Bryant v. Arkansas Public Serv. Comm'n
Annotate this Case
Winston BRYANT, Attorney General v. ARKANSAS
PUBLIC SERVICE COMMISSION
CA 95-109 ___ S.W.2d ___
Court of Appeals of Arkansas
En Banc
Opinion delivered November 6, 1996
1. Public Service Commission -- standard of judicial review. --
The review of appeals from the Public Service Commission is
limited by the provisions of Ark. Code Ann. 23-2-423(c)(3),
(4), and (5) (Supp. 1995), which define the standard of
judicial review as determining whether the Commission's
findings of fact are supported by substantial evidence,
whether the Commission has regularly pursued its authority,
and whether the order under review violated any right of the
appellant under the laws or the Constitutions of the State of
Arkansas or the United States.
2. Public Service Commission -- broad discretion in exercise of
regulatory authority. -- The Arkansas Public Service
Commission has broad discretion in exercising its regulatory
authority, and courts may not pass upon the wisdom of the
Commission's actions or say whether the Commission has
appropriately exercised its discretion.
3. Administrative law & procedure -- when administrative action
may be regarded as arbitrary and capricious. -- Administrative
action may be regarded as arbitrary and capricious only where
it is not supportable on any rational basis, and something
more than mere error is necessary to meet the test.
4. Public Service Commission -- appellant must prove that
Commission's action was willful and unreasoning. -- To set
aside the Public Service Commission's action as arbitrary and
capricious, the appellant must prove that the action was
willful and unreasoning, made without consideration and with
a disregard of the facts or circumstances of the case.
5. Public Service Commission -- when decision must be affirmed. -
- If an order of the Public Service Commission is supported by
substantial evidence and is neither unjust, arbitrary,
unreasonable, unlawful, or discriminatory, then the appellate
court must affirm the Commission's action.
6. Public Service Commission -- rules -- any party may obtain
discovery to extent that it is relevant and material. --
Section 13 of the Public Service Commissionþs Rules of
Practice and Procedure governs discovery; Rule 13.01 provides
that any party may obtain discovery to the extent that it is
relevant and material; Rule 13.02(a) specifically provides
that parties may obtain discovery regarding any matter not
privileged or subject to claim for a protective order that is
relevant and material to the issues in the pending docket;
control of the frequency of use and extent of discovery rests
in the sound discretion of the Commission; although the
Attorney General argued that Rule 13.02 allows discovery of
any issue remaining in a pending docket, Rule 13 specifically
refers to "any matter ... which is relevant and material."
7. Discovery -- production of books and documents -- "fishing
expedition" prohibited. -- A party to a pending action has no
right to call for books, papers, and documents from his
adversary merely for the purpose of entering into a þfishing
examinationþ of them; to authorize their production, there
must be a substantial showing that the book, paper, or
document sought contains material evidence in support of the
cause of action or defense of the party asking for it; it is
not sufficient for a party to allege generally the materiality
of the books or documents, as this would be the averment of a
conclusion and permit the question of materiality to be
decided by the applicant instead of by the court; nor is it
sufficient to allege that the books or papers contain evidence
relative to the merits of the action, but it must be made to
appear wherein the relation exists.
8. Discovery -- attorney general did not demonstrate that
discovery was necessary regarding upgrades. -- Where the
Public Service Commission, in Orders No. 38 and No. 40,
determined the information that should be included in, and the
format of, infrastructure reports required of the utility, the
attorney general, although objecting to the utilityþs
clarification of Order No. 38, neither proposed that any
additional information be required nor appealed from the
orders; the Commission found that neither Order No. 38 nor
Order No. 40 required the inclusion in the reports of the
information sought by the attorney general, and the appellate
court held that the attorney general did not demonstrate that
this discovery was necessary for the Commission to determine
whether the infrastructure upgrades were being implemented in
a timely manner and in a manner most beneficial to the public.
