VANDE WALLE, Justice.
This is an appeal from a judgment of the district court of Burleigh County affirming
In March 1977, Power Fuels, Inc. ("Power Fuels"), filed an application with the Public Service Commission ("PSC") seeking a special common motor-carrier certificate of public convenience and necessity authorizing it to transport crude oil, water, and salt water, in bulk, in tank vehicles to, from, and between all points and places in North Dakota lying west of a line defined in the application. Getter Trucking, Inc. ("Getter"), Matador Service, Inc. ("Matador"), Big "M" Oil Field Services, Inc. ("Big `M' "), and Northern Tank Lines ("Northern Tank")—special common motor carriers holding authority to provide all, or a part of, the transportation service proposed in the application—protested the application.
In April 1977, Power Fuels filed an application for temporary authority to provide service until such time as the application could be heard and determined by the PSC. The PSC granted temporary authority on April 12, 1977, and notified Power Fuels on May 20, 1977, that it had met all necessary "compliances" and could initiate operations. Temporary authority was granted to Power Fuels pursuant to Section 49-18-12, N.D. C.C.
The hearing on the application for permanent authority was held on September 8, 1977. On November 25, 1977, the PSC issued its findings of fact, conclusions of law, and order granting Power Fuels the special certificate of convenience and necessity. Getter and Matador appealed to the district court of Burleigh County. On May 25, 1978, the district court remanded the case to the PSC with the direction that the PSC make proper findings of fact and that, after the PSC had issued proper findings of fact, the matter be returned to the district court for review. On July 6, 1978, the PSC entered its amended findings of fact, conclusions of law, and order and returned the matter to the district court. The district court, after reviewing the matter, sustained the PSC order and judgment was entered on October 12, 1978. Matador appeals that judgment to this court.
Matador, on appeal, has advanced essentially three issues:
1. Whether or not the PSC's granting of temporary authority to Power Fuels was unlawful.
2. Whether or not the statutory requirement that, on review, a court must determine if the administrative agency's findings of fact are supported by a preponderance of the evidence, is constitutional.
3. Whether or not the PSC's findings of fact are supported by a preponderance of the evidence.
First, Matador argues that the PSC should not have granted Power Fuels a temporary permit for service and, because
In support of its position Matador has included in the appendix a copy of a Burleigh County district court decision in Dan Dugan Transport Company v. Elkin, Civil No. 26208 (Sept. 7, 1977). No appeal was taken from the decision in Dan Dugan. Dan Dugan apparently was an action for declaratory judgment naming the PSC as a party and asking the court to construe the provisions of Section 49-18-12, N.D.C.C., insofar as those provisions concern the issuance of a temporary permit. The Burleigh County district court determined that whether or not a temporary permit should be issued to an applicant was not a matter that rested solely in the discretion of the members of the PSC. It concluded that the PSC has the authority to grant temporary permits upon a showing that (1) there is an immediate and urgent need for the proposed service and (2) there is no carrier capable of meeting that need. Furthermore, the district court concluded that where the records of the PSC reveal that an existing common motor carrier is authorized to provide the service in question, some procedure should be utilized by the PSC to determine whether or not that carrier is willing and able to provide the service required by the immediate, urgent need therefor. The district court determined, however, that the precise summary procedure to be used by the PSC in reaching the determination required by statute should be left to the PSC but that the PSC cannot lawfully confine itself to unsupported allegations contained in an application for a temporary permit. Matador now asks that we give the PSC "some further hints" concerning what should be required of an applicant in the ex parte proceeding to permit the PSC to conclude that there is an immediate and urgent need for common motor-carrier service requiring the issuance of a temporary permit under Section 49-18-12, N.D.C.C.
