Merchants Fast Motor Lines, Inc. v. Railroad Commission of Texas , 22 Tex. Sup. Ct. J. 54 ( 1978 )

DANIEL, Justice.

A controlling question in this case is whether review of an administrative order made by the Texas Railroad Commission prior to the effective date of the Administrative Procedure Act should be reviewed under the provisions of that Act or as provided by the law in effect when the administrative order was promulgated and the review was sought.

Morgan Express, Inc., applied for and the Railroad Commission granted an order on June 11, 1975, substantially amending and enlarging its motor carrier authority and prescribing certain new rate schedules for Morgan. Merchants Fast Motor Lines, Inc., and six other competing carriers contested the application and challenged the validity of the order by petition filed in the District Court of Travis County on August 13, 1975. as provided in Sec. 20 of the Motor Carrier Act, Article 911b.¹

The trial court completed its hearing of the appeal on November 20, 1975, and entered judgment setting aside the order on January 12, 1976, eleven days after the new Administrative Procedure Act became effective on January 1,1976.² The trial court held the Morgan order to be invalid for several reasons, including a lack of substantial evidence in support of the order and a lack of due process with respect to changes in the applicable rates. The Court of Civil Appeals agreed with the trial court on the errors in the Commission order relating to rates, but did not pass on the substantial evidence and other points raised by Morgan. Instead, the Court of Civil Appeals reversed the trial court and remanded the cause to that court with directions to remand it to the Commission “to give the Commission an opportunity to correct any errors in its order of June 11, 1975, all pursuant to § 19(e) of the Administrative Procedure Act.” 545 S.W.2d 198. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

By application dated August 20, 1971, amended on January 3, 1973, Morgan sought a Commission order removing certain restrictions from its Common Carrier Certificate No. 3063 and the addition of other transportation services. Prior to this application, Morgan’s certificate authorized it to transport over regular routes “Goods, Wares and Merchandise, in packages not to exceed fifty (50) pounds each in weight, and Newspapers, Newsreels, Films, and Theater supplies, in packages or bundles not to exceed one hundred (100) pounds each in weight, and the transportation not to exceed three thousand (3000) pounds per single unit.” The certificate also contained the restriction that, “The holder of this certificate is authorized to charge a rate for such services, the minimum of which shall not be lower than the lowest maximum rate charged by any other common carrier transporting like commodities over the route, or parts thereof, set out hereinafter . . .”

On June 11, 1975, the Railroad Commission granted part of the requested changes, including an increase in the weight restrictions and changes in the rate tariffs prescribed for Morgan’s account. As heretofore stated, the seven competing carriers filed a petition on August 13, 1975, challenging the validity of the order in accordance with Sec. 20 of Art. 911b. Hearings were held in the trial court on November 18, 19, and 20, 1975, after which the trial court asked for briefs and took the case under advisement. On January 12, 1976, the trial court rendered judgment declaring the order void, setting it aside, and enjoining the issuance of the amended certificate. The trial court filed eighty conclusions of law on February 6, 1976, and an additional four conclusions of law on February 27, 1976, in which it stated reasons for its action.

In the meantime, on February 9, 1976, the Commission filed a motion in the trial court praying for a recision of the court’s prior judgment and for a remand of the cause to the Commission “for further proceedings on all issues raised in this case and other instructions deemed appropriate by the Court . . .”, pursuant to the authority for remand granted by Section 19(e) of the Administrative Procedure Act. The trial court denied this motion on the grounds that the APA was inapplicable to the proceeding.

Intent of the Administrative Procedure Act

Petitioners, hereinafter referred to as Merchants or the competing carriers, insist that review of the Commission’s order should be under the law which was in effect when the order was promulgated. It is clear that all administrative proceedings in this case were conducted and decided before the APA became effective. During such time, a suit to set aside a Railroad Commission order in motor carrier cases was governed by Sec. 20 of Art. 911b, and the order was either affirmed or set aside. Remand to the Commission was without statutory authority. Railroad Commission v. Oil Field Haulers Association, 442 S.W.2d 874 (Tex.Civ.App.1969, writ ref’d n.r.e.).

Morgan contends that Sec. 19(e) of the APA (Art. 6252-13a) which provides for affirmance, reversal or remand of administrative decisions should be retroactively applied since it is a procedural statute.

Retroactive laws are prohibited by Article 1, Sec. 16, of the Texas Constitution. As a general rule, statutes operate prospectively, but they may operate retrospectively when no impairment of vested rights results. Cox v. Robison, 105 Tex. 426, 150 S.W. 1149 (1912). Moreover, statutes will not be applied retrospectively unless it appears by fair implication from the language used that it was the intent of the Legislature to make it applicable to both past and future transactions. State v. Humble Oil & Refining Co., 141 Tex. 40, 169 S.W.2d 707 (1943).

