submitted to SWBT its claim for reimbursement of attorneys’ fees incurred in that Commission proceeding. SWBT paid the claim without objection. The City sued in district court for judicial review of the Commission’s final order in Docket 8585. The course of that litigation is set out in Cities of Abilene v. Public Util. Comm’n,
Having a contrary undеrstanding of the parties’ agreement, the City complained to the Commission. In a contested case conducted in Docket 11027, the Commission issued a final order in which it found as a fact that the parties had made the agreement on the terms set out above. In related conclusions of law, the Commission determined as follows: (1) a proceeding initiated by the Commission’s general counsel under PURA section 42 is a “ratemaking proceeding” within the meaning of PURA section 24, entitling municipalities to attorneys’ fees under that section; (2)rthe City of McKinney’s complaint in docket 11027, seeking reimbursement of attorneys’ fees based on the parties’ agreement in Docket 8585, is a dispute so closely related to a “ratemaking proceeding” that the City is also entitled to recover under PURA section 24 the City’s attorneys’ fees incurred in Docket 11027; (3) $125,686.14 and $57,860.36 were reasonable amounts for
SWBT sued in the present case for judicial review of the Commission’s final order in Docket 11027, contending among other things that the order was void because the Commission lacked jurisdiction to hear and decide the City of McKinney’s complaint. The district court reversed the Commission order in Docket 11027, based on the agency’s want of subject-matter jurisdiction, and ordered the cause dismissed.
In two points of error, the Commission contends the judgment is erroneous because, as a matter of law, the Commission possessed subject-matter jurisdiction to adjudicate the City of. McKinney’s complaint in Docket 11027. The City of McKinney makes the same contention in four of its five points of error. Because we conclude the Commission possessed such jurisdiction, we will sustain the points of error and need not discuss the City’s fifth point of error.
DISCUSSION AND HOLDINGS
The legislature delegated to the Commission a general regulatory power over public utilities expressed in the broadest possible terms. The delegation includes the power “to do all things, whether specifically designated in [PURA] or implied herein, necessary and convenient to the exercise of [the Commission’s] power and jurisdiction.” PURA § 16. The delegated power also includes an express power to conduct adjudica: five proceedings “with rеspect to administering the provisions of [PURA] or the rules, orders, or other actions of the commission.” Id. (emphasis added). A delegation of power to an administrative agency, in such broad and general terms, implies a legislative judgment that the agency should have the widest discretion in conducting its adjudicative proceedings, including a discretion to make ad hoc rulings in specific instances, within the bounds of relevant statutes and the fundamentals of fair play. See FCC v. Schreiber,
We hold the power to conduct adjudicative proceedings, expressly delegated to the Commission in PURA section 16, necessarily includes the following incidental powers: (1) a power to accept and act upon an agreement between the parties that removes from dispute and litigation a subsidiary issue of fact or law,
SWBT reasons the Commission was powerless to award attorneys’ fees in Docket 11027 because: (1) PURA section 24 authorizes recovery of attorneys’ fees only in a “ratemaking proceeding,” in this instance Docket 8585; (2) the City of McKinney was therefore required to plead, prove, and recover the entirety of its attorneys’ fee expenses in Docket 8585; (3) the Commission lоst jurisdiction to award attorneys fees in Docket 8585 when its order in that contested case became final; and (4) no statute empowers the Commission to re-open and decide anew matters adjudicated in a previous contested case. In support of this reasoning, SWBT cites several judicial decisions to the effect that one entitled to statutory attorneys’ fees must recover accrued and expected attorneys’ fees in the same proceeding, our decision in Sexton v. Mount Olivet Cemetery Assn.,
The question of the City of McKinney’s entitlement to attorneys’ fees was never adjudicated in Docket 8585. Instead, that question was by agreement removed from the course of litigation in that proceeding. In lieu of whatever rights and obligations resulted from the force and effect of PURA section 24, the parties substituted the rights and obligations comprising their agreement relative to attorneys’ fees. The Commission accepted and acted upon that agreement in arriving at SWBT’s rates in Docket 8585. Thus, when the Commission entertained the City of McKinney’s complaint in Docket 11027, it could not possibly have “re-opened” for “relitigation” and a new adjudication the question of attorneys’ fees — that question had never been adjudicated at all. SWBT’s argument to the contrary reduces actually to a contention that the Commission and the parties were powerless to rеmove the question of attorneys’ fees from litigation and adjudication in Docket 8585. We have held to the contrary for the reasons given above. The holding in Coalition of Cities is not to the contrary. There the court held the Commission was powerless to “carve” from a ratemaking proceeding the question of whether part of a utility’s capital expenditures were prudent when the utility insisted the expenditures be included in the calculation of its rates. Coalition of Cities,
SWBT contends the Commission lacked subject-matter jurisdiction because no statute apart from PURA section 24 empowers the agency to order reimbursement for attorneys’ fees; and that statute, properly cоnstrued, applies only to ratemaking proceedings initiated by a utility under PURA section 43. Consequently, PURA section 24 did not apply in Docket 8585, a proceeding initiated by the agency’s general counsel un
For the reasons given, we reverse the district-court judgment and remand the cause to that court for proceedings not inconsistent with our 'opinion.