The PSC and Power Fuels note, however, that the decision in Dan Dugan was issued some five months after the temporary permit had been issued to Power Fuels by the PSC, and that Power Fuels should not be penalized by a decision issued after the temporary permit had been issued. Additionally, both the PSC and Power Fuels argue that the evidence submitted at the hearing before the PSC, on which Amended Finding No. 6 was based, was used only for the purpose of determining whether or not Power Fuels provided satisfactory service during the time it held the temporary permit and not for the purpose of determining whether or not there was a need for additional service. It is obvious that such evidence could not be used to establish a need for additional service because Section 49-18-12, N.D.C.C., provides, in part, that the temporary permit "shall create no presumption that the corresponding certificate of public convenience and necessity shall be granted after the hearing on the application." The PSC also argues that there is no evidence in the record upon which we can conclude that it has failed to adhere to the decision in Dan Dugan because, as we have already noted, that decision was issued after the temporary permit was granted by the PSC.
We agree with the PSC and Power Fuels that the method of issuance of the temporary permit should not be decided by this court in the context of the present appeal. If the decision in Dan Dugan was meant to be instructive to the PSC in its issuance of temporary permits, it could not apply to a permit issued some five months prior to that decision. Although Matador in its brief alleges that the PSC has "really done nothing to effect a change in its policy relating to the issuance of temporary common motor carrier authority under the statute,"
The second issue Matador raises concerns the scope of review on appeal from a decision of an administrative agency. Prior to July 1, 1977, Section 28-32-19, N.D.C.C., provided, in part, that the decision of the agency should be affirmed unless "the findings of fact made by the agency are not supported by the evidence." This provision was construed to mean that the findings must be supported by "substantial evidence." E. g., Geo. E. Haggart, Inc. v. North Dakota Workmen's Compensation Bureau, 171 N.W.2d 104 (N.D.1969).
In 1977, the Legislature amended Section 28-32-19, N.D.C.C., to require that the decision of the agency be affirmed unless the findings of fact made by the agency "are not supported by a preponderance of the evidence." In its decision the district court determined, in part:
Section 94 of the North Dakota Constitution provides, in part, that "No duties shall be imposed by law upon the supreme court or any of the justices thereof, except such as are judicial, . . ." The decision of the district court that the preponderance standard would impose other than judicial duties on the judiciary is, as amplified by the briefs of the parties, predicated on the assumption that the preponderance standard would require this court to substitute its judgment for that of the administrative agency and would require us to make a determination that is legislative or administrative, rather than judicial, in nature. Our review is governed by the same standard which governs the review by the district court. See Sec. 28-32-21, N.D.C.C.
In considering the significance of the 1977 amendment of Section 28-32-19(5), N.D.C.C., this court has previously stated:
In a subsequent decision we cited Steele and said:
In Allstate, after reviewing the evidence, the court concluded the Insurance Commissioner's order was "neither supported by a preponderance of the evidence, nor is it in accordance with law; . . ." Allstate Insurance Co. v. Knutson, supra, 278 N.W.2d at 392.
In Tang v. Ping, 209 N.W.2d 624, 628 (N.D.1973), cited in Allstate, this court quoted Hjelle v. Sornsin Construction Co., 173 N.W.2d 431, 432 (N.D.1970), as follows:
In State Insurance Commissioner v. National Bureau of Casualty Underwriters, 248 Md. 292, 236 A.2d 282 (1967), the Court of Appeals of Maryland faced arguments similar to the ones with which we are now concerned. The 1963 Maryland Legislature had enacted a new statute to govern and control the insurance business in Maryland. The appeal provision in the statute, Md. Ann.Code Art. 48A, § 245(2),
We agree with the reasoning of the Maryland Court of Appeals and find it consistent with our decision in Steele v. North Dakota Workmen's Comp. Bur., supra. This result was foreshadowed by the decision of this court in Allstate Insurance Co. v. Knutson, supra. In construing the "preponderance of the evidence" standard to permit us to apply the weight-of-the-evidence test to the factual findings of an administrative agency, we do not make independent findings of fact or substitute our judgment for that of the agency. We determine only whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record. In so doing we conclude that we are not exercising a nonjudicial function as prohibited by Section 94 of the North Dakota
Thirdly, Matador contends that the evidence does not support the finding by the PSC that public convenience and necessity require additional common-carrier authority. It also urges that the PSC conclusion that increased oil activity has resulted in a need for additional common motor-carrier authority ignores the existence of common motor carriers who have increased their investments in motor-carrier equipment as necessary to meet the additional transportation requirements related to the increased oil activity.