9. Discovery -- attorney general failed to demonstrate denial of
access to any relevant and material information. -- Where the
attorney general asserted that the Public Service Commissionþs
complete disallowance of any discovery on the issue of
revenues was arbitrary and capricious, the appellate court
held that the assertion was contrary to the evidence where the
utility's quarterly reports contained revenue information;
where Order No. 61, which found that much of the information
sought by the attorney general was contained in the utilityþs
monthly infrastructure reports, allowed the attorney general
to depose a utility witness for the purpose of having the
reports explained; where the Commission further found that
other information did not appear to be relevant to the issues
scheduled for hearing by Order No. 58 but that it might have
been relevant to the March 10, 1995, report and that the
attorney general could inspect this information at its
location; and where there was also evidence that the utility
incurred approximately $6,000 in copying costs in its attempts
to comply with Order No. 61; the appellate court held that the
attorney general had failed to demonstrate that he was denied
access to any relevant and material information.
10. Public Service Commission -- authorized to find that documents
were protected and to limit their discovery. -- Under the
Public Service Commission's Rule 13.05, a party may seek a
protective order during discovery or the later stages of a
formally docketed proceeding; under Ark. Code Ann. 23-2-316
(1987), whenever the Commission determines it to be necessary
in the interest of the public or, regarding proprietary facts
or trade secrets, in the interest of the utility to withhold
such facts and information from the public, the Commission
must do so; the Commission may take such action in the nature
of, but not limited to, issuing protective orders, temporarily
or permanently sealing records, or making other appropriate
orders to prevent or otherwise limit public disclosure of
facts and information; thus, the appellate court held, under
its legislative authority and internal rules, the Commission
had the authority at any stage of the proceedings to find that
the documents in question were protected and to limit their
discovery.
11. Public Service Commission -- previous order was not
disregarded. -- The appellate court held that there was no
merit to the attorney general's argument that Order No. 61
found that all revenue information sought by the attorney
general through discovery was relevant and discoverable and
that, when the Commission did not compel discovery of all the
revenue information in Order No. 63, it was disregarding its
previous order; Order No. 61 did not find that the attorney
generalþs requested discovery was relevant or discoverable but
merely required the utilityþs representative to explain the
reports it had already filed; the appellate court noted that
the attorney general had not claimed that the utility refused
an explanation of its reports.
12. Discovery -- attorney general failed to demonstrate relevance
and materiality of broad discovery requests. -- The appellate
court rejected the attorney general's claim that, by declining
in Orders Nos. 52, 56, 61, 62, 63, and 64 to require the
utility to respond to his discovery requests, the Public
Service Commission arbitrarily and capriciously reversed the
position taken by it in Order No. 38; the appellate court held
that, although the attorney general repeatedly claimed that
the information contained in the quarterly reports required by
Order No. 38 was insufficient for the Commission to determine
whether the expenditures were most beneficial to the public or
whether a reallocation of funds should be ordered, he had
failed to demonstrate how his broad discovery requests were
relevant and material to these issues; furthermore, the
Commission required the utility to produce additional
information in response to the attorney generalþs
interrogatories, and it also found that much of the
information requested by the attorney general had been
provided to him in the utility's monthly and quarterly
reports.
13. Public Service Commission -- annual review conducted on issue
of revenues. -- The appellate court held that, contrary to the
attorney general's assertion that the Public Service
Commission had dramatically changed its position on the issue
of revenues generated by the Stipulation investments by
amending the annual-review provision of Order No. 38 with a
three-year-period provision in Order No. 63, the evidence was
overwhelming that the Commission did in fact conduct an annual
review as specified by Order No. 38; furthermore, Rule 3.02 of
the Commissionþs Rules of Practice and Procedure provides that
þ[a]ny matter before the Commission, including formal
applications as defined in Section 4 of these Rules, may be
adjudicated by administrative order based on the facts
presented in the application without a hearing unless a
hearing is required by law, the Commission, or these Rulesþ;
the appellate court noted that the attorney general did not
argue any rule of procedure or statute that required a hearing
in this situation, and there was no evidence that the attorney
general ever requested a hearing on the issue of revenues.
14. Public Service Commission -- no abuse of discretion in denial
of discovery requests. -- Based on its review of the
pleadings, the briefs and oral arguments of the attorneys for
the parties, and the numerous orders entered by the Public
Service Commission in response to the attorney general's
discovery requests, the appellate court could not say that the
Commission abused its discretion in denying the attorney
general's discovery requests.
Appeal from the Arkansas Public Service Commission; affirmed.
Winston Bryant, Att'y Gen., by: Shirley Guntharp, Deputy
Att'y Gen., and Suzanne Antley, Ass't Att'y Gen., for appellant.
Ivester, Skinner & Camp, P.A., by: Edward Skinner, for
appellee Arkansas Public Service Commission.