On the other hand, as to procedural statutes, it is settled that the Legislature may make changes applicable to future steps in pending cases. Phil H. Pierce Co. v. Watkins, 114 Tex. 153, 263 S.W. 905 (1924); Regal Properties v. Donovitz, 479 S.W.2d 748 (Tex.Civ.App.1972, writ ref’d n.r.e.); Boyd v. Dean, 515 S.W.2d 753 (Tex.Civ.App.1974, no writ). This is because a litigant has no vested right in a procedural remedy. Phil H. Pierce Co. v. Watkins, supra. In the above cases, the legislative intent was either clearly stated³ or there was nothing in the Act which expressed or implied a contrary intent. Sections 13-18 of the APA (Art. 6252-13a) provide standards for administrative hearings and records, and the relevant Sections applicable to judicial review are as follows:

“Sec. 19. (a) A person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case is entitled to judicial review under this Act. This section is cumulative of other means of redress provided by statute.

“(d)(3) the review is conducted by the court sitting without a jury and is confined to the record, except that the court may receive evidence of procedural irregularities alleged to have occurred before the agency but which are not reflected in the record.

“(e) The scope of judicial review of agency decisions is as provided by the law under which review is sought. Where the law authorized appeal by trial de novo, the courts shall try the case in the manner applicable to other civil suits in this state and as though there had been no intervening agency action or decision. Where the law authorizes review under the substantial evidence rule, or where the law does not define the scope of judicial review, the court may not substitute its judgment for that of the agency as to the weight of the evidence on questions committed to agency discretion but may affirm the decision of the agency in whole or in part and shall reverse or remand the case for further proceedings if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

“(1) in violation of constitutional or statutory provisions;

“(2) in excess of the statutory authority of the agency;

“(3) made upon unlawful procedure;

“(4) affected by other error of law;

“(5) not reasonably supported by substantial evidence in view of the reliable and probative evidence in the record as a whole; or

“(6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

“Sec. 22. Chapter 274, Acts of the 57th Legislature, Regular Session, 1961, as amended (Article 6252-13, Vernon’s Texas Civil Statutes), and all other laws and parts of laws in conflict with this Act are repealed. . . . ”

The Administrative Procedure Act does not specifically state that its judicial review provisions shall or shall not apply to administrative hearings and decisions which have been concluded prior to the effective date of the Act. The above cited cases suggest various conclusions or interpretations when a remedial statute does not contain express words as to its prospective or retrospective application. We deem it more appropriate, however, to follow the fundamental rule that legislative intention should be ascertained from the entire act, and not from isolated portions thereof. Woods v. Littleton, 554 S.W.2d 662 (Tex.1977); City of Mason v. West Texas Utilities Co., 150 Tex. 18, 237 S.W.2d 273 (1951). The Legislature has declared: “In all interpretations, the court shall look diligently for the intention of the Legislature, keeping in view at all times the old law, the evil and the remedy.” Art. 10, Sec. 6, Texas Revised Civil Statutes. The purposes of the APA stated in Sec. 1 include the following: “.

to afford minimum standards of uniform practice and procedure for state agencies . and to restate the law of judicial review of agency action.”

When the APA was enacted in 1975, there were no uniform rules for conducting, deciding and appealing from administrative decisions. Under the old law, numerous administrative agencies conducted hearings according to their own applicable rules, some of which required findings of fact and conclusions of law in support of their decisions and some of which did not. Review of administrative orders under the substantial evidence rule was by trial in the district court upon a new record without regard to the evidence heard by the administrative agency.⁴ This type of substantial evidence review of a newly developed court record, which often differed from the evidence heard by the agency, came under severe criticism.⁵ It was an “evil” of the old law. The remedy provided by the APA was to require a more complete administrative record, with findings of fact and conclusions of law, and to limit judicial review to the record made before the administrative agency. The intended effect of this change was noted by this Court in Imperial American Resources Fund v. Railroad Commission, 557 S.W.2d 280 (Tex.1977), as follows:

“. . . Through enactment of the Administrative Procedure Act . the Legislature has made a far-reaching change in limiting judicial review under the substantial evidence rule to the records made before the administrative agencies. The result is that the agencies and the courts now consider the same evidence. Judicial review under the essential standards of the substantial evidence rule has been preserved, but the courts now test the substantiality of the evidence upon which an administrative agency made its decision. . . . ”

