Union Telephone Co., Inc. v. Wyoming Public Service Com'n
Annotate this Case
Union Telephone Co., Inc. v. Wyoming Public Service Com'n
1991 WY 148
821 P.2d 55
Case Number: 90-189
Decided: 11/21/1991
Supreme Court of Wyoming
UNION TELEPHONE COMPANY, INC., PETITIONER,
v.
THE WYOMING PUBLIC
SERVICE COMMISSION; JOHN R. SMYTH, BIL TUCKER, AND NELS J. SMITH, IN THEIR
OFFICIAL CAPACITIES AS COMMISSIONERS OF THE WYOMING PUBLIC SERVICE COMMISSION;
AND AT & T COMMUNICATIONS OF THE MOUNTAIN STATES, INC.,
RESPONDENTS.
Bruce S. Asay, Cheyenne,
V. Anthony Vehar, Vehar, Beppler, Lavery, Rose & Boal, P.C., Evanston, and
James J. Cassity and Merrill F. Nelson, Kirton, McConkie & Poelman, Salt
Lake City, Utah, for petitioner.
Joseph B. Meyer, Atty.
Gen., Michael L. Hubbard, Sr. Asst. Atty. Gen., Milo Vukelich, Asst. Atty. Gen.,
for respondent Wyoming Public Service Com'n.
Thomas A. Nicholas, III,
Hirst & Applegate, P.C., Cheyenne, and William P. Eigles, Denver, Colo.,
for respondent AT & T Communications of the Mountain States,
Inc.
Before URBIGKIT, C.J.,
and THOMAS, CARDINE, MACY and GOLDEN, JJ.
THOMAS, Justice.
[¶1.] The issue that the
court must address in this case is the lawfulness of an adjudicated decision by
the Public Service Commission (PSC) assigning the authority to provide long
distance telephone service for intrastate interLATA (Local Access and Transport
Area) calls. The decision of the PSC is challenged under the requirement that,
in order to be lawful, its decision must not be arbitrary, capricious, or an
abuse of discretion, or otherwise not in accordance with law and must be
supported by substantial evidence. The case turns upon whether Union Telephone
Company, Inc. (Union), an intrastate purveyor of telephone service, had
authority under its certificate of public convenience and necessity to provide
intrastate interLATA service to its customers or whether AT & T
Communications of The Mountain States, Inc. (AT & T) was the entity
certified by the PSC to furnish this long distance service. The PSC ruled that
Union did not have that authority pursuant to
its certificate and decided that the authority to furnish such services was
assigned to AT & T pursuant to the latter's certificate of public
convenience and necessity. Our review of the entire record satisfies us that the
evidence establishes that the authority for this particular long distance
telephone service was assigned to AT & T and that the decision of the PSC
continues the historic arrangement for such telephone service. The record fails
to disclose that any events had occurred that would justify a change in the
allocation of that authority by the PSC, and its determination of the case
should be affirmed. A collateral issue is presented that attacks the provisions
of the PSC's order implementing its decision. We hold that the order of the PSC
with respect to implementation was not arbitrary, capricious, or unlawful and
that it was supported by substantial evidence. The order of the PSC is
affirmed.
[¶2.] Union, in its Appellant's Brief, states the issues to
be:
"1. Whether the
Commission's finding and conclusion that Union Telephone Company, Inc. (`Union')
lacks authority to provide certain long distance telephone service (known as
`intrastate interLATA service') to its own customers, despite the fact that it
has done so for many years, is arbitrary and capricious, unlawful, or
unsupported by substantial evidence.
"2. Whether the
Commission's finding and conclusion that AT & T has authority to provide the
disputed long distance telephone service to Union's customers is arbitrary and capricious, unlawful,
or unsupported by substantial evidence.
"3. Whether the
Commission's findings and conclusions regarding implementation of its decision
are arbitrary and capricious, unlawful, or unsupported by substantial
evidence."
The PSC, in its brief as
respondent or appellee, rephrases the issues in this way:
"I. Was the Public Service Commission of Wyoming arbitrary,
capricious or did it abuse its discretion when it made the following findings
and conclusions,
"1. That Union Telephone
Company, Inc. lacked the authority to provide intrastate interLATA telephone
service;
"2. That AT & T
Communications of the Mountain States, Inc. had the authority to provide
intrastate interLATA telephone service to customers within Union's service area; and
"3. Regarding
implementation of the Commission's decisions.
"II. Were such findings
and conclusions unlawful or unsupported by substantial evidence?"
In its Brief of
Respondent-Appellee AT & T Communications of the Mountain States, Inc., AT
& T urges that only the first issue articulated by Union is of significance in this case on the ground that
its complaint which initiated the case and the decision of the PSC were not
premised on either of the other issues. In our judgment, Union's second issue is inextricably intertwined with the
first issue because AT & T would have no basis for its complaint in the
absence of authority to provide the disputed service. Furthermore, the order on
rehearing by the PSC addressed with particularity the implementation of its
decision, and Union's third issue is
significant in the case.
[¶3.] This appeal arises from
a complaint brought by AT & T before the PSC in which AT & T asserted
that Union was involved in providing services
that had been assigned to AT & T by its certificate of public convenience
and necessity. The issues are rather standard administrative review issues, but
they do arise in a somewhat novel setting. The setting is complicated by the
nature of the development of telephone services in the state of Wyoming, and that complication has been exacerbated by the
efforts of the federal judiciary to manage the telephone communications industry
in the United
States.
[¶4.] Union is an independent
telephone company that was organized in 1914 to provide telephone service for
portions of Sweetwater and UintaCounties in Wyoming and for portions of Daggett and SummitCounties in Utah. It is an example of other independent
telephone companies in Wyoming that serve
customers in another state as well as in Wyoming. Union did have a certificate of
public convenience and necessity authorizing it to furnish telephone service in
Wyoming.
[¶5.] The problem presented
in this case is a consequence of the largest antitrust suit in American history,
the civil action filed by the United States in 1974 against
American Telephone and Telegraph and Western Electric Company. On August 24,
1982, the federal district court for the District of Columbia approved a landmark
agreement between the parties to that action that broke up what was recognized
as the "Bell System." See "Modification of Foreign Judgment" (hereinafter MFJ),
United States v. American
Telephone & Telegraph Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom.
