Pacific Northwest Bell Telephone Co. v. Katz, C-12269

• Decision Date: 09 June 1993
• Docket Number: C-12269
• Citation: 853 P.2d 1346,121 Or.App. 48
• Parties: PACIFIC NORTHWEST BELL TELEPHONE COMPANY, dba US West Communications, Inc., Appellant, v. Myron B. KATZ and Ron Eachus, Respondents. 90; CA A71320.
• Court: Oregon Court of Appeals

Page 1346

853 P.2d 1346

121 Or.App. 48

PACIFIC NORTHWEST BELL TELEPHONE COMPANY, dba US West

Communications, Inc., Appellant, v. Myron B. KATZ and Ron Eachus, Respondents.

90C-12269; CA A71320.

Court of Appeals of Oregon.

Argued and Submitted Sept. 21, 1992.

Decided June 9, 1993.

Charles L. Best, Portland, argued the cause and filed the briefs for appellant.

Keith L. Kutler, Asst. Atty. Gen., Salem, argued the cause for respondents. With him on the brief were Charles S. Crookham Atty. Gen., Virginia L. Linder, Sol. Gen., and Robert M. Atkinson, Asst. Atty. Gen., Salem.

Before WARREN, P.J., and RIGGS and EDMONDS, JJ.

RIGGS, Judge.

Pacific Northwest Bell Telephone Company (PNB) appeals from a judgment of the circuit court upholding the Public Utility Commission's (PUC) orders 89-1274 and 90-1457. In order 89-1274, PUC concluded that it has jurisdiction over Address Telephone Directories (ATDs) and Business and Customer Lists (BCLs). ¹ In order 90-1457 PUC denied PNB's petition to abandon its production of ATDs and BCLs. PNB makes several assignments of error, but essentially argues that PUC's assertion of jurisdiction over ATDs and BCLs is in error, because those services are not "telecommunications services" as defined by ORS 759.005(2)(g). We affirm.

On January 6, 1989, PNB filed with PUC a notice of intent to abandon production of ATDs and BCLs (Notice of Intent to Abandon Service). OAR 860-32-020. PUC initiated an investigation and, at a prehearing conference, PNB questioned PUC's jurisdiction over ATDs and BCLs. PUC bifurcated the proceedings and conducted a hearing on the jurisdictional question first, reserving the merits of PNB's petition for later.

On September 29, 1989, PUC issued order 89-1274, in which it concluded that it had jurisdiction over ATDs and BCLs. After a hearing on the merits of PNB's petition, PUC issued order 90-1475, denying the petition because it considered the proposed abandonment a "sham." PUC concluded that PNB did not intend to abandon production of ATDs and BCLs but rather that PNB was attempting to spin off a revenue-producing activity to a non-regulated affiliate in order to reduce its revenue base and justify higher rates to the consumers. PNB sought review of that order in the circuit court. That court agreed with PNB that ATDs and BCLs are not "telecommunications services" as defined in ORS 759.005(2)(g). However, the court ruled that PUC did have regulatory authority over ATDs and BCLs based on its general powers in ORS 756.040. PNB appeals.

We review PUC's order directly. ORS 756.598; Pacific Northwest Bell Telephone Co. v. Katz, 116 Or.App. 302, 841 P.2d 652 (1992). We may not substitute our judgment for that of PUC as to any findings of fact that are supported by substantial evidence in the record. We will uphold PUC's order if there is a rational relationship between the facts and PUC's legal conclusions, and if PUC has made sufficient findings and conclusions from which we may determine that the reasoning is rational and that PUC has acted within its grant of authority. 116 Or.App. at 305.

PUC based its finding of jurisdiction over ATDs and BCLs on ORS 757.480, which requires a public utility to obtain PUC approval before disposing of property that is "necessary or useful in the performance of [the utility's] duties to the public." ² PUC also concluded that it has jurisdiction over ATDs and BCLs, because they are within the scope of the definition of "telecommunications service[s]," as modified by the general definition of "services." ORS 759.005(2)(g); ³ ORS 756.010(12). ⁴ We need not decide whether the second basis for jurisdiction is valid, because we find sufficient grounds for PUC jurisdiction in ORS 759.375, which is the telecommunications counterpart to ORS 756.480 cited above.

ORS 759.375(1)(a) uses the same language as ORS 756.480 and provides:

"(1) No telecommunications utility doing business in Oregon shall, without first obtaining the commission's approval of such transaction:

"(a) Sell, lease, assign or otherwise dispose of the whole of the property of such telecommunications utility necessary or useful in the performance of its duties to the public or any part thereof of a value in excess of $10,000 * * *."

In its order 90-1457, PUC found that allowing the petition would result in PNB disposing of property that is "necessary or useful in the performance of [PNB's] duties to the public." PNB argues that, although it is under a duty to provide telecommunications services, ATDs and BCLs are neither necessary nor useful in its performance of that duty. Whether or not that statement is correct, PNB ignores the fact that, as a regulated utility, it has a duty to ensure that

"the charges made * * * for any service rendered or to be rendered * * * shall be reasonable and just * * *." ORS 759.035.

In its order, PUC reasoned that, because ATDs and BCLs are revenue-producing activities, they help satisfy PNB's revenue requirement, which otherwise would have to be met by increased rates to customers. In that context, ATDs and BCLs are "necessary or useful" to PNB's performance of its duty to charge only "reasonable and just" rates. That reasoning is convincing, especially in light of the stated goals of the telecommunications statutes:

"The Legislative Assembly finds and declares that it is the goal of the State of Oregon to secure and maintain high-quality universal telecommunications service at just and reasonable rates for all classes of customers and to encourage innovation within the industry by a balanced program of regulation and competition. The commission shall administer the statutes with respect to telecommunications rates and services in accordance with this policy." ORS 759.015. (Emphasis supplied.)

Other statutes give PUC both authority and various mechanisms to ensure that consumers are charged "reasonable and just" rates. E.g., ORS 756.040; ORS 759.030. The utility statutes in general reflect a legislative scheme in which PUC exercises broad powers to protect consumer interests. We see no reason to narrow that scheme here.

PNB argues that, not only are ATDs and BCLs not "necessary or useful" in the performance of its duties, but they are not even property and so t...