Ann E. Mealeman and Garry S. Wann, for appellee Southwestern
Bell Telephone Company.
John F. Stroud, Jr., Judge.
This appeal is brought by the Attorney General of the State of
Arkansas from Orders No. 52, 56, 61, 62, 63, and 64 issued by the
Arkansas Public Service Commission in Docket #92-260U and results
from the Commissionþs refusal to compel Southwestern Bell Telephone
Company (SWB) to respond to discovery propounded by the Attorney
General. The Attorney General argues that, in denying his
discovery requests, the Commission failed to pursue its authority
regularly and abdicated its responsibility to regulate SWB. We
conclude that the Commission has regularly pursued its authority
and has not abused its discretion in denying the Attorney General
portions of his requested discovery. The orders of the Commission
are affirmed.
In Docket #92-260U, the Commission approved a stipulation
entered into by SWB, the Staff of the Public Service Commission
(Staff), and twenty other parties. This Stipulation resulted from
an investigation conducted by Staff of SWBþs earnings that found
SWBþs rates had produced earnings of $33 million in excess of SWBþs
reasonable revenue requirement. The Stipulation disposed of the
issues raised by the excess earnings by providing that SWB would
make incremental investments of $231 million over a three-year
period to upgrade its infrastructure in Arkansas in lieu of
potential rate reductions. The Commission approved the Stipulation
in Order No. 38, but Order No. 38 also required SWB to establish a
deferred account and to file quarterly reports so that the
Commission could monitor the implementation of the upgrades. Order
No. 38 further provided that the Commission would on an annual
basis formally review the status of the deferred account, the
investments made and projected investments remaining, and the
revenues generated by those investments.
SWB filed a motion to clarify the procedure for developing the
investment monitoring reports and also advanced a þPlan Investment
Monitoring Reportþ form to be adopted on an interim basis. Staff
supported the motion with some proposed modifications and also
recommended that SWBþs monitoring report form be adopted. The
Attorney General objected to SWBþs motion, but he did not raise any
specific objection to the adoption of SWBþs proposed format for the
plan investment monitoring reports, nor did he propose any
additions to the format or request that any additional information
be included in the monitoring reports. Commission Order No. 40
adopted SWBþs motion as modified by specific provisions of Staffþs
response.
On April 21, 1994, and August 19, 1994, SWB filed its first-
and second-quarter infrastructure reports, its plan investment
monitoring reports, and monthly reports and work papers as required
by Orders No. 38 and 40. The Attorney General then served SWB with
thirty-six interrogatories, most containing five to six subparts,
and thirty-one requests for production of documents that sought
extensive and specific discovery of the information contained in
the infrastructure reports. SWB objected to the Attorney Generalþs
discovery requests, contending that the information sought was
irrelevant and immaterial, beyond the scope of the docket, and
unduly burdensome and oppressive. The Attorney General filed a
motion to compel responses to his discovery and also served SWB
with a second set of interrogatories and production of documents
that requested detailed information about the infrastructure report
filed by SWB on October 21, 1994. SWB again objected to the
Attorney Generalþs requests, and the Attorney General moved to
compel SWB to respond to his requests.
The Commission denied the Attorney Generalþs motions in Order
No. 52. It held that the monitoring reports contain extensive
information on the infrastructure investments that are available to
the Attorney General, and that the Attorney General has not cited
any specific reason for his extensive discovery requests nor
identified a specific flaw in the reports necessitating such
extensive discovery. The Commission did provide, however, that, if
the Attorney General knew of a specific deficiency or problem with
the monitoring reports, he should bring it to the Commissionþs
attention.
The Attorney General petitioned for rehearing of Order No. 52.
He argued that the infrastructure reports did not reflect the
information that Order No. 38 indicated would be necessary, i.e.,
whether the infrastructure upgrades are being implemented in a
timely manner and in a manner which is most beneficial to the
public. He also argued that the reports did not provide the
information necessary for the Commission to supervise and regulate
SWB to ensure compliance with its orders. In Order No. 56, the
Commission denied the Attorney Generalþs petition for rehearing,
stating that the Attorney General has not responded to Order No. 52
by citing any specific problems or deficiency in the monitoring
reports or in the implementation of the infrastructure investment.