Maryland v. United States, 460 U.S. 1001, 103 S. Ct. 1240, 75 L. Ed. 2d 472 (1983). The MFJ divested American Telephone and
Telegraph Company of the Bell Operating Companies (BOCs), which were wholly
owned subsidiaries that had been engaged in providing regional telephone
service. American Telephone & Telegraph Co., 552 F. Supp. at 139, n. 19. The
federal court described the result in this way:
"Section I of the
proposed decree would provide for significant structural changes in AT & T.
In essence, it would remove from the Bell System the function of supplying local
telephone service by requiring AT & T to divest itself of the portions of
its twenty-two Operating Companies which perform that function. "The geographic
area for which these Operating Companies would provide local telephone service
is defined in the proposed decree by a new unit, the `exchange area.' According
to the Justice Department, an exchange area `will be large enough to comprehend
contiguous areas having common social and economic characteristics but not so
large as to defeat the intent of the decree to separate the provision of
intercity services from the provision of local exchange service.' Court approval
would be required for the inclusion in an exchange area of more than one
standard metropolitan area or the territory of more than one State." American
Telephone & Telegraph Co., 552 F. Supp. at 141 (footnote
omitted).
[¶6.] In a subsequent order,
the federal court approved the division of all former Bell territory in the United States
into geographically-limited exchange areas called Local Access and Transport
Areas (LATAs).1 United States v.
Western Electric Co., 569 F. Supp. 990 (D.D.C. 1983), appeal dismissed 714 F.2d 178 (D.C. Cir. 1983). By the provisions of this latter order, the BOC servicing
a LATA was permitted to carry only intraLATA telephone calls. Western Electric,
569 F. Supp. at 994. The BOCs could not handle any calls that were placed from
one LATA to another LATA, even if both of those LATAs were serviced by the same
BOC. Western Electric, 569 F. Supp. at 994, n. 14. The interLATA communications
were to be carried by AT & T or one of its competitors, after having been
picked up from the LATA servicer. Western Electric, 569 F. Supp. at
994.
[¶7.] Pursuant to the federal
decree, the former Bell territory within
Wyoming was
amalgamated as essentially one LATA, and it was serviced by Mountain States
Telephone and Telegraph Company (Mountain Bell). Within the boundaries of
Wyoming,
however, there were eighteen small LATA variances that reflected existing
service conditions and certificated authority granted to companies other than
Mountain Bell by the PSC at the time the Wyoming LATA was instituted. As a
product of these variances, mostly around the borders of the state, not all
telephone calls from one location in Wyoming to another are intraLATA calls.2 Calls initiated in one LATA in
Wyoming, but terminating in another LATA within
Wyoming, are
known as "intrastate interLATA service."
[¶8.] Prior to the effective
date of the federal divestiture order, January 1, 1984, Union provided
long-distance service for Union's customers within the state of Wyoming by connecting
with Mountain Bell. These interconnected calls were handled pursuant to a toll
settlement agreement between Union and Mountain
Bell. That arrangement provided that Mountain Bell would pick up calls from
Union's customers for any destination in Wyoming, and it would then hand them
off to other telephone companies that were to become other LATAs within the
state. After January 1, 1984, Mountain Bell no longer could provide the
long-distance service between LATAs in Wyoming. A new system was required by the MFJ
in order to furnish intrastate interLATA service.
[¶9.] To accommodate to that
new system, the PSC, on December 28, 1983, had granted AT & T Communications
of the Mountain States, Inc., a subdivision of AT & T Communications, Inc.,
an interim certificate of public convenience and necessity that authorized AT
& T:
"* * * [T]o provide
intrastate inter LATA telephone and telecommunication service throughout the
State of Wyoming effective January 1,
1984."
This certificate of
public convenience and necessity also provided:
"Such interim certificate
authority granted is to be restricted to that intrastate inter LATA telephone
and telecommunication service currently provided by Mountain States Telephone
and Telegraph Company [Mountain Bell] in the State of Wyoming, which Mountain
States Telephone and Telegraph Company will be precluded from providing after
January 1, 1984, pursuant to [the MFJ]."
Later, the interim
authority granted on December 28, 1983 was made permanent by the
PSC.
[¶10.] Beginning upon the effective date of the
divestiture in January, 1984 and continuing until February, 1986, Union and AT
& T cooperated to provide intrastate interLATA service for Union's customers
under an arrangement which provided that AT & T would furnish to customers
within Union's territory operator-handled and direct-dialed message toll service
for the intrastate interLATA calls. Union
recorded the call particulars, and it billed its customers and collected
revenues from them for those calls. Union
remitted the revenues for the service to AT & T by purchasing the accounts
receivable generated by AT & T for the calls. The revenues were accounted
for by the use of a purchase of accounts receivable statement (PARS) that was
initiated and furnished by Union. In order to
facilitate access to Union's customers by AT & T, Union provided to AT &
T, and charged for, Feature Group C originating and terminating access3 to Union's local exchange network. This access did not result
in AT & T's facilities being directly connected to Union's facilities. Instead, an intrastate interLATA call
placed by an AT & T customer in Union's territory first was routed to
Union's connection with Mountain Bell, and
Mountain Bell then turned the call over to AT & T.
[¶11.] In February, 1986, Union initiated a change. Union decided that it was authorized to provide intrastate
interLATA service to its own customers without following the arrangement
previously pursued with AT & T. At that time, Union began providing
operator-handled intrastate interLATA message toll services to those AT & T
customers who were in Union's territory.
Customers attempting an operator-assisted intrastate interLATA call were
connected directly to a Union operator rather than an AT & T operator. The
calls still were routed through AT & T's lines. At that time, Union also discontinued the reporting and remitting of
operator surcharges to AT & T for completion of those calls.
