Public Utility Commission v. City of Coahoma

DIES, Chief Justice. Our original opinion is withdrawn, and we substitute the following: We review a suit filed by the City of Coahoma, as plaintiff below, to set aside an order of the Public Utility Commission (hereafter PUC), a state administrative agency created by Tex.Rev.Civ.Stat.Ann. art. 1446c (1980), defendant below. It is undisputed that since 1955 Coahoma has been providing water service not only to residents in the City but also outside the City, most of this outside the City being within the boundaries of Howard County Water Control and Improvement District No. 1 (hereafter “District”). Both the City and the District filed application to the PUC under the provisions of the Public Utility Regulatory Act (hereafter “PURA”), Tex.Rev.Civ.Stat.Ann. art. 1446c (1980), for certificates of public convenience and necessity for water service operations. The Commission granted Coa-homa a certificate within its city limits and the District within its limits. The district court set aside PUC’s order remanding the case to the commission with the “following directions”: “1. The Public Utility Commission shall issue to the City of Coahoma a certificate of public convenience and necessity for the operation of water service for the area within the city limits of the City of Coahoma and also for at least that area which is outside such city limits but within the Howard County Water Control and Improvement District No. 1 and which lies within two hundred (200) feet of any point along a water distribution line. “2. The commission shall conduct such further proceedings and shall make such decisions and orders as it may consider to be appropriate with respect to the following matters: [530] “a. the application of Howard County Water Control and Improvement District No. 1 for a certificate of public convenience and necessity for water service; “b. sewer service for the areas involved in this case; “c. water service for that area which is not within the city limits of the City of Coahoma but is within Howard County Water Control and Improvement District No. 1. “d. other matters which in the discretion of the commission should be considered during such proceedings.” It is from this judgment PUC and the District have appealed. Appellants’ first group of points urges the court erred in holding the City of Coahoma was entitled to a “grandfather” certificate under Sec. 58 of the Act. This section provides: “On application made to the commission within six months after the effective date of this Act, the commission shall issue a certificate of public convenience and necessity for the construction or operation then being conducted to any public utility actually providing service to any geographical area on the effective date of this Act ...” It is undisputed Coahoma filed its application within six months of the effective date of the Act. Sec. 3(c) of the Act provides: “The term ‘public utility’ or ‘utility,’ when used in this Act, includes any person, corporation, river authority, cooperative corporation, or any combination thereof, other than a municipal corporation,” etc. (Emphasis supplied.) Clearly then it seems to us, Coahoma must proceed as any other entity under the provisions of Sec. 54 of the Act in obtaining a certificate of convenience and necessity. Appellee counters that Sec. 50(2) of Article VII of the PURA implies that a “retail public utility” needs no certificate to continue operating in the same area on the effective date of the Act, and that under Sec. 49 of Article VII a “municipality” is one retail public utility. However, the Attorney General’s Opinion No. H-812, April 20,1976, concluded “public utility” and “retail public utility” are not the same. We follow this opinion and sustain these points of appellants. Paragraph 6 of the judgment of the trial court reads: “There is no substantial evidence to support the finding of the Commission, stated in the Examiner’s ‘Opinion,’ that the water service in the area in controversy was provided by the Water District.” Appellants’ brief urges the issue is “whether the grant of a Certificate of Public Convenience and Necessity [to the Water District] under Section 54 of the PURA was valid and supported by substantial evidence.” “ ‘Substantial evidence’ may be defined as such evidence as will convince reasonable men and on which they may not reasonably differ, that is, competent evidence such as a reasonable mind might accept as adequate to support a conclusion.” 1 Tex.Jur.2d Administrative Law § 42, at 682-83 (1959). A court “is not obligated to sustain the agency’s action if it is supported by a mere scintilla of evidence nor is it bound to consider the testimony of one side without regard to that introduced by the other.” 1 Tex.Jur.2d Administrative Law § 43, at 684, citing Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022 (1942); Trapp v. Shell Oil Co., 145 Tex. 323, 198 S.W.2d 424 (1946). We have carefully examined all the evidence heard by the Examiner of the Commission. To completely summarize it would only unduly lengthen this opinion. Coahoma, a city of about twelve hundred has about one-half of its water outlets in appellants’ water district. By contract until 1985 Coahoma must pay the water cost (obtained from Big Springs), the bonds is [531] sued by appellants’ district in 1955, and all other expenses. Appellants’ water district does not apparently intend to release Coa-homa from this contract if its certificate is granted, although it will take approximately one-half of its water income. The Water District has no clear plans on how it will finance its desired expansion or proposals, and there is only a scintilla of evidence that Coahoma is not adequately serving its present customers within the Water District. Furthermore, it is clear from the record before the Examiner that both applications involved herein were regarded as competing applications. Appellee, Coahoma, made no real effort to prove a “merit” case under Sec. 54 of the Act. Therefore, “in the interest of justice” we feel appellee, Coahoma, should be given this opportunity. See Eli Lilly v. Melton, 458 S.W.2d 544, 546 (Tex.Civ.App.—Eastland 1970, no writ). We, therefore, agree with the trial court that the Commission’s grant of a certificate of convenience and necessity to the Water District is not supported by substantial evidence, and we reverse and remand this cause to the trial court with instructions to remand the entire cause to the Public Utilities Commission with instructions that the latter decide both applications in accordance with the guidelines and factors contained in Sec. 54 of the Act. These holdings make it unnecessary for us to consider other points. REVERSED and REMANDED with instructions.