The Commission noted that the Attorney General continues to argue
the inadequacy of the monitoring reports adopted by Order Nos. 38
and 40, even though he had the opportunity to raise this issue
during the extensive proceedings that led to the entry of Order No.
38 or to raise the issue in a petition for rehearing of that Order.
The Attorney General appealed Orders No. 52 and 56, and during
this period, the Commission entered Order No. 55. In response to
this order, Staff and SWB each filed separate annual reports
regarding the implementation of the Stipulation. The Commission
then entered Order No. 58, which scheduled a public hearing to
address and consider the proposed adjustments and modifications
recommended by SWB and Staff to the Stipulation investments and
infrastructure upgrades. The Attorney General sought additional
discovery from SWB regarding its annual report. SWB answered some
of the interrogatories and referred the Attorney General to its
monthly infrastructure reports filed under seal with the Commission
for the answers to others. SWB also filed separately its objec-
tions to the Attorney Generalþs interrogatories and requests for
production of documents.
The Commission addressed the partiesþ motions in Order No. 61:
1. Interrogatories No. 1(a), 2(a), 3(a), 4(a), 5(a),
6(a) and 7(a).
SWBT responded to each of these Interrogatories by
referring the AG to information contained in the Monthly
Infrastructure Reports....
The information sought by the AG can be obtained
from the Monthly Infrastructure Reports. Pursuant to
Rule 13.08(c), SWBTþs answers to the above referenced
Interrogatories [are] sufficient. If the AG or the AGþs
experts require guidance to interpret the contents of the
Monthly Infrastructure Reports, the AG has the option to
depose the appropriate employee of SWBT to explain the
contents of the Reports.
2. Interrogatories No. 1(b)-(g), 2(b)-(g), 3(b)-
(g), 4(b)-(g), 5(b)-(g), 6(b)-(g) and 7(b)-(g), and
Requests for Production No. 1, No. 2, No. 3, No. 4, No.
5, No. 6 and No. 7.
In each of the above referenced interrogatory
subparts the AG requests extensive and specific informa-
tion on the investments which are the subject of the
interrogatory, including all payees, the amounts of each
payment, dates of payments and specific equipment
received for expenditures....
....
The information sought by the AG does not appear on
its face to be relevant to the issues which are the
subject of the scheduled hearing and it is questionable
whether the interrogatories are designed to lead to
information relevant and material to those issues.
However, the information may be relevant to the Report
filed on March 10, 1995, and some of the requested
information may be peripherally related to the issues
which are the subject of the hearing. The task of
compiling the extensive and detailed information which
might be responsive to the AGþs Interrogatories and
Requests in one location would be burdensome and unrea-
sonable. It is a sufficient response to allow the AG to
inspect the information at the location of the informa-
tion....
3. Interrogatories No. 10, No. 11, No. 12, No. 13,
No. 14, No. 15, No. 16 and No. 28 and Requests for
Production No. 8, No. 9, No. 10, No. 11, No. 12, No. 13
and No. 14.
In each of these Interrogatories the AG seeks þthe
amount of revenue that has been generated for SWB to date
as a result of expenditures made pursuant to Order No. 38
...þ and other information. SWBT responded that the
Quarterly Plan Investment Monitoring Reports filed with
the Commission and provided to the AG track the revenue
generated on a monthly basis.
Pursuant to Rule 13.08(c), SWBT has adequately
responded to the Interrogatories by specifying the
records in the possession of the AG from which the
answers may be derived. If the AG needs to have the
records interpreted or explained, the proper course of
action is to depose the appropriate SWBT employee to
interpret the records.
Order No. 61 denied the Attorney Generalþs motion to compel answers
to Interrogatories No. 17 through 27 and Requests for Production
No. 15 through 28. The Commission held that these interrogatories
and requests for production were not relevant to the Report filed
March 10, 1995, or the issues scheduled for hearing on May 9, 1995.
The Attorney General filed an additional discovery motion that
complained that SWB was withholding from discovery contracts it had
with certain vendors. Order No. 62 allowed the Attorney General to
inspect the contracts SWB had with various vendors on the condi-
tions stated by the vendors. The Attorney General also petitioned
for rehearing of Orders No. 61 and 62, contending that these
orders reflected a failure on the part of the Commission to pursue
its authority regularly. Order No. 61, the Attorney General
claimed, was unlawful because it held information regarding
revenues generated by the Stipulation irrelevant; whereas, the
Commission had said in Order No. 38 that it would review revenues
annually. The Attorney General claimed that Order No. 62 was
illegal because the order condoned SWBþs violation of Order No. 61
and because the Commission reversed its position from Order No. 61.