Section 49-18-14, N.D.C.C., sets forth the factors to be considered by the PSC in granting a certificate of authority:
It is with subsection 4 as well as the prohibition against the granting of a certificate, if it appears from the evidence that the service furnished or that could be furnished by existing transportation facilities is reasonably adequate, with which most of the evidence and testimony before the PSC was concerned.
The PSC's findings of fact and conclusions of law are as follows:
"AMENDED FINDINGS OF FACT
"At the outset of the hearing, Applicant requested to amend the application in regards to the area involved in the application. Applicant requested the application to read `Thence west along the south boundary of McHenry and Ward Counties until it intersects with Highway No. 83,' and as the amendment did not broaden the application in any manner, Applicant's request was granted by the Commission.
"The Applicant, Power Fuels, Inc., is a corporation whose business is the buying and selling of liquified propane gas and crude oil. Propane is purchased from Solar Gas, Dome Petroleum, and Amoco and sold to Stepanek's Gas, Behm's LP Gas, and Behm's Propane, Inc., the latter two companies being controlled by individuals who also direct Power Fuels, Inc. Crude oil is also bought from Sunbehm Gas, a related company, and sold to Ashland Oil.
"The buy-sell transaction commences with an order for the product being placed with Power Fuels; a truck is dispatched to load the product, title to which is obtained by Power Fuels; ownership remains with Power Fuels until delivered to the ordering party. No storage is owned by Power Fuels, other than the capacity of the vehicle in which the product is transported.
"The profit to Power Fuels from the buy-sell transaction is the difference between the purchase and selling prices. No specific charge is made for transportation, and the prices of the transaction, originally determined competitively, are now controlled by the Federal Energy Administration.
"The magnitude of the profits accruing to Power Fuels from the buy-sell operation are not ascertainable from the record.
"Under the Temporary Authority granted by the Public Service Commission, Power Fuels has been engaged in a satisfactory common carrier transportation of crude oil and water for Wiser Oil, Phillips Petroleum, Murphy Oil, Ward-Williston, Zinke and Phillipe, utilizing three trucks and three trailers stationed at Minot, North Dakota.
"As of June 30, 1977 the Applicant Power Fuels had assets of $226,903 and liabilities of $126,320, with $100,583 of Shareholder's equity. The American Bank and Trust Company of Minot, North Dakota, is willing to provide the necessary financing for additional transportation equipment, should Power Fuels so request.
"A dramatic increase in the exploration and drilling of oil wells has occurred within North Dakota recently. As of June, 1977 there were 35 drilling rigs in operation, compared to 8 three years ago. 228 drilling permits were issued for the first six months of 1977, compared to 135 for the entire 1976 year. Wildcat discoveries in North Dakota are 20 percent over the national average.
"Ward-Williston Drilling Co. and Wiser Oil Co. sell crude oil to Ashland, Murphy, and Koch Oil Companies. Currently, Ward-Williston and Wiser, active in Bottineau, Renville and McHenry Counties, have 26 producing wells and maintain 5 salt water disposal plants. Although they utilize the services of Matador, as well as that of the Applicant Power Fuels, Ward-Williston and Wiser are dissatisfied with Matador. Matador has damaged two disposal plants by mixing crude oil with the water delivered there for disposal. Matador leaves the run tickets at the lease site, and refuses to haul tank bottoms. Matador is a subsidiary of Koch Oil, which is a competing oil buyer in the strongly-competitive North Dakota oil industry. Ward-Williston and Wiser support the Applicant's application for crude oil and disposal water hauling authority.