Notes
. The Commission consolidated the contested case in Doсket 8585 with another in Docket 8218. They proceeded to adjudication under the heading Inquiry of the General Counsel into the Reasonableness of the Rates and Services of Southwestern Bell Telephone Company and Inquiry of the General Counsel into the WATS Prorate Credit. See 18 P.U.C. Bull. 1468 February 20, 1990.
. PURA was recodified effective April 5, 1995, as Tex.Rev.Civ. Stat. Ann. art. 1446c-0 (West 1996). The contested case in Docket 8585 was conducted and decided before the recodification. As disсussed in the text, the controversy involves a subsequent contested case denominated Docket 11027 in the Commission. That contested case was conducted under the former version of PURA; the final order therein was signed, however, after the April 5, 1995 effective date of the recodification. The substance of the PURA sections discussed in the text of our opinion was not altered by the 1995 recodification. For clarity, we have designated the section numbers as they appeared in PURA before its recodification.
. PURA section 24 provides as follows:
The governing body of any municipality shall have the right to select and engage rate consultants, accountants, auditors, attorneys, engineers, or any combination thereof, to conduct investigations, present evidence, advise and represent the governing body, and assist with litigation on public utility ratemaking proceedings; and the public utility engaged in such proceedings shall be required to reimburse the governing body for the reasonable cost of such services.
PURA § 24 (emphasis added). The parties may have made the reimbursement agreement based upon a shared belief or assumption that Docket 8585 amounted to a "public utility ratemaking proceeding” to which PURA section 24 applied; or, the parties may have been in dispute in that regard but wished nevertheless to adjust the dispute on the terms indicated so as to avoid having to litigate the issue to the point of a Commission interpretation of PURA sections 24 and 42 and a resulting agency decision. We believe the parties’ motivation immaterial; the fact of the rеimbursement agreement is undisputed.
. No question pertaining to how the order may be enforced, whether by process or otherwise, is before us on appeal. See, e.g., Booth v. Texas Employers' Ins. Ass'n,
. In a contested case governed by the Administrative Procedure Act, the agency may, unless precluded by law, dispose of the entire case by stipulation, agreed settlement, consent order, or default. See Tex. Gov’t Code Ann. § 2001.056 (West 1997).
. The supreme court, in Coalition of Cities, based its holding on a conclusion that nothing in PURA authorized the Commission to determine . one item of a utility’s rate base (the prudence of expenditures incurred in constructing a particular plant) in a proceeding separate from that in which all other items of the rate base were litigated. Coalition of Cities,
. This principle is sometimes confused with the erroneous idea that a reviewing court, must sustain an agency order on any “valid basis” shown in the record. This does not mean, however, that the reviewing court may sustain the agency upon a factual basis not passed upon by the agency. It means that the reviewing court may sustain the agency order upon any legal basis shown in the record. The supreme court explained the distinction at length in Gulf Land Co.,
Lead Opinion
ON MOTION FOR REHEARING
The district-court judgment dismissing the City of McKinney’s cause of action rests upon a singlе theory — that the Commission was without subject-matter jurisdiction in Docket 11027; consequently the district court lacked such jurisdiction.