Order No. 63 denied the Attorney Generalþs petition for
rehearing of Orders No. 61 and 62. The Commission again stated
that the scheduled hearing was limited to the purpose of consider-
ing adjustments and modifications to the Stipulation investments
and infrastructure upgrades and that the Attorney Generalþs
discovery exceeded the scope of the hearing. The Commission
further stated that, if the Attorney Generalþs discovery regarding
the annual report filed by SWB leads to some legitimate issue, the
Attorney General may raise that issue before the Commission in an
appropriate pleading but that it would not entertain a collateral
attack on Orders No. 38 and 40. The Commission concluded that the
appropriate time to deal with the overall issues of revenues
generated from the Stipulation investments was at the conclusion of
the three-year period of implementation, when the Commission would
direct an appropriate review.
The Attorney Generalþs petitions for rehearing of Orders No.
61, 62, and 63 were denied by the Commission in Order No. 64. The
Commission held that the revenue information requested by the
Attorney General was beyond the scope of the reports required by
the Commission, that the Commission had allowed the Attorney
General to depose a SWB employee to have the reports explained but
that it did not require SWB to compile additional information, and
that the Attorney General had confused discovery with an entitle-
ment to specific answers. The Attorney Generalþs second notice of
appeal sought reversal of Orders No. 61, 62, 63, and 64 and was
consolidated with his appeal of Orders No. 52 and 56.
The Attorney General has stated one point for appeal: The
Commission failed to pursue its authority regularly by abdicating
its responsibility to regulate SWB. The relief he is seeking is
the remand or setting aside of Orders No. 52, 56, 62, 63, and 64,
and the part of Order No. 61 that found his discovery requests
irrelevant. He contends that the Commission in Order No. 38 gave
SWB unprecedented use of over-earned ratepayer money and has joined
with SWB in thwarting all of his attempts to obtain information
about the actual use of the funds. In his brief, he has made
numerous arguments criticizing the Commissionþs refusal to compel
SWB to respond to his extensive discovery requests and disagrees
with SWBþs and the Commissionþs characterization of his appeal as
a þdiscovery dispute.þ From our review, however, we find that the
issue presented by this appeal is whether the Commission abused its
discretion in refusing to compel SWB to respond to all of the
Attorney Generalþs discovery requests. We conclude that there has
been no abuse.
Our review of appeals from the Public Service Commission is
limited by the provisions of Arkansas Code Annotated 23-2-
423(c)(3), (4), and (5) (Supp. 1995), which define our standard of
judicial review as determining whether the Commission's findings of
fact are supported by substantial evidence, whether the Commission
has regularly pursued its authority, and whether the order under
review violated any right of the appellant under the laws or the
Constitutions of the State of Arkansas or the United States. See
Bryant v. Arkansas Pub. Serv. Comm'n, 46 Ark. App. 88, 102, 877 S.W.2d 594 (1994). The Arkansas Public Service Commission has
broad discretion in exercising its regulatory authority, and courts
may not pass upon the wisdom of the Commission's actions or say
whether the Commission has appropriately exercised its discretion.
AT&T Communications of the Southwest, Inc. v. Arkansas Pub. Serv.
Commþn, 40 Ark. App. 126, 129, 843 S.W.2d 855 (1992); Russellville
Water Co. v. Arkansas Pub. Serv. Comm'n, 270 Ark. 584, 588, 606 S.W.2d 552 (1980). Administrative action may be regarded as
arbitrary and capricious only where it is not supportable on any
rational basis, and something more than mere error is necessary to
meet the test. Woodyard v. Arkansas Diversified Ins. Co., 268 Ark.
94, 97, 594 S.W.2d 13 (1980). To set aside the Commission's action
as arbitrary and capricious, the appellant must prove that the
action was a willful and unreasoning action, made without consider-
ation and with a disregard of the facts or circumstances of the
case. AT&T Communications of the Southwest, Inc. v. Arkansas Pub.
Serv. Commþn, 40 Ark. App. at 130. This Court has often said that,
if an order of the Commission is supported by substantial evidence
and is neither unjust, arbitrary, unreasonable, unlawful, or
discriminatory, then this court must affirm the Commission's
action. Arkansas Elec. Energy Consumers v. Arkansas Pub. Serv.