[¶12.] Then, in September of 1986, Union expanded this service so that it included
direct-dial intrastate interLATA message toll service to AT & T customers in
its territory. At that point in time, Union
began withholding all toll revenues from AT & T for intrastate interLATA
calls. Union stopped furnishing the PARS for
interLATA toll revenues to AT & T, and it stopped billing the AT & T
originating and terminating access charges.
[¶13.] Next, on January 1, 1988, Union implemented an originating responsibility plan
(ORP). This plan was approved by the PSC, and Union interpreted the ORP as
assigning to Union primary responsibility for all toll service originating
within Union's service area. Under the ORP,
Union developed toll rates and access charges
for servicing calls from its territory; it billed and retained the revenues for
toll calls, paying other carriers for their services. Under Union's plan, AT
& T and other interexchange4 carriers were allowed access to
Union's network using Feature Groups A and B
access until such time as Feature Group D access could be implemented. Under
this arrangement, Union would have remained the
primary intrastate interLATA servicer because of its control of Feature Group C
access.
[¶14.] In the meantime, on October 9, 1987, AT
& T filed a complaint with the PSC in which it requested that the PSC order
Union to stop providing direct-dialed and operator-handled intrastate interLATA
message telecommunication service within the state of Wyoming. The complaint
further requested that Union be ordered to remit to AT & T all monies
received by Union for intrastate interLATA communications subsequent to
September, 1986 and that Union should be
required to compensate AT & T for the use of AT & T's network and
switching facilities. Union answered the
complaint and instituted a counterclaim for access charges that it claimed were
owed to it by AT & T.
[¶15.] After extensive hearings, including the
submission of voluminous exhibits,5 the PSC issued an order on December
19, 1988. In that order, the PSC found that Union was not authorized to provide intrastate interLATA
service. It further found that the authority to furnish such service was
assigned to AT & T. Consistently, the PSC ordered Union to cease and desist
providing intrastate interLATA service to its customers; it suspended Union's
ORP6 for such service; and it ordered
Union to provide AT & T with Feature Group C access so that AT & T could
provide the intrastate interLATA service in lieu of Union. Union also was ordered to bill for and collect AT &
T's intrastate interLATA charges and to report its toll revenue for those
charges on a PARS. The PSC further determined that Union owed AT & T the sum of $2,800 in satisfaction of
the withholding of payments and of all monetary claims and counterclaims in the
proceeding.
[¶16.] After the commission's order was filed,
Union and AT & T both requested a rehearing, and Union applied for permission to supplement the record. On
March 30, 1989, the PSC entered its notice and order granting the petitions for
rehearing of both parties, and the PSC also permitted the parties to submit
additional and supplemental evidence and argument at the rehearing. There
followed further hearings at which both parties produced witnesses and exhibits,
and the commission then issued its Order on Rehearing on October 23, 1989. This
order affirmed the previous order of the commission, with certain modifications.
Union was required to file an access services
tariff with the PSC for Feature Group C access rates, and it also was required
to hand off all intrastate interLATA calls to AT & T's operators and to
remit to AT & T the revenues for such calls including the operator
surcharge.
[¶17.] Union
filed a petition for judicial review of the Order on Rehearing by the district
court. After the case was docketed in the district court, it was certified
directly to this court pursuant to Rule 12.09, W.R.A.P.
[¶18.] When a case is certified to this court
pursuant to Rule 12.09, W.R.A.P., we examine the decision of the administrative
agency as if we were the reviewing court of the first instance. Vandehei
Developers v. Public Service Commission, 790 P.2d 1282 (Wyo. 1990); Exxon Corporation v. Wyoming State Board of
Equalization, 783 P.2d 685 (Wyo. 1989); cert.
denied ___ U.S. ___, 110 S. Ct. 1937, 109 L. Ed. 2d 300 (1990). The authority vested in a reviewing court is set forth in §
16-3-114(c)(ii), W.S. 1977 (July 1990 Repl.), as follows:
"(ii) [The reviewing
court may] [h]old unlawful and set aside agency action, findings and conclusions
found to be:
"(A) Arbitrary,
capricious, an abuse of discretion or otherwise not in accordance with
law;
"(B) Contrary to
constitutional right, power, privilege or immunity;
"(C) In excess of
statutory jurisdiction, authority or limitations or lacking statutory
right;
"(D) Without observance
of procedure required by law; or
"(E) Unsupported by
substantial evidence in a case reviewed on the record of an agency hearing
provided by statute."
[¶19.] Union
challenges the decision of the PSC on the ground that it was arbitrary,
capricious, and not in accordance with law. In reaching a determination with
respect to whether the factual decision of an administrative agency is arbitrary
and capricious, our standard is that we review the entire record and determine
whether the decision can be supported by evidence found in that record. Palmer
v. Board of Trustees of Crook County School District No. 1, 785 P.2d 1160
(Wyo. 1990).
In Vandehei, which is a case that also involved the PSC, we further articulated
our standard of review in this way:
"* * * Petitioners have
the burden of proving that the PSC's actions were arbitrary, capricious or an
abuse of discretion. Wyoming Bancorporation v. Bonham, 527 P.2d 432, 439
(Wyo. 1974), op. supp., 563 P.2d 1382
(Wyo. 1977), reh'g denied, 566 P.2d 219
(Wyo. 1977).
The reviewing court must examine whether the decision made by an administrative
agency has been reached on relevant factors and was rational. Tri-State
Generation and Transmission Association, Inc. v. Environmental Quality Council,
590 P.2d 1324, 1331 (Wyo. 1979). Agency decisions are to be
reversed only for errors of law. Shenefield v. Sheridan County School District No. 1, 544 P.2d 870, 874
(Wyo. 1976).
Further, courts will not substitute their judgment for that of an administrative
agency. Gilmore v. Oil and Gas Conservation Commission, 642 P.2d 773 (Wyo. 1982)." Vandehei,
790 P.2d at 1284.
In this statement of the
standard, the concept of an error of law is included.
[¶20.] Union
also challenges the decision of the PSC on the ground that it is not supported
by substantial evidence. In reaching the determination as to whether the record
encompasses substantial evidence to support the agency decision, we also review
the entire record presented before the agency. Matter of Warehime, 806 P.2d 292
(Wyo. 1991); Tri-State Generation and
Transmission Association, Inc. v. Wyoming
Public Service Commission, 784 P.2d 627 (Wyo.