We do not, as SWBT suggests, conclude that SWBT agreed to pay the City of McKinney’s “appellаte” attorneys’ fees. The Commission made that decision. We cannot and have not. Nor do we examine the correctness of the Commission decision. We decide simply that the Commission had jurisdiction to make a decision resolving the dispute. We believe the power was delegated to the Commission in PURA section 16 as a power incidental and necessary to the agency’s exercise of its expressly delegated power and duty to adjudicate contested cases. We believe the power was also delegated to the Commission in Texas Government Code section 2001.056, authorizing agencies subject to the statute to dispose of an entire contested case by agreed settlement or stipulation; a fortiori they are authorized to dispose in like manner of a subsidiary issue of fact or law within a particular case, such as the disputed issue of attorneys’ fees in this instance.
We need not decide in this appeal the meaning and applicability of PURA sections 24 and 70.
In Docket 11027 the Commission expressly decided the question of subject-matter jurisdiction based upon the agency’s interpretation of PURA sections 24 and 42. Insofar as subject-matter jurisdiction is concerned, we sustain the Commission’s final order in Docket 11027 on a different basis — the authority delegated to the agency in PURA section 16 and Texas Government Code section 2001.056. Because the Commission possessed subject-matter jurisdiction under those statutes, it is immaterial if the agency misconstrued PURA sections 24 and 42 as SWBT contends. SWBT complains, however, that we erroneously uphold the Commission’s final order on a basis other than that ■relied upon by the agency. As explained previously in our opinion, we must sustain the agency order on any legal basis shown in the record. The legal basis, in this instance, is PURA section 16 and Texas Government Code section 2001.056. We have not decided the question of subject-matter jurisdiction on any disputed factual basis not passed upon by the Commission-. ■
SWBT suggests we erroneously conclude an administrative agency may adjudicate private contract rights. We recognize the longstanding doctrine reflected in such cases as Railroad Commission v. City of Austin,
SWBT suggests we erroneously conclude private parties may, by their agreement, confer subject-matter jurisdiction upon an administrative agency. It is a sufficient response to note that we have discussed at length the statutory grounds for our conclusion regarding subject-matter jurisdiction. The parties’ agreement and any dispute arising therefrom are prоper objects but not the source of the Commission’s jurisdiction.
We overrule the motion for rehearing.
. The district-court judgment states as follows:
It is the decision of this Court that the Commission has jurisdiction over expenses in a rate case so long as that case is pending, but when the [rate] case becomes final the jurisdiction over the matter of fees in that case ceases, just as the jurisdiction of the Commission ceases over any other matter pending before the Commission in that case.
. It is difficult to imagine how an agency might cоnduct to a conclusion a complex contested case, such as a rate case, without any stipulations or agreed settlement as to some subsidiary issue of fact or law. And the agency’s power to accept and act upon such stipulations or agreed settlement is meaningless, as a practical matter, if the agency is powerless to enforce them in some manner. The best discussion of the topic is found in 4 Stein, Mitchell аnd Mezines, Administrative Law % 23.01 (1991).
. See PURA § 71 (attorney general, on Commission's request, shall bring a claim in court of competent jurisdiction to require public utility’s compliance with agency order).
. PURA section 24 requires a public utility to reimburse a municipality “for the reasonable costs of” its attorneys' fees "to the extent found reasonable by the commission.” This implies, of course, that the Commission possesses at minimum the power to determine what is in fact a reasonable amount and thе utility’s obligation does not depend upon the municipality being a prevailing parly in the “ratemaking proceedings before the commission or in court.” PURA section 70, on the other hand, authorizes recovery of attorneys' fees by any party (a municipality or another) who prevails in a suit for judicial review on his claim that existing rates or those prescribed by the Commission are excessive. The prevailing party may, "in the same action,” recover reasonable attorneys’ fees for services furnished "before the commission and the court,” in an amount "fixed by the [reviewing] court.”