Comm'n, 35 Ark. App. 47, 76, 813 S.W.2d 263 (1991).
The Attorney General begins his brief by arguing that the
Commission abdicated its responsibility to regulate SWB by failing
to observe its own discovery rules, disregarding Arkansas prece-
dent, and not requiring SWB to follow its directives. Section 13
of the Commissionþs Rules of Practice and Procedure governs
discovery. Rule 13.01 provides that any party may obtain discovery
to the extent that it is relevant and material. Rule 13.02(a)
specifically provides:
Parties may obtain discovery regarding any matter, not
privileged or subject to claim for a protective order
pursuant to Rule 13.05 herein, which is relevant and
material to the issues in the pending docket. Control of
the frequency of use and extent of discovery rests in the
sound discretion of the Commission.
Although the Attorney General argues that Rule 13.02 allows
discovery of any issue remaining in a pending docket, Rule 13
specifically refers to þany matter ... which is relevant and
material.þ (Emphasis added.) Order No. 52, which denied the
Attorney Generalþs discovery requests filed on August 23 and
October 25, of 1994, held that the Attorney General was conducting
a þfishing expedition,þ and had not cited any specific reason for
his extensive discovery requests. Although the Commission gave the
Attorney General the opportunity to demonstrate that the informa-
tion he requested was relevant and material to the infrastructure
reports required by Order No. 38, the Attorney General merely
repeated his conclusions that the reports do not reflect the
information that Order No. 38 indicated would be necessary, i.e.,
whether the infrastructure upgrades are implemented in a timely
manner and in a manner most beneficial to the public.
In his brief, the Attorney General argues that, without the
information he seeks to discover, SWB could report any number that
it chooses and, therefore, it is necessary to have the supporting
documentation in order to determine whether SWB is reporting
accurate information. This argument further convinces us that the
Commission was correct in its conclusion that the Attorney General
was pursuing a þfishing expedition.þ A party to a pending action
has no right to call for books, papers, and documents from his
adversary merely for the purpose of entering into a þfishing
examinationþ of them; to authorize their production there must be
a substantial showing that the book, paper, or document sought
contains material evidence in support of the cause of action or
defense of the party asking for it. Price v. Edmonds, 231 Ark.
332, 337, 330 S.W.2d 82 (1959). It is not sufficient for a party
to allege generally the materiality of the books or documents, as
this would be the averment of a conclusion and permit the question
of materiality to be decided by the applicant instead of by the
court; nor is it sufficient to allege that such books or papers
contain evidence relative to the merits of the action, but it must
be made to appear wherein such relation exists. Id. at 338.
The Commission in Orders No. 38 and 40 determined the
information that should be included in, and the format of, the
infrastructure reports. Although the Attorney General objected to
SWBþs clarification of Order No. 38, he did not propose that any
additional information be required, nor did he appeal from these
orders. The Commission found that neither Order No. 38 nor Order
No. 40 required that the information sought by the Attorney General
be included in the reports, and the Attorney General has not
demonstrated that this discovery is necessary for the Commission to
determine whether the upgrades are being implemented in a timely
manner and in a manner most beneficial to the public.
The Attorney General also asserts that the Commissionþs
complete disallowance of any discovery on the issue of revenues was
arbitrary and capricious. The Attorney Generalþs assertion,
however, is contrary to the evidence. The quarterly reports filed
by SWB contain revenue information. Commission Order No. 61, from
which this Court quoted earlier in this opinion, found that much of
the information the Attorney General sought was in SWBþs monthly
infrastructure reports but allowed the Attorney General to depose
a SWB witness for the purpose of having the reports explained. The
Commission further held that other information did not appear to be
relevant to the issues scheduled for hearing by Order No. 58 but
that it may be relevant to the March 10, 1995, report and that the
Attorney General could inspect this information at its location.
There was also evidence that SWB incurred approximately $6,000.00
in copying costs in its attempts to comply with Order No. 61. The
Attorney General has failed to demonstrate that he was denied
access to any relevant and material information.
