5. Need for Hearing

Applicants proposed that no hearings are needed, and the Commission preliminarily agreed. (Resolution ALJ 176-3149.) Alisal requests hearings on (1) whether Alisal's violations of law and level of fitness support an order that the utility divest itself of the water systems, (2) whether the sale prices are confiscatory, and (3) the fitness of the proposed transferee. Based on the applications, the pleadings, and the discussion at the prehearing conference, we confirm the preliminary determination that hearings are not needed.

Alisal litigated the issues on which it seeks evidentiary hearing in United States of America v. Alisal Water Corporation et al., Case No. C97-20099. The District Court order determines that Alisal should divest itself of the properties, establishes the sale price for the properties, and finds that Pajaro/Sunny Mesa is capable of operating the systems and in compliance with the law. Alisal does not dispute any of the material facts upon which the District Court bases its factual findings, but seeks to introduce evidence of mitigating factors or other evidence that the District Court did not consider when it issued its divestiture orders against Alisal. Alisal has appealed the District Court order to the Ninth Circuit Court of Appeal. After nearly eight years of litigation of these issues before the District Court, due process does not require, and the principles of res judicata militate against, allowing Alisal an evidentiary hearing on these issues.

Although Alisal does not assert the need for hearings on the issue of rate impact in its protest, it indicated at the prehearing conference that it would offer evidence on whether Pajaro/Sunny Mesa imposes discriminatory rates, and later suggests, in its brief on res judicata, that hearings are needed in order for the Commission to assess whether the rates Pajaro/Sunny Mesa will impose are unfair, unreasonable or discriminatory. We disagree. Although we direct the applicants to provide additional information on the issue, the additional information we request is not reasonably subject to factual dispute and does not therefore indicate the need for hearings.

Furthermore, although the protestant bears the burden of proving that the rates fixed by the district are unreasonable or unfair (Hansen v. City of San Buenaventura, supra), Alisal does not assert that Pajaro/Sunny Mesa's rates will be unreasonable or unfair, and makes no offer of proof to that effect. There is no basis, under these circumstances, to undertake evidentiary hearings on the issue of rate impact of the proposed transfer.

We affirm the preliminary determination of no need for hearing. The ex parte rules as set forth in Rule 7(e) apply.