"Gulf Oil Corp., currently active in Dunn, McKenzie and Billings Counties, has 23 producing wells. Gulf has six drilling rigs in North Dakota and is planning to drill 50 wells in the next year. Because of the geology attendant in the area of new drilling in North Dakota, salt water is an important ingredient in the process of oil drilling. Gulf currently is utilizing Getter and Matador to transport the salt water it uses for drilling, but these carriers have not fulfilled all of Gulf's transportation needs. Although there is presently a shortage of salt-saturated water, there being but one plant producing it, a drilling rig requires the services of six trucks to provide the necessary drilling water. Thus, the daily demand for salt water transport fluctuates with the completions of particular drilling activities. Gulf supports Power Fuels' application for salt water authority.
"Galaxie Oil Company operates wells in Renville and McKenzie Counties. Galaxie currently utilizes Matador, Getter and Power Fuels, and finds the services of all three satisfactory. Galaxie sells its crude oil to Ashland, Koch and Murphy Oil Companies.
"Phillips Petroleum has 82 producing wells in the Westhope area, 7 producing wells around Dickinson, and 2 others in western North Dakota. It is presently drilling 5 wells in the Westhope area. Phillips has had problems with Matador drivers allowing disposal water receiving tanks from its producing wells being allowed to overflow. Phillips supports the application
"Gulf Oil and Phillips Petroleum are each partners in certain action with Sunbehm Gas, a company related by common stockholders to Power Fuels.
"Matador Service, Inc., a subsidiary of Koch Oil which is, in turn, a division of Koch Industries, holds the following North Dakota intrastate authority:
"Matador, which also holds transportation authority in Kansas, Oklahoma, Montana and South Dakota, maintains terminals in North Dakota at Lignite, Westhope, Watford City, Tioga, Williston, Belfield and Bowman. Transportation equipment is stationed at the first four terminals, totaling 55 trucks with tanks and 37 pup trailers.
"Eighty percent of Matador's system revenues come from transportation of oil and water in North Dakota. Matador experiences competition from Northern Tank Lines and Getter, although the former is only in crude oil in the Tioga area, and the latter is in water only.
"As oil field activity has increased in the past three years, Matador has increased its investment in North Dakota.
"Getter Trucking, Inc. is a company in the business of oil field hauling, holding North Dakota intrastate authority as follows:
"Getter has one terminal in Williston, North Dakota, at which it maintains 14 trucks and trailers, some of which are used in Montana. North Dakota revenues from the transportation of oil field liquids accounts for only 20-25 percent of Getter's North Dakota business, and only 3.75-4.69 percent of its system revenues.
"Northern Tank Lines is a transportation company which holds the following pertinent North Dakota intrastate authority:
"Terminals located at Williston and Tioga maintain 13 trucker-trailer units which are utilized for intrastate crude oil and water hauls. Very little water is transported by Northern in the Tioga area.
"Northern utilizes winter crude oil hauling to balance its interstate asphalt transportation.
"Big `M' Oilfield Service, Inc. holds the following North Dakota intrastate authority:
"AMENDED CONCLUSIONS OF LAW
"The Public Service Commission has jurisdiction over the proposed activities of the Applicant and the subject matter of this proceeding.
"Applicant Power Fuels is fit, willing and able to perform the service for which authority is sought. The record herein does not establish Power Fuels to be engaged in illegal transportation. While further hearings might so prove, the Commission concludes that such activity would not, in this case, prevent the grant of the authority sought, when weighed against the benefits obtaining to North Dakota shippers from the grant.
"The significant increase in oil field activity in North Dakota in the past three years has resulted in a need for additional common carrier authority.