1989); Western Radio Communications, Inc. v. Two-Way Radio Service, 718 P.2d 15
(Wyo. 1986).
In this court, the burden of establishing the absence of substantial evidence is
assigned to the party challenging the sufficiency of the evidence. Palmer;
Western Radio. Substantial evidence is relevant evidence, which reasonable minds
would accept as adequate to support the findings of the agency. Palmer;
McCulloch Gas Transmission Company v. Public Service Commission of Wyoming, 627 P.2d 173 (Wyo. 1981). The administrative agency is
vested with the authority to weigh and determine the credibility of evidence
based upon its expertise and experience. Palmer; Western Radio; Matter of Rule
Radiophone Service, Inc., 621 P.2d 241 (Wyo. 1980). We do not substitute our judgment
for that of the PSC if the agency decision is supported by substantial evidence.
Mountain States Telephone and Telegraph Company v. Public Service Commission of
Wyoming, 698 P.2d 627 (Wyo. 1985). Sections
37-2-112, -2-118, and -2-127 (Dec. 1977 Repl.), extend jurisdiction to the PSC
to hear this controversy.
[¶21.] The review of the record that we have
accomplished persuades us that the findings and conclusions of the PSC were
neither arbitrary nor capricious; we found no abuse of discretion; and the
decision is not unlawful. Furthermore, the record encompasses ample substantial
evidence to support the orders that the PSC entered.
[¶22.] Examining the issues asserted by Union,
we turn first to its claim that the decision of the PSC, that Union could not properly furnish intrastate interLATA
service to its customers, is erroneous. Union
challenges that aspect of the order on several grounds. First, Union relies upon
the following language in its 1957 certificate of public convenience and
necessity, which Union claims gave it the
authority to provide long distance service to its customers:
"* * * Union has, since
its organization in 1914, provided telephone service to the inhabitants of
[Sweetwater and UintaCounties]. * * * A connection for long
distance telephone service is made at Mountain View with The Mountain States
Telephone and Telegraph Company.
* * * * * *
"* * * [A] Certificate of
Public Convenience and Necessity * * * is hereby issued to Union Telephone
Company * * * authorizing it to construct, operate and maintain a modern dial
telephone system for the purpose of furnishing dial exchange telephone service
to [its customers] * * *."
Union, in its argument,
interprets the language relating to the "dial exchange telephone service" to
encompass certificated authority to provide long distance service within
Wyoming, and
that authority would incorporate what is now intrastate interLATA service. Union
urges the proposition that the fact that the PSC mentioned the connection with
Mountain Bell manifests an implicit recognition that Union relied upon the Mountain Bell hookup to permit it to
provide long distance service to its customers.
[¶23.] The PSC read the language of the 1957
certificate of public convenience and necessity differently. It concluded that
the certificate recognizes only the authority of Union to provide local telephone service and that the
language connotes that it was Mountain Bell that possessed the right to provide
long distance service. In this regard, Union's contention is that no special
deference should be afforded the conclusion of the PSC because the proper
interpretation of Union's certificate of public
convenience and necessity is purely a matter of law. Cf. Mekss v. Wyoming Girls'
School, 813 P.2d 185 (Wyo. 1991); State ex rel. Workers' Compensation Division
v. Brown, 805 P.2d 830 (Wyo. 1991); Union Pacific Railroad Company v. Wyoming
State Board of Equalization, 802 P.2d 856 (Wyo. 1990); Employment Security
Commission of Wyoming v. Western Gas Processors, Ltd., 786 P.2d 866 (Wyo. 1990)
(Supreme Court owes deference to agency findings of fact but may correct
erroneous agency conclusions of law). It is correct that this court does not
generally afford deference to an administrative agency's determinations with
respect to questions of law, but there also is no question that we do give to
the PSC wide latitude and discretion with respect to its interpretation of the
certificates of public convenience and necessity that it issues. See Svilar
Light and Power, Inc. v. Riverton Valley Electric Association, Inc., 355 P.2d 52
(Wyo. 1960).
For a similar rule that exists in our neighboring state of Colorado, see also,
e.g., Public Service Co. v. Public Utilities Commission of the State of
Colorado, 653 P.2d 1117 (Colo. 1982); McKenna v. Nigro, 150 Colo. 335, 372 P.2d 744 (1962).
[¶24.] The rule that accords latitude and
discretion to the PSC with respect to the interpretation of its certificates of
public convenience and necessity exists because that certification function is a
discretionary one by necessity. That discretion has to include interpretation of
the authority that is granted once the certificate is issued. We are satisfied
that the PSC, which issued this certificate, is in the best position to properly
interpret it. Absent an interpretation that is arbitrary, capricious, or not in
accordance with law, we defer to the interpretation of the certificate of public
convenience and necessity that was made by the PSC.
[¶25.] The review we have made of the record and
of the PSC's order in this case persuades us that the interpretation of
Union's certificate of public convenience and
necessity by the PSC was not arbitrary or capricious, and was in accordance with
law. The PSC explained in its order that it consistently has viewed Union, and
consistently has referred to Union in access tariff approval, as an "independent
investor-owned local exchange utility" authorized to provide "Wyoming intrastate local
exchange services within its authorized service area." The PSC further noted
that Union possesses no facilities outside of
its certificated serving area for the purpose of originating and completing
intrastate interLATA calls. The interpretation of this certificate by the PSC is
adequately supported, and it is affirmed.
[¶26.] Union's next argument is that, in that
period of time prior to divestiture, Mountain Bell acquiesced in the providing
of intrastate interLATA service by Union. Union
contends that AT & T, pursuant to its certificate of public convenience and
necessity relating to intrastate interLATA service, inherited only Mountain
Bell's prior right to provide the service, and Union contends that AT & T must be bound by the
acquiescence of Mountain Bell. The terms of the agreement between Union and
Mountain Bell are encompassed within the Toll Settlement Agreement that Mountain
Bell and Union reached prior to the
divestiture. It is Union's claim that this agreement permitted Union to deal directly with its customers for the purpose
of billing and receiving revenues for long distance service.
