BellSouth Telecommunications, Inc. v. Johnson, 90671

• Decision Date: 09 April 1998
• Docket Number: No. 90671,90671
• Citation: 708 So.2d 594
• Parties: 23 Fla. L. Weekly S206 BELLSOUTH TELECOMMUNICATIONS, INC., Appellant, v. Julia L. JOHNSON, etc., et al., Appellee.
• Court: Florida Supreme Court

Page 594

708 So.2d 594

23 Fla. L. Weekly S206

BELLSOUTH TELECOMMUNICATIONS, INC., Appellant, v. Julia L. JOHNSON, etc., et al., Appellee.

No. 90671.

Supreme Court of Florida.

April 9, 1998.

William W. Deem, Robert G. Beatty, Nancy B. White and J. Phillip Carver of Mahoney, Adams and Criser, P.A., Jacksonville, for Appellant.

John P. Fons and John Beranek of Ausley and McMullen, Tallahassee, and Charles L. Rehwinkle, Tallahassee, on behalf of Sprint-Florida, Incorporated, Intervenor/Appellant.

Robert D. Vandiver, General Counsel and Richard C. Bellak, Associate General Counsel, Florida Public Service Commission, Tallahassee, for Appellee.

HARDING, Justice.

This cause is before us on a direct appeal brought by BellSouth Telecommunications, Inc. (BellSouth) to review Order No. PSC-97-0488-FOF-TL of the Public Service Commission (Commission). The order at issue denied BellSouth's request to reclassify the Jensen Beach, West Palm Beach, and Holley-Navarre exchanges into higher rate groups. Sprint/United Centel (Sprint) has also intervened in this proceeding. We have jurisdiction pursuant to article V, section 3(b)(2) of the Florida Constitution and section 364.381, Florida Statutes (1995). For the reasons expressed below, we affirm the Commission's order.

The facts of this case are as follows. Section 364.051, Florida Statutes (1995), provides that local exchange companies may elect price regulation effective January 1, 1996. The statute further states in relevant part:

(2) BASIC LOCAL TELECOMMUNICATIONS SERVICE.--Price regulation of basic local telecommunications service shall consist of the following:

(a) Effective January 1, 1996, the rates for basic local telecommunications service of each company subject to this section shall be capped at the rates in effect on July 1, 1995, and such rates shall not be increased prior to January 1, 1999. However the basic local telecommunications service rates of a local exchange telecommunications company with more than 3 million basic local telecommunications service access lines in service on July 1, 1995, shall not be increased prior to January 1, 2001.

(b) Upon the date of filing its election with the commission, the rates for basic local telecommunications service of a company that elects to become subject to this section shall be capped at the rates in effect on that date and shall remain capped as stated in paragraph (a).

§ 364.051, Fla. Stat. (1995). On November 1, 1995, BellSouth filed written notification with the Commission of its election of price regulation pursuant to section 364.051. BellSouth's election was to be effective January 1, 1996. Prior to January 1, 1996 (but after July 1, 1995), ¹ BellSouth filed tariffs to reclassify the rates for the Jensen Beach, West Palm Beach, and Holley-Navarre exchanges (rate regroupings). The rate regroupings reclassified these exchanges from one standard rate group to another, ² but did not cause any standard rate to increase or decrease. The rate regroupings reflected changes to the nature of local service within these exchanges, i.e., growth--the expanded scope of local calling caused by an increase in the number of access lines within the exchanges. The rate regroupings were to be effective October 20, October 22, and November 28, 1995, respectively.

On January 10, 1996, the Commission issued its "Order Acknowledging Election of Price Regulation and Notice of Proposed Agency Action Order Requiring Reduction of Certain Rates." That order determined that the rate regroupings constituted "increases" in rates for basic local telecommunications service and certain protected non-basic service within the proscription of section 364.051. The Commission directed BellSouth to eliminate the rate increases that resulted from the rate regroupings.

On January 31, 1996, BellSouth filed its Petition on Proposed Agency Action, thereby challenging the Commission's proposed agency action with respect to the rate regroupings. On July 22, 1996, Sprint was given permission to intervene. On April 28, 1997, the Commission issued its "Order Denying Tariff Filing For Rate Regrouping," forcing BellSouth to reverse the rate regroupings. This order is now being appealed.

The issue presented in this case is whether or not rate regrouping is permissible under the new price deregulation scheme. In essence, section 364.051 caps "rates" at their July 1, 1995, levels. The real question is whether the term "rates" applies to rate groups or individual customers.

BellSouth and Sprint both argue that the cap only applies to particular rate groups and therefore rate regroupings are not rate "increases" within the purview of section 364.051. BellSouth and Sprint contend that rate regrouping is an increase in the value of the service that a customer is receiving--the ability to access more callers within the local calling area. ³ Thus, it is BellSouth and Sprint's position that section 364.015 caps only the rates that apply to existing rate groups, not the rates that apply to individual customers. In addition, BellSouth and Sprint argue that when the access lines within an exchange increase or decrease, Florida Administrative Code Rule 25-4.056 ⁴ and sections 364.08(1), ⁵ 364.09, ⁶ and 364.10(1), FLORIDA STATUTES⁷, require the companies to reclassify the rates in order to avoid impermissible discrimination among similarly situated customers.

In response, the Commission reasons that the language of section 364.051 is clear and does not allow for any exceptions for rate regrouping. The Commission explains in Order No. PSC-97-0488-FOF-TL that rate regrouping is representative of the rate-ofreturn regulatory era, "created as a value-of-service, revenue generating mechanism, where rates were not necessarily based on cost." The Commission further states that rule 25-4.056 was created to reflect the rate-of-return philosophy. Finally, the Commission concludes that the circumstances that amounted to statutory discrimination (sections 364.08, 364.09, and 364.10) under the rate-of-return scheme do not amount to discrimination under the deregulation scheme. The Commission emphasizes that although customers in different exchanges may pay different rates, customers within the same exchange will all pay the same rate for the same calling privileges.

We begin our analysis by noting that "Commission orders come to this Court 'clothed with a presumption of validity.' " Florida Interexchange Carriers Ass'n v. Clark, 678 So.2d 1267, 1270 (Fla.1996) (quoting City of Tallahassee v. Mann, 411 So.2d 162, 164 (Fla.1981)). Additionally, an agency's interpretation of a statute that it is charged with enforcing is entitled to great deference and will be approved by this Court unless it is clearly erroneous. Florida Interexchange Carriers Ass'n, 678 So.2d at 1270; Florida Cable Television Ass'n v. Deason 635 So.2d 14, 15 (Fla.1994). The burden of overcoming these presumptions is on the party challenging the Commission's order, and it must be shown that there has been a departure from the essential requirements of the law. Florida Interexchange Carriers Ass'n, 678 So.2d at 1270; City of Tallahassee v. Mann, 411 So.2d at 164.

In the present case, the Commission interpreted rate regrouping as being a prohibited price increase under section 364.051. We do not find that this interpretation is clearly erroneous. The plain language of section 364.051 provides that "rates ... shall be capped"; the statute does not distinguish between "rates" as they apply to rate groups versus "rates" as they apply to individual customers. § 364.051(2)(a), Fla. Stat. (1995). Thus, the Commission could properly conclude that the statute caps all rates. Individual customers...