The Attorney General next argues that the Commission abused
its discretion by refusing him discovery of certain vendor
contracts despite the fact that SWB had failed to apply for a
protective order under Commission Rule 13.05. The Attorney General
contends that the Commission allowed him to discover contracts
between SWB and third-party vendors in Order No. 61 but that SWB
later failed to produce the contracts, arguing that they were
subject to a contractual provision prohibiting their disclosure.
SWB responded that it was prohibited by the contracts from
releasing them; however, it had contacted the vendors and sought
their cooperation. Thereafter, AT&T responded that it would allow
the Attorney General to obtain one copy of its contracts with SWB
but that the Attorney General must return the copy to AT&T at the
conclusion of the hearing. The Commission, in response to the
Attorney Generalþs motion for sanctions, entered Order No. 62,
which allowed the Attorney General to review the AT&T contracts
under the terms and conditions stated by AT&T and also held that
the information sought by the Attorney General did not appear to be
relevant to the issues at the scheduled hearing. The Attorney
General contends that the Commissionþs ruling in Order No. 62 is
unlawful because the Commission reversed its position taken in
Order No. 61; it ignored the requirements of Rule 13.05; it ignored
supreme court precedent; and it ignored its responsibility to
ensure compliance with its orders as required by Ark. Code Ann.
23-1-103(a) (1987), which states in part that every public utility
shall obey and comply with every order of the Commission in any
matter affecting the business of any public utility and that it
shall do everything necessary to secure compliance with its orders.
We find no merit to the Attorney Generalþs argument. Rule
13.05 outlines the procedure for obtaining a protective order and
allows a party to seek a protective order þ[d]uring discovery, or
during later stages of a formally docketed proceeding.þ Rule 13.05
also refers to Ark. Code Ann. 23-2-316 (1987), which provides in
part:
(b)(1) Whenever the commission determines it to be
necessary in the interest of the public or, as to
proprietary facts or trade secrets, in the interest of
the utility to withhold such facts and information from
the public, the commission shall do so.
(2) The commission may take such action in the nature
of, but not limited to, issuing protective orders,
temporarily or permanently sealing records, or making
other appropriate orders to prevent or otherwise limit
public disclosure of facts and information.
Clearly, under its legislative authority and internal rules, the
Commission had the authority at any stage of the proceedings to
find the documents were protected and limit their discovery.
The Attorney General cites Dunkin v. Citizens Bank of
Jonesboro, 291 Ark. 588, 590, 727 S.W.2d 138 (1987), for his
assertion that the Commission refused to follow supreme court
precedent. Dunkin, however, concerns a defendantþs refusal to
answer interrogatories in a wrongful death action and bears no
relevance to the proposition that the Attorney General argues here.
The Attorney General also asserts that the Commission failed
to follow its own directives in Order No. 61 by not requiring SWB
to answer with specificity Interrogatories 10-16 and Requests for
Production Nos. 11-14. Order No. 61 stated that SWB had adequately
responded to the requests by specifying the records in the
possession of the Attorney General from which the answers could be
derived but allowed the Attorney General to depose a representative
of SWB for the purpose of having the records interpreted or
explained. The Attorney General deposed SWB witness Larry Walther
and, after doing so, filed a motion to compel responses. The
Attorney General claimed that, because Mr. Walther said in his
deposition that the Quarterly Plan Investment Monitoring Reports
reflect only a total revenue generated from the investments in all
of the projects and that revenue information on individual projects
does not exist, SWB had not followed the Commissionþs directive.
The Commission disagreed. In Order No. 63, it said:
In this Motion, the AG requests that the Commission
compel Southwestern Bell Telephone Company (SWBT) to
compile and create new records to respond to the AGþs
Interrogatories and Requests for Production. The AG
acknowledges that the Commission did not require SWBT to
compile and report the revenue information the AG is
requesting in Order No. 38. In essence, the AG is
requesting a modification of Order No. 38 over a year
after the Order was entered.
The Attorney General is now attempting to convince this Court
that Order No. 61 found that all revenue information the Attorney
General sought through discovery was relevant and discoverable and,
therefore, when the Commission did not compel discovery of all the
revenue information in Order No. 63, it was disregarding its
previous order. There is no merit to this argument. Order No. 61
did not find that the Attorney Generalþs requested discovery was
relevant or discoverable. It merely required SWBþs representative
to explain the reports it had already filed. The Attorney General
has not claimed that SWB refused an explanation of its reports.