[¶27.] More specifically, Union's argument is
that those intrastate interLATA customers within Union's territory were Union's
customers since the toll settlement agreement provides that "Union would bill and collect charges from its originating
customer and compensate Mountain Bell or other companies for their service." The
agreement actually provides that Union would remit all of the intrastate
and interstate toll revenues to Mountain Bell and that Union would be
compensated by Mountain Bell for Union's cost in providing the service and for a
reasonable return on Union's company plant
investment. According to the agreement, the balance of the funds generated by
intrastate and interstate long distance service was allotted to Mountain Bell.
Although there were other provisions of the agreement that could support Union's
interpretation, the overall tenor of that agreement concerning long distance
telephone service demonstrates that Mountain Bell was the actual service
provider, and that it merely compensated Union
for the use of Union facilities.
[¶28.] Even if the agreement Union relies upon
does offer support for Union's position, it is clear that a contractual
arrangement between Union and Mountain Bell, unless it is incorporated in the
certificate of public convenience and necessity by the PSC, has no validity with
respect to any modification of the authority found in the respective
certificates of public convenience and necessity. Neither could it be recognized
as stripping the PSC of jurisdiction over the territorial disputes. See
Tri-County Electric Association, Inc. v. City of Gillette, 584 P.2d 995 (Wyo. 1978). Once the dispute over authority
was submitted to the PSC, the PSC had the authority under our law to determine
the certificated rights of each of the parties, and it could do that without
regard to the nature of Mountain Bell's pre-divestiture agreement with
Union. Section 37-2-112, W.S. 1977 (Dec. 1977
Repl.). In the proceeding before the PSC, the certificated authority of each of
the utilities involved would control over an arrangement between them. It
follows that whatever Union's agreement was as set forth in the toll settlement
agreement, Union's contention that the agreement made it the proper carrier for
intrastate interLATA calls properly was rejected by the PSC.
[¶29.] Union follows with an argument that,
since the MFJ did not purport to affect the rights of the Independent Telephone
Companies, Union must be regarded as having retained its "pre-divestiture right
to provide intrastate, interLATA service" after the effective date of the
divestiture. We have accepted the finding of the PSC, however, that Union had no such right prior to the effective date of the
divestiture, and this argument must be rejected.7
[¶30.] Union's
final argument with respect to its authority to provide intrastate interLATA
service to its customers is that the public interest favors its provision of
such service. Union presented evidence in the
hearing before the PSC that demonstrated its substantial investment in long
distance facilities would be jeopardized by the decision of the PSC, and its
evidence also tended to show that its facilities in many instances are superior
to those of AT & T. The public interest is a primary factor to be considered
by the PSC in its adjudicative role. McCulloch, 627 P.2d 173; Rule Radiophone,
621 P.2d 241; § 37-2-205(c), W.S. 1977 (Cum.Supp. 1990). It is the agency's
prerogative, however to weigh the value and effect to be given particular
evidence relating to the public interest. In the absence of evidence that the
agency acted arbitrarily or capriciously in deciding what the public interest is
in the particular situation and what weight that interest should be afforded in
the decision-making process, we defer to the judgment of the agency. We have
found no evidence of arbitrary or capricious action in this case. This is
particularly true in view of the ruling that Union had no right to operate beyond the scope of its
certificated authority, and the PSC had the duty to consider the interests of
the public at large.
[¶31.] In summation, it is our holding that the
PSC did not act arbitrarily, capriciously, or contrary to law in adopting its
ruling that Union had no authority to provide
intrastate interLATA service to its customers. We also hold that the findings by
the PSC on this issue are supported by substantial evidence.
[¶32.] In the next issue set forth by Union,
which is very much like the other side of the coin with respect to the first
issue, Union contends that AT & T had no authority to provide intrastate
interLATA service to Union's customers. The
argument advanced by Union is that, because the certificate of authority given
to AT & T for intrastate interLATA service is the same as the authority
previously held by Mountain Bell and, since Mountain Bell never acted as a
retail provider for Union's long distance service, AT & T is without a
certificate of public convenience and necessity to provide intrastate interLATA
service to Union's customers.
[¶33.] In analyzing this argument, we first
consider the scope of authority held by Mountain Bell to provide intrastate toll
service prior to the effective date of divestiture. The order of the PSC entered
in 1984 that granted AT & T permanent authority to provide intrastate
interLATA service recognized such authority existing in Mountain Bell. In its
order, the PSC stated:
"Mountain Bell is a Colorado Corporation authorized to transact
business in Wyoming, with its main office in
Denver. * * *
Mountain Bell is authorized by this Commission to provide all telecommunications
services in the areas certificated to it and intrastate toll service
throughout Wyoming by Commission orders in Docket No. 9382 and subs
thereunder and by the Wyoming Supreme Court decision in Dubois Telephone
Exchange v. Mountain States Tel. and Tel., (Wyo. 1967) 429 P.2d 812, wherein the
Court affirmed Mountain Bell's right to provide exclusive statewide message toll
services." (Emphasis added.)
[¶34.] This certificate recognizes authority in
Mountain Bell to provide statewide, intrastate toll services prior to the
divestiture.8 Furthermore, as we already have
discussed, Mountain Bell acted, at least in the economic sense, as the service
provider for its toll settlement agreement with Union. In addition, there is to be taken into account the
language in Union's own certificate of public
convenience and necessity that states that a connection is made with Mountain
Bell for the provision of long distance service.
[¶35.] Once the divestiture order became
effective, and the PSC had issued the certificate of public convenience and
necessity to AT & T, the intrastate interLATA component of what had formerly
been Mountain Bell's long distance service was allotted to AT & T. AT &
T clearly succeeded to Mountain Bell's authority to provide this particular
service. On the basis of this record, we conclude that the PSC did not act
arbitrarily or capriciously, did act in accordance with law, and did not abuse
its discretion in ruling that the authority to provide intrastate interLATA
telephone service to Union's customers was assigned to AT & T. To the
contrary, the record rather clearly demonstrates that this was an historical
succession of authority from Mountain Bell to AT & T and that Union had never had that authority pursuant to its
certificate of public convenience and necessity.