"The authority sought in the instant application is irregular route, as is the authority of the competing carriers. Consequently, no conclusion can be drawn with respect to existing travel upon specific routes. No significant increase in the cost of maintaining the highways concerned will result from a grant of this application.
"Existing transportation facilities in the territory for which the Applicant seeks authority are not providing a reasonably adequate service, nor does it appear from the evidence that they could furnish such adequate service. Security of investments does not foreclose a grant of competitive authority, where the dramatic increase in demand for transportation services has not been adequately met.
"Public convenience and necessity require the grant of the instant application."
Testimony was presented to the Commission by four potential users of the service that Power Fuels seeks to offer. In addition, testimony was offered that indicated a substantial upsurge in oil exploration and production in this State in the immediate future.
Gulf Oil Company's representative, who also supported the application of Power Fuels, testified that Gulf's dissatisfaction with existing service was due to the unavailability of salt water for drilling purposes. Matador's witness testified this problem existed because of the short supply of salt water and not because of the lack of transportation facilities in which to haul the salt water.
Phillips Petroleum Company was also interested primarily in the water transportation service. It complained that Matador had permitted its receiving tanks to overflow, although it also admitted that the service had been adequate with only one or two exceptions.
Galaxy Oil Company stated Matador's salt-water transportation service had been satisfactory, although it expressed support for Power Fuels's application.
Power Fuels and the PSC view the evidence as sustaining the PSC's conclusion that public convenience and necessity require the granting of the certificate of authority. They point out that only Matador provides the complete oil field service that Power Fuels seeks to provide. Although there were other protestants at the hearing before the PSC, only Matador appealed to this court the order granting Power Fuels that authority, and none of the other protestants has as broad authority as Matador holds or as Power Fuels seeks to attain. They also note that Wiser Oil Company sells crude oil to three companies (Murphy, Ashland, and Koch), that Matador is a subsidiary of one of these companies (Koch), and that Ashland and Koch are probably engaged in crude oil production trades. PSC and Power Fuels argue that it is improbable that Koch or Ashland would testify against Matador in view of these arrangements between them.
Concerning the testimony that both Matador and Power Fuels were to transport salt water in the same tanks in which they transported crude oil (to which Wiser Oil Company and Ward-Williston Drilling objected), the PSC argues that transportation in separate tanks might well be accomplished by competition between Matador and Power Fuels if separate vehicles for such transportation is realistic. The PSC and Power Fuels urge that Matador's "complacency," to which Phillips Petroleum had testified, might also be corrected by competition. Finally, they note that while Matador has attempted to place the blame for the lack of salt water that Gulf Oil Company desired for drilling purposes on the unavailability of the salt water rather than on a lack of transportation facilities for the salt water, the evidence shows that neither Matador nor Getter, which also had authority to transport salt water in the area in which Gulf was drilling, could "keep up to the rigs" that were then drilling and that Getter had denied a request for service because of lack of vehicles.
Thus the basic issue that surfaces in this appeal is whether the record must reflect that the service furnished or that could be furnished by holders of an existing certificate of authority is not reasonably adequate before an additional certificate of authority may be granted to an applicant. Matador's position appears to be that the evidence must show that the service they furnish is unsatisfactory in order to justify the issuance of an additional certificate of authority by the PSC. We do not agree.
In In re Hanson, 74 N.D. 224, 239, 21 N.W.2d 341, 349 (1945), this court, on rehearing, considered the provisions of what is now Section 49-18-14, N.D.C.C., prohibiting the issuance of a certificate of authority if it appears from the evidence that the service furnished or that could be furnished by existing transportation facilities is reasonably adequate, and stated:
In Application of Ditsworth, 78 N.D. 3, 48 N.W.2d 22 (1951), this court, on appeal from a decision of the PSC, considered the effect of an amendment of Section 49-18-08(4), N.D.C.C. That section, prior to its amendment in 1945, required the PSC to "Prevent substantial duplication of service between common motor carriers . . ." The 1945 amendment of that section required the PSC to "Prevent unfair competition between common motor carriers . . ." The court noted that the amendment meant that substantial duplication of service alone no longer prevented the issuance of a certificate. The court further stated:
See also Application of Hvidsten, 78 N.D. 56, 48 N.W.2d 26 (1951).
