Southwestern Bell Telephone Co. v. Oklahoma Corp. Com'n, 83179

• Decision Date: 15 December 1994
• Docket Number: No. 83179,83179
• Parties: SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant, v. OKLAHOMA CORPORATION COMMISSION and State of Oklahoma, Appellees.
• Court: Oklahoma Supreme Court

Page 1116

897 P.2d 1116

1994 OK 142

SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant, v. OKLAHOMA CORPORATION COMMISSION and State of Oklahoma, Appellees.

No. 83179.

Supreme Court of Oklahoma.

Dec. 15, 1994.

As Corrected on Limited Grant of Rehearing April 4, 1995.^*

Motion to Stay the Effect of Rules in Commission Order No. 380024.

The Corporation Commission issued an order adopting rules for the upgrade of telephone services. Southwestern Bell Telephone appealed the order. It asked the Commission to stay the effect of the order as to the rules while the matter was on appeal. The Commission denied the request, and Southwestern Bell sought a stay from this Court.

COMMISSION DIRECTED TO STAY THE EFFECT OF RULES CONDITIONED UPON APPELLANT POSTING A SUSPENDING BOND IN SUFFICIENT AMOUNT.

Melanie S. Fannin, Roger K. Toppins, Charles J. Scharnberg, Oklahoma City, for appellant.

Lawrence R. Edmison, Maribeth D. Snapp, Leslie Wilson Pepper, Okl. Corp. Com'n, Oklahoma City, for appellees.

SUMMERS, Justice.

The Corporation Commission issued Order No. 380024 in Cause No. RM 930000090, and thereby promulgated rules that required telephone companies to upgrade their service, upgrade their networks, and provide lifeline service. The Order also provided for wide area calling plans. Southwestern Bell Telephone Company (SWBT) appealed, seeking review of the Order. SWBT then sought before the Commission a stay of the newly adopted rules pending the present appeal. The Commission denied the stay, and SWBT seeks a stay of the Order from this Court.

SWBT argues that the stay is mandatory pursuant to Okla. Const. Art. 9 § 21. Article 9 § 21 states in pertinent part that:

Upon the giving of notice of appeal from an order of the Corporation Commission, the Commission, if requested, shall suspend the effectiveness of the order complained of until the final disposition of the order appealed, and fix the amount of suspending or supersedeas bond.

This language clearly states that the Commission shall stay an order, if requested, conditioned upon a suspending bond. The Commission argues that because of statutes that amended the Constitution it now may not stay an order that creates a rule.

Article 9 § 35 of the Oklahoma Constitution gives the Legislature the power to alter, amend, revise, or repeal Art. 9 §§ 18 to 34, inclusive. ¹ In 1993 the Legislature amended "The Corporation Commission shall be required to comply with the provisions of Article I of the Administrative Procedures Act except for subsections A, B, C and F of Section 303 of this title and Section 306 of this title. To the extent of any conflict or inconsistency with Article I of the Administrative Procedures Act, pursuant to Section 35 of Article IX of the Oklahoma Constitution, it is expressly declared that Article I of the Administrative Procedures Act is an amendment to and alteration of Sections 18 through 34 of Article IX of the Oklahoma Constitution." (emphasis added)

the Oklahoma Administrative Procedures Act (OAPA):

75 O.S.Supp.1993 § 250.4(A)(2), effective July 1, 1993. The question now becomes whether the amended Article I of the OAPA contains provisions inconsistent with Art. 9 § 21.

Article I of the OAPA is codified at 75 O.S.1991 §§ 250.2-308.2, as subsequently amended. The Commission relies upon two sections of Article I, §§ 308.2 and 306. Section 308 states in part:

Rules shall be valid and binding on persons they affect, and shall have the force of law unless amended or revised or unless a court of competent jurisdiction determines otherwise. Except as otherwise provided by law, rules shall be prima facie evidence of the proper interpretation of the matter to which they refer.

75 O.S.1991 § 308.2(C).

This statute plainly states that rules are valid until a court determines otherwise. The Commission argues that such language means that the Commission (or court) may not stay the effect of a rule until the Commission (or court) finally adjudicates a suit challenging the rule.

The Commission also relies upon § 306, which contains language similar to § 308.2:

"Rules promulgated pursuant to the provisions of the Administrative Procedures Act are presumed valid until declared otherwise by a district court of this state or the Supreme Court." § 306(C).

Section 306 also provides for challenging an administrative rule by way of a declaratory judgment action in the District Court. § 306(A) and (D).

The Commission's arguments may be summarized as saying (1) that the sections together prohibit District Courts from granting stays in declaratory judgment actions attacking administrative rules, and (2) further prohibit the Commission and the Supreme Court from granting stays in appeals from Commission rules. We must first take note of some basic principles underlying this controversy.