[¶36.] We turn then to the last issue presented
by Union relating to its concerns about the
implementation provisions of the PSC's order. Union challenges the requirement
by the PSC that Union's customers be billed at AT & T rates; the requirement
that Union report interLATA revenues using a PARS; and the requirement that
Union's access rates follow the AT & T
methodology. It is necessary to analyze each of these claims separately. In
doing so, we acknowledge the principle that, when a conflict exists between two
utilities, the PSC is authorized to make such order and prescribe such
conditions as seem just and reasonable. See Tri-City Electric Association v.
City of Gillette, 584 P.2d 995 (Wyo. 1978).
[¶37.] Union first asserts that the PSC
requirement that Union must bill and collect long distance and operator charges
at AT & T's tariffed intrastate rates will result in a rate increase to
Union's customers. For that reason, Union argues that the PSC should have, but did not, follow
the statutory procedures and make the appropriate findings for a rate increase.
Section 37-2-120, W.S. 1977 (Dec. 1977 Repl.), requires in the part pertinent to
this issue:
"* * * No order, however,
shall be made by the commission which requires the change of any rate or
service, facility or service regulation except as otherwise specifically
provided, unless or until a public hearing has been held in accordance with the
provisions of this act."
We previously have ruled
that this section contemplates a trial-type hearing, and we have reversed a PSC
order which resulted in a rate increase but did not afford such a hearing.
Tri-State Generation & Transmission Association, Inc. v. Wyoming Public
Service Commission, 735 P.2d 718 (Wyo. 1987),
appeal after remand, 784 P.2d 627 (Wyo. 1989). In this case, however, extensive
public hearings were held on AT & T's complaint. Notice was given of these
hearings. The requisite opportunity to cross-examine and to produce witnesses
also was provided.
[¶38.] We hold that the PSC hearings on AT &
T's complaint fulfilled the requirement of a public hearing "prior to any change
of rate or service." Even if that were not so, we also must recognize that there
truly was no rate increase so far as AT & T's rates were concerned, and we
would hold that the hearing that Union says should have occurred is not required
simply because the rates that have been filed by the utility holding the proper
certificate of public convenience and necessity were greater than the rates
charged by a utility that did not have the requisite certificate of public
convenience and necessity.
[¶39.] Union then continues its argument by
asserting that the PSC failed to make a finding that Union's rates were
"inadequate or unremunerative, * * * unjust, or unreasonable, or unjustly
discriminatory, or unduly preferential or otherwise in any respect in
violation of any provision of this act" before substituting AT & T's
rates for Union's. Section 37-2-121, W.S. 1977
(Dec. 1977 Repl.) (emphasis added). As we have noted above, the record
demonstrates that the PSC did find a violation of the act prior to the
substitution. The PSC clearly found that Union's unauthorized provision of
intrastate interLATA service was a violation of the certificate of public
convenience and necessity held by Union and a violation of § 37-2-205 (a), W.S.
1977 (Cum.Supp. 1990). Since Union had no authority to provide the service, the
PSC reasonably could have refused to implement Union's rates on the ground that they were simply part of
a plan in direct violation of applicable law. The PSC did state that its
implementation plan was designed to "return the parties to the status quo
that existed before Union began providing direct-dialed and operator-handled
toll services beyond the scope of its certificates of public convenience and
necessity * * *." In its appeal, Union has not
demonstrated that the PSC committed an error by requiring that Union bill at AT
& T's tariffed rates, which were the only tariffed rates in effect for this
particular service.
[¶40.] The next argument presented by Union
involves its complaint that the PSC erred by requiring Union to submit a monthly
PARS to AT & T. Union's contention is that this "forced transfer of Union
accounts" will result in Union's having to
disclose proprietary business information. Union insists that the PSC's failure
to "net" the amounts due between Union and AT & T is erroneous; there is no
evidence that other companies have entered into such PARS arrangements with AT
& T or that the arrangement is in the public interest; and the PSC has
ordered Union to transfer its business accounts
without compensation. Similar arguments were made before, and rejected by, the
PSC. On the basis of the record presented, we are unable to conclude that the
decision by the PSC to require the use of a PARS as the device for accounting
for the services rendered by AT & T was arbitrary and capricious, was not in
accordance with law, or was not supported by substantial evidence. Again, we
identify a continuation of historical methodology.
[¶41.] First, the PSC found that Union already remits a PARS to AT & T for intrastate
interLATA calls. Union has failed to articulate
any good reason for distinguishing the intrastate PARS required under the PSC's
order from the interstate PARS which it already voluntarily furnishes. In the
second place, the PSC noted that Union had
remitted a monthly PARS to AT & T for intrastate interLATA service prior to
September, 1986. Because Union had no certificate of public convenience and
necessity to provide intrastate interLATA services in Wyoming, Union's
complaint that information regarding "its" intrastate interLATA customers would
be disclosed to AT & T is nothing more than a redundant statement that it
does not wish to relinquish intrastate interLATA service to AT & T as the
PSC ordered. We have previously affirmed that portion of the order of the PSC
that requires Union to desist from furnishing
that service.
[¶42.] In its next argument, Union challenges
the requirement invoked by the PSC that Union
adopt the F.C.C. Parts 36-69 methodology in fixing its access rates for AT &
T's Feature Group C access. F.C.C. Part 36 first divides a company's total cost
between interstate and intrastate service. F.C.C. Part 69 then allocates the
interstate costs between various categories. It is Union's argument that the
access tariff created by this methodology results in rates that are too low to
cover Union's overall operating costs because Union no longer will be permitted
to set the access rates charged to AT & T in order to subsidize its own
local and interLATA long distance service. Thus, Union will have to increase its local service rates by $5
per month to meet the shortfall, and AT & T service will be unfairly
subsidized. In the course of the hearing, the PSC had before it testimony that
Union's intrastate access rates had been set
unreasonably high. A vice-president of AT & T testified at the hearings that
Union's residual pricing scheme resulted in a perpetual subsidy to Union. The PSC also had before it testimony that, due to
practical considerations, a number of independent telephone companies in the
mountain states have adopted Parts 36-69 methodology to set intrastate access
rates. The PSC then found that the results of the F.C.C. methodology more
closely approximated Union's costs of providing
access services than would the approach utilized by the ORP.