Finally, Matador argues that the PSC's conclusion that Power Fuels "is fit, willing and able to perform the service for which authority is sought" was in error because Power Fuels has been transporting liquefied petroleum gas (LPG) without a certificate of authority. The findings of the PSC indicate that Power Fuels did transport LPG without a certificate. The PSC also determined that Power Fuels buys the product at the loading point and sells it at the delivery point; that the profit of Power Fuels from the buy-sell transaction is the difference between the purchase and selling prices; that no specific charge is made for transportation; and that the
The conclusion of the PSC that is most significant in this regard is that such activity was not illegal on the basis of the record before it, and that even if the activity were illegal it would not prevent the granting of the authority sought when weighed against the benefits North Dakota shippers would obtain from the granting of the certificate.
The leading case cited by all parties is Eklund Brothers Transport, Inc. v. Ritts, 148 N.W.2d 263 (N.D.1966). In that case the PSC issued an order to certain respondents requiring them to cease and desist their operations transporting water as for-hire motor carriers within the State of North Dakota until they had complied with the applicable provisions of Chapter 49-18, N.D.C.C., and the rules and regulations of the PSC. The record made on the hearing before the PSC showed that the respondents were transporting water to oil-drilling sites without a certificate. The respondents contended they did not need a certificate because they purchased the water at the loading point and sold it at the well site and, under the provisions of Section 49-18-02(1), N.D.C.C.,
The PSC argues that the Federal decisions have adopted the "primary business" test and that, because Eklund relied upon Federal decisions, we have impliedly adopted that test. The PSC points out that the "primary business" test is a determination whether or not the furnishing of transportation for compensation, as distinguished from some bona fide merchandising or manufacturing enterprise, is the carrier's real business. The PSC then notes that the United States Department of Energy recognizes the existence of a defined business known as "crude oil reselling," regulates the profit margins of this business, and specifically concerns itself with the type of crude oil reseller who buys from the producer and transports directly to the point of sale without having passed through any point of reception. Thus, the PSC argues, there is a distinction between crude oil resellers who exist as a business and water resellers who, to the PSC's knowledge, do not exist as a business.
This is a question that, from the record made before the PSC, we cannot decide today. Rather, the conclusion of the PSC that such activity, if it were illegal, would not prevent the granting of the authority sought, is controlling. If we were to conclude that Power Fuels had transported LPG without a certificate, contrary to law, the question would still remain whether or not such activity would prevent the PSC from granting a certificate of authority to transport other commodities. This is a matter peculiarly within the discretion of the PSC. Because the PSC's conclusion is within its discretion, and because of the record before the PSC, we will not substitute our judgment for that of the PSC on this appeal.
In reviewing the construction placed upon the statutes authorizing the PSC to issue a certificate of public convenience and necessity (particularly insofar as the statutes concern the authority of the PSC to
For the reasons stated herein the judgment of the district court is affirmed.
ERICKSTAD, C. J., and PEDERSON, PAULSON and SAND, JJ., concur.
At the time of the decision in Ditsworth, the scope of review was "trial anew." Secs. 28-3221 and 28-2732, N.D.R.C.1943. See, however, Geo. E. Haggart, Inc. v. North Dakota Workmen's Compensation Bureau, supra, 171 N.W.2d at 110-112.
With regard to the statement concerning trial anew, see Geo. E. Haggart, Inc. v. North Dakota Workmen's Compensation Bureau, supra.
"The provisions of this chapter shall not apply:
"1. To any person transporting his own property with his own vehicle when such person is the bona fide owner of the property so transported."