The Attorney General further claims that, by declining in
Orders No. 52, 56, 61, 62, 63, and 64 to require SWB to respond to
his discovery requests, the Commission arbitrarily and capriciously
reversed its position from that taken by it in Order No. 38. We
disagree. Order No. 38 provided:
SWBT shall file in this docket a quarterly report
reflecting the status and activity in the deferred
account including interest thereon. The Commission will
on an annual basis during the life of the Stipulation
formally review the status of the deferred account, the
investments made and projected investment remaining, and
the revenues generated by those investments. The
Commission will also make appropriate adjustments in
SWBTþs rates if necessary using the deferred account.
During the annual review and/or upon petition of SWB to
the Commission, the Commission will consider any proposed
adjustments in the amounts allocated in the Stipulation
to the various projects proposed in the Stipulation.
Substantial adjustments transferring money allocated from
one Stipulation project to another shall only be made
after an order of the Commission is entered approving the
proposed adjustment.
Although the Attorney General has repeatedly claimed that the
information in the reports is insufficient for the Commission to
determine whether the expenditures are most beneficial to the
public or whether a reallocation of funds should be ordered, he has
failed to demonstrate how his broad discovery requests are relevant
and material to these issues. Furthermore, the Commission has in
fact required SWB to produce additional information in response to
the Attorney Generalþs interrogatories, and it has also found that
much of the information requested by the Attorney General has been
provided to him in the monthly and quarterly reports.
The Attorney General argues that the Commission dramatically
changed its position on the revenue issue in Order No. 63. The
Attorney General states that Order No. 38 unequivocally provides
that the Commission will review the revenues generated by the
Stipulation investments annually but that the Commission amended
this provision in Order No. 63 when it stated that þthe appropriate
time to deal with the overall issue of revenues generated from the
stipulation investments is at the conclusion of the three-year
period of the implementation, when the Commission will direct
appropriate review.þ The evidence is overwhelming, however, that
the Commission did in fact conduct an annual review as specified by
Order No. 38. The Commission states at the beginning of Order No.
58 that it had directed Staff and SWB to file reports on the
implementation of the Stipulation approved in Order No. 38. From
the language in Staffþs and SWBþs Stipulation reports and Order No.
58, it appears that the Commission requested these reports in order
to conduct its annual review of the deferred account as provided by
Order No. 38. Order No. 64 states that the Commission had
conducted the annual review:
The Commission conducted the first annual review of
Stipulation investments and upgrades based upon the
reports filed by SWBT and Staff on March 10, 1995. There
is no requirement that the Commission conduct public
hearings or issue orders or findings in conjunction with
the annual review of the Stipulation. However, in view
of SWBTþs request to make certain modifications and
adjustments in the Stipulation expenditures, the Commis-
sion did schedule a public hearing on May 9, 1995, for
the limited purpose of considering the modifications and
adjustments proposed in SWBTþs Report. Based upon a
review of the reports filed by SWBT and Staff, the
Commission determined that the proposed modification was
the only issue which required further examination and the
Commission scheduled a public hearing for that limited
purpose.
The Attorney General argues that the Commissionþs failure to hold
a formal hearing on the issue of revenues is contrary to its
holding in Order No. 38; however, the clear wording of Order No. 38
does not support this interpretation. Furthermore, Rule 3.02 of
the Commissionþs Rules of Practice and Procedure provides that
þ[a]ny matter before the Commission, including formal applications
as defined in Section 4 of these Rules, may be adjudicated by
administrative order based on the facts presented in the applica-
tion without a hearing unless a hearing is required by law, the
Commission, or these Rules.þ The Attorney General has not argued
any rule of procedure or statute that requires a hearing in this
situation, and there is no evidence that the Attorney General ever
requested a hearing on the issue of revenues.
In summary, we find that the sole issue presented by this
appeal is whether the Commission abused its discretion in denying
the Attorney Generalþs discovery requests. Rule 13.02(a) of the
Commissionþs Rules of Practice and Procedure provides that
þ[c]ontrol of the frequency of use and extent of discovery rests in
the sound discretion of the Commission.þ Based on our review of
the pleadings, the briefs and oral arguments of the attorneys for
the parties, and the numerous orders entered by the Commission in
response to the discovery requests, we cannot say that the
Commission abused its discretion.
Affirmed.
Jennings, CJ., and Pittman, Robbins, Mayfield, and Rogers,
JJ., agree.
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