[¶43.] This court, in a different utility
context, has recognized that discretion is vested in the PSC in establishing
rate-making methodology so long as the result reached is reasonable. Mountain
Fuel Supply Co. v. Public Service Commission of Wyoming, 662 P.2d 878 (Wyo. 1983). In this particular case, the PSC
adjusted Union's rates to correspond more
closely with the actual costs involved. Under the circumstances reflected in
this record, we are unable to say that there was any abuse of discretion granted
to the PSC to set reasonable rates by virtue of its order requiring Union to adopt F.C.C. Parts 36-69 methodology. See
Sections 37-2-112, -2-121, -2-122, -2-127, W.S. 1977 (Dec. 1977
Repl.).
[¶44.] In this instance, Union has been unable to demonstrate that challenged
portions of the PSC orders are arbitrary, capricious, not in accordance with
law, or not supported by substantial evidence. Our examination of the record
persuades us that the order of the PSC is a lawful exercise of its regulatory
powers. The decisions of the PSC are affirmed in all
respects.
FOOTNOTES
1 "LATAs" and "exchange
areas" are essentially equivalent terms for the same geographic divisions. The
Western Electric court explained the evolution of the LATA concept as
follows:
"* * * Unfortunately, as
drafted by the parties, the [MFJ] speaks of the areas in which the Operating
Companies will provide post-divestiture services as `exchange areas.' Since
traditionally regulators have used the term `exchange area' in an entirely
different sense, this terminology in the decree has led to a considerable amount
of confusion. * * * The confusion occasioned by the dual usage of the term
`exchange' prompted AT & T to suggest * * * that the phrase `local access
and transport area,' with the acronym LATA, be employed when referring to the
exchange area that is the creation of this antitrust decree * * *. The Court * *
* [has] adopted this terminology, and it will consistently be used herein."
United
States v. Western Electric Company, Inc., 569 F. Supp. 990, 993 n. 9 (D.D.C. 1983).
2 An example of that
situation would be a call from Mountain View to
Torrington. That
call would be initiated in Union's territory; it then would be "handed off" to
Mountain Bell at Kemmerer Hill; it would be carried by Mountain Bell to
Cheyenne; at Cheyenne, AT & T would pick up the call and it would be
transported by AT & T to Denver, Colorado. From Denver, Colorado, the call
would be transported to Scottsbluff, Nebraska, at which point it would be picked up and
terminated by Scottsbluff United Telephone Company in Torrington, a part of an
entirely different LATA. See the map attached as Appendix 1.
3 Feature Group Services
refer to the connections which allow local telephone users to access long
distance facilities of the caller's choice. Feature Groups A and B allow the
user to be connected with a line or trunk in order to access the long distance
service. With either Feature Group A or B, the customer dials an access code to
reach the long-distance service. Feature Group C allows a customer to access the
long-distance service directly through 0 + or 1 + dialing. Mountain Bell provides Feature
Group C access to AT & T in its service area and thus customers may
automatically reach AT & T by 0 + or 1 + dialing. Feature Group D, the most
advanced service available at the present time, allows a user to reach any
available long distance carrier simply by 0 + or 1 + dialing.
Originating
access refers to the access needed to process outgoing calls. Terminating
access refers to the access needed to carry incoming calls into the area
served by the local telephone company.
4 Again, as the Western
Electric court explained:
"`Interexchange' as
defined in section IV(K) of the decree is identical to what has generally herein
been referred to as inter-LATA; and `intraexchange' is identical to
`intra-LATA.'" United
States v. Western Electric Company, Inc., 569 F. Supp. 990, 1008 n. 84 (D.D.C. 1983).
5 The administrative
record in this case is comprised of nearly 3,000 pages.
6 Although the Commission
had previously approved Union's ORP, it does not appear that this approval
constituted an endorsement of Union's
subsequent practices concerning intrastate interLATA service. In any case, the
order approving the ORP specifically stated that "[t]his order does not affect
the formal complaint filed by AT & T against Union in Docket No. 9768 [the present
controversy]."
7 The language in question
reads as follows:
"The decree does not
impose any obligations or restrictions on the ITCs [Independent Telephone
Companies], either directly or by way of configuration of LATAs."
United
States v. Western Electric Company, Inc., 569 F. Supp. 990, 1008 (D.D.C. 1983).
"The LATAs will not
include any ITC areas. This is consistent with the decree which requires only
that all points served by the Bell Operating Companies be included in a LATA.
Section IV(G)(2). The LATAs were drawn without reference to the ITC areas to
ensure that the decree could not be construed as imposing any obligations or
restrictions on the ITCs themselves." United States v. Western Electric
Company, Inc., 569 F. Supp. 990, 1008 n. 85 (D.D.C. 1983).
8 In its argument,
Union challenges the premise for Mountain
Bell's statewide authority pursuant to the 1984 certificate. Union contends, and
we are disposed to agree, that Dubois Tel. Exchange v. Mountain States Tel. and
Tel. Co., 429 P.2d 812 (Wyo. 1967), did not "affirm Mountain Bell's authority to
provide exclusive statewide message toll services." Furthermore, we recognize
that Docket Number 9382, referred to in the order of the PSC, was a certificate
of public convenience and necessity granted to Mountain Bell on August 5, 1960,
which extended to Mountain Bell authority to provide intrastate toll service
within its service area. The authorities cited by the PSC in its 1984
order do not, in and of themselves, demonstrate a statewide grant of authority
to Mountain Bell to provide long distance toll service.
We do not, however,
perceive that it would be appropriate to interfere with the use of the PSC of
its earlier statement concerning Mountain Bell's authority. We are reluctant,
because of a procedural rule, to inquire into the 1984 determination by the PSC
concerning Mountain Bell's authority. Union,
which was a participant in the 1984 certification proceeding, has not shown that
it endeavored to obtain judicial review of the 1984 determination by the PSC.