Declaratory judgments may be sought in a District Court to challenge an administrative rule. 75 O.S.1991 § 306. We have in numerous cases affirmed trial court declaratory judgments granting temporary and permanent injunctive relief. ² We have explained that a declaratory judgment is an appropriate remedy when a person is adversely affected by an invalid statute and is threatened with its enforcement. State ex rel. Board of Examiners in Optometry v. Lawton, 523 P.2d 1064, 1065-1066 (Okla.1974). Because of the nature of such a suit courts use temporary injunctions to restrain the enforcement of statutes and ordinances in order to protect property rights pending resolution of a controversy.

Anderson v. Trimble, 519 P.2d 1352, 1356 (Okla.1974) cert. denied, 419 U.S. 995, 95 S.Ct. 308, 42 L.Ed.2d 269 (1974). Courts have historically used their equitable powers to give parties temporary relief from the enforcement of challenged rules, ordinances, and statutes, so that rights are protected during litigation.

A stay suspends or arrests a proceeding, and is effective as to the parties to the proceeding. DLB Energy Corp. v. Oklahoma Corporation Commission, 805 P.2d 657, 662 (Okla.1991); In re Koome, 82 Wash.2d 816, 514 P.2d 520, 523 (1973). A stay pursuant to Art. 9 § 21 suspends or arrests the effect of a Commission proceeding as to the party appealing to this Court. ³

The parties agree that this Court exercises appellate jurisdiction pursuant to Okla. Const. Art. 9 § 20 in this proceeding. That provision states in part:

An appeal from an order of the Corporation Commission affecting the rates, charges, services, practices, rules or regulations of public utilities, or public service corporations, shall be to the Supreme Court only....

The Supreme Court's review of appealable orders of the Corporation Commission shall be judicial only,....

This section shows that the Supreme Court possesses appellate jurisdiction to review rules and regulations of the Commission, and that this review is judicial in nature. See Turpen v. Oklahoma Corporation Commission, 769 P.2d 1309, 1317 (Okla.1988) where we explained our judicial review over an appeal of a rate proceeding. When this Court stays an appealed Commission order that stay is a type of judicial process.

Similarly, when the Commission issues an order and thereby stays the effect of a Commission order on appeal as to an appealing party that stay order is judicial in character. In other words, the Art. 9 § 21 stay is based upon the Commission exercising its discretion, and determining the proper bond for a particular appeal. Such is an exercise of an adjudicative power, and not legislative or executive. See Monson v. State ex rel. Oklahoma Corporation Commission, 673 P.2d 839, 843 (Okla.1983) where we contrasted an act that is legislative in character with an exercise of an adjudicatory power. The decision on the amount of a bond calls for an adjudicative inquiry into the circumstances, i.e., the nature of the order being stayed and the proper amount for the protection of the competing interests. The Commission's exercise of this Art. 9 § 21 adjudicatory power is not contrary to the OAPA.

The Commission points out that a rule is presumed valid until judicially determined otherwise. So too are statutes. Strelecki v. Oklahoma Tax Commission, 872 P.2d 910, 917 (Okla.1993). But such presumption does not strip a District Court of its power to grant a party temporary equitable relief from the threatened enforcement of a challenged statute in a declaratory judgment proceeding. Similarly, the presumed validity of a rule does not strip from the Commission its adjudicatory power to stay the effect of a rule as to a party appealing that rule to this Court. The presumed validity of a rule refers to the burden of establishing its invalidity that is placed upon the complaining party. Toxic Waste Impact Group, Inc. v. Leavitt, 755 P.2d 626, 630 (Okla.1988); J. Brotton Corp. v. Oklahoma Alcoholic Beverage Laws Enforcement Commission, 822 P.2d 683, 686 (Okla.1991); Hart v. Oklahoma Alcoholic Beverage Control Bd., 412 P.2d 142, 150 (Okla.1966). The presumed validity of a rule does not alter adjudicatory powers of courts or the Commission to grant stays.

The language of § 308.2 provides that rules have the effect of law. We have recently held that a valid rule has the force and effect of law. Indiana Nat. Bank v. State Dept. of Human Services, 857 P.2d 53, 60 (Okla.1993); Coppola v. Fulton, 809 P.2d We view the language of § 308.2 as Legislative recognition of this judicially-established principle. We decline to adopt the Commission's view which would elevate administrative rules above statutes, and thereby place rules beyond the power of a District Court (or the Commission) to stay pending judicial resolution of a controversy. Thus the language of § 306 and § 308.2 does not prohibit a District Court, this Court, nor the Commission from staying the applicability of a rule or statute as to a party before it.

1291, 1296 n. 21 (Okla.1991); Toxic Waste Impact Group, Inc. v. Leavitt, 755 P.2d 626, 630 (Okla.1988). We did not so hold based on any s...