Judicial knowledge can be taken of the fact that some administrative proceedings were being conducted and some decisions were made under pre-existing laws between the final enactment of the APA on April 22, 1975, and its effective date of January 1, 1976. It can be assumed that the Legislature knew such proceedings were ongoing, which may account for the setting of the later effective date. We find no indication in the Act that it was intended to apply to administrative records and orders which were made pursuant to hearings conducted under pre-existing laws. From a careful study of the structure of the entire APA, we conclude that it was intended to apply only to administrative orders promulgated after January 1, 1976. This conclusion applies to the judicial review provisions of the Act, because under the APA, such review is limited to the record made in the administrative hearing. Otherwise, all of the pre-APA orders would be subject to remand and retrial in accordance with APA standards.

It is undisputed that in this case the administrative record and decision of June 11, 1975, did not meet APA standards. Those standards were not then in effect. The competing carriers sought and obtained judicial review under Sec. 20 of the Motor Carrier Act (Art. 911b), which was the only right of appeal available to them at the time. It is impossible to apply APA standards of review to a record and a decision made under different standards of pre-ex-isting law. Accordingly, we hold that an administrative order made prior to the effective date of the APA must be reviewed under the laws applicable when the order was promulgated, and that APA review provisions are not applicable thereto.

Errors Upon Which Reversal Was Based

The question to be decided on review is whether the Commission’s order of June 11, 1975, was, on that date, valid or invalid. The trial court based its decision of invalidity upon numerous errors, including several relating to rates. The Court of Civil Appeals also ruled that the amendment of the certificate relating to rates was a nullity. We agree. Indeed, Morgan does not seriously contend otherwise. As heretofore stated, there is no provision in the appeal procedure provided by Sec. 20 of Art. 911b for a remand to the Commission. An order appealed under that pre-existing law must stand or fall as it is brought to court. The order in this case falls, if for no other reason, because of the invalidity of its provision prescribing rates for Morgan’s existing and newly authorized services. The new rate provisions are interwoven with the additional operating rights granted Morgan. It cannot be assumed that the Commission would have granted other certificate amendments apart from the changes relating to rates.

We agree with the reasons stated by the Court of Civil Appeals in holding the rate changes to be invalid, but we do not agree that they constitute procedural errors which would be subject to correction by the Commission if a remand were permissible. On the contrary, the portion of the order dealing with rates was without due process. The form and content of the application as well as the notice and hearing failed to comply with the Commission’s Rule 13(E) relating to rates. There is no way for those errors to be corrected except by filing a new application and complying with the law in a new hearing under the APA standards, which are now in effect. In view of our holding as to the effect of the errors relating to rates and our previous holding that the permissive remand provisions of the APA are inapplicable to this case, it is unnecessary for us to pass upon other points raised by the parties here or in the Court of Civil Appeals.

Accordingly, the judgment of the Court of Civil Appeals is reversed and the judgment of the trial court is affirmed.

CHADICK, J., dissents.

1 . All statutory references are to Vernon’s Annotated Texas Civil Statutes unless otherwise noted. Sec. 20 of Art. 911b provides in part as follows:

“Sec. 20. If any motor carrier or other party at interest be dissatisfied with any decision, rate, charge, rule, order, act, or regulation adopted by the Commission, such dissatisfied person, association, corporation, or party after failing to get relief from the Commission may file a petition setting forth the particular objection to such decision, rate, charge, rule, order, act or regulations, or to either or all of them in the District Court in Travis County, Texas, against said Commission as defendant. . . Either party to said action may appeal to the Appellate Court having jurisdiction of said cause and said appeal shall be at once returnable to said Appellate Court having jurisdiction of said cause . . . .”

2 . Article 6252-13a (1975), known as the Administrative Procedure and Texas Register Act, effective January 1, 1976, which will be referred to herein as the Administrative Procedure Act or the APA.

3 . For instance, in Phil H. Pierce Co. v. Watkins, supra, the relevant statute provided: “[A]ll inconsistent laws and rules of practice and procedure shall be inoperative in the civil district courts of the class included within this act.”

4 . The only exception prior to 1976 was under the Savings and Loan Act of 1963, Art. 852a, Sec. 11.12(5)(b), in which the Legislature first limited judicial review to the record made before the administrator.

5 . See Reavley, Substantial Evidence and Insubstantial Review in Texas, 23 Sw.L.J. 239 (1969) and Walker, The Application of the Substantial Evidence Rule in Appeals from Orders of the Railroad Commission, 32 Tex.L.Rev. 639 (1954).