The failure to challenge that certificated authority in the original proceeding
can lead to a procedural bar in a later dispute before the PSC. Cf. Riverton
Valley Electric Ass'n v. Pacific Power and Light Co., 391 P.2d 489 (Wyo. 1964) (certificate
issued by PSC which did not reflect parties' stipulation should have been
challenged at time of issuance). In addition, there are practical difficulties
with making any such inquiry since we do not have before us either briefs or a
record that would show whether there was substantial evidence to support the
conclusion reached by the PSC in the 1984 proceeding. Consequently, we choose
not to adopt Union's argument that the 1984
grant of authority to Mountain Bell pursuant to its certificate of public
convenience and necessity was not supported by the authorities cited by the
PSC.
URBIGKIT, Chief Justice,
dissenting.
[¶45.] I join in the dissent of Justice Macy. As
recognized in majority opinion, it appears that all parties agree that the basic
issue presented for appeal is whether the Public Service Commission order
granted AT & T expanded authority for services previously provided by
Mountain Bell with a concurrent requirement for Union Telephone to contract its
historical conduct of business enjoyed prior to 1984 when the AT & T
divestiture occurred, or whether the status quo of the pre-1984 business
relationships of Union Telephone and Mountain Bell would be now maintained
between AT & T and Union Telephone. It was the divestiture which put AT
& T into the prior position occupied by Mountain Bell.
[¶46.] When the syllogism is stated in that
fashion, all litigative participants and the majority seem to agree that the
Public Service Commission order presently restricting activities of Union
Telephone and commensurately expanding the rights of AT & T is directed
to restore the status quo which existed prior to 1984.
[¶47.] With this syllogism properly stated for
the issue to be appropriately defined, I observe the arguments to be
academically expansive, but find that the factual assertion and conclusion by
the Public Service Commission, as now restated in the majority, to be factually
in error. Discussion about the "scope" of authorization of the pre-1984
certificates of convenience and necessity issued either to Mountain Bell or to
Union Telephone seems to be either inconclusive in dispute or arcane in
application. The real issue addressed to the real world is whether the actual
conduct existent pre-1984 is maintained or now to be altered to result in harm
to Union Telephone and benefit to AT & T within this area of
out-of-certificated territory telephone service.
[¶48.] Volume I of the agency record starts with
a hearing notice by the Public Service Commission dated in early 1988. The
agency record in fourteen extensive volumes continues for more than a year.
Judicial involvement, pursued through three more volumes of this record, started
in November 1989. After an extended session conducted by the trial court on May
8, 1990, the case was certified to this court on July 9, 1990.
[¶49.] It would seem that a record developed and
argument pursued for that period of time could have dispositively resolved one
simple question as a determinable fact: Does the present Public Service
Commission order reduce authorized activities of Union Telephone compared to
their conduct of business before 1984 and commensurately expand AT & T into
activities Mountain Bell did not conduct before 1984 - intrastate
interLATA?
[¶50.] lthough somewhat concealed in the
totality of the pages of this accumulated record, I find the answer disarmingly
apparent. Before 1984, Union Telephone was the retail provider to conduct this
character of telephone service, but the present decision factually
transfers that status to AT & T. The pre-1984 status is not maintained, the
asserted goal is missed or ignored, and this decision is consequently wrong.1 I join in the dissent of Justice
Macy.
FOOTNOTES
1 It is much more
difficult to sift out of the briefing, argument and record exactly what
operational changes resulted from the transference of retail provider from Union
Telephone to AT & T. What it does include is service of operators, billing,
revenue stream, primary contact status, telephone dialing numbers and signs on
telephone booths. Amazingly, all of this really started from the status of one
pay telephone at one newly constructed truck stop located within the
certificated territory of Union
Telephone.
MACY, Justice, dissenting,
with whom URBIGKIT, Chief Justice, joins.
[¶51.] I am painfully aware we have given wide
latitude and discretion to the PSC with respect to its interpretation of the
certificates of public convenience and necessity which it issues. This does not
mean, however, that we must "rubber stamp" the PSC's interpretations when such
interpretations do not require the PSC's expertise and experience. We have
repeatedly stated that whether or not a writing is ambiguous is a question of
law to be decided by this Court. It is crystal clear to me that the
words,
[A] Certificate of Public
Convenience and Necessity . . . is hereby [] issued to Union Telephone Company .
. . authorizing it to construct, operate and maintain a modern dial telephone
system for the purpose of furnishing dial exchange telephone service to [its
customers,]
give Union
unchallengeable authority to provide intrastate interLATA service to its
customers. This is especially clear when such certificate is preceded by the
statement:
Union has, since its
organization in 1914, provided telephone service to the inhabitants of
[Sweetwater and UintaCounties]. . . . A connection for long
distance telephone service is made at Mountain View with The Mountain States
Telephone and Telegraph Company.
There is nothing in the
certificate which would in any way put one on notice that intrastate interLATA
service would not be included within Union's
certificate of public convenience and necessity.
[¶52.] It appears that, if the PSC intended to
except intrastate interLATA service from Union's certificate, it could have easily said
so.
[¶53.] I agree with the majority and the PSC
that AT & T's authority to provide intrastate interLATA service is limited
to that authority held by Mountain Bell prior to the effective date of the
divestiture. I cannot, however, find any predivestiture certificated authority
permitting Mountain Bell to provide long distance service to Union's customers.
[¶54.] I am concerned that this Court has given
too much latitude and discretion to the PSC to apply strained interpretations to
the language contained in Union's and Mountain
Bell's certificates of public convenience and necessity under the guise of a
standard of review which has no application when the meaning is clear. It is
quite obvious the PSC failed to use its alleged expertise in interpreting the
certificates in question in this instance. The certificates simply do not say
what the PSC says they say!
[¶55.] It is the duty of this Court to use its
expertise and experience to determine questions of law, and we should not
abrogate that duty. The PSC's order is unlawful and should be
reversed.
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