Colorado Office of Consumer Counsel v. Mountain States Tel. & Tel. Co.

• Decision Date: 15 July 1991
• Docket Number: No. 89SA400,89SA400
• Citation: 816 P.2d 278
• Parties: Util. L. Rep. P 26,090 COLORADO OFFICE OF CONSUMER COUNSEL and the Colorado Municipal League, Intervenors-Appellants, v. The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, Petitioner-Appellee, and The Public Utilities Commission of the State of Colorado and Arnold H. Cook, Ronald L. Lehr, and Andra Schmidt, the individual Commissioners thereof, Respondents-Appellees, and AT & T Communications of the Mountain States, Inc.; MCI Telecommunications Corporation; the Colorado Association of Radio Common Carriers; Competitive Telecommunications; Association of Colorado and Wyoming; Eagle Telecommunications, Inc.; US Sprint Communications Company; and Universal Telephone Company of Colorado, Intervenors and Co-Respondents-Appellees.
• Court: Colorado Supreme Court

Page 278

816 P.2d 278

Util. L. Rep. P 26,090

COLORADO OFFICE OF CONSUMER COUNSEL and the Colorado Municipal League, Intervenors-Appellants, v. The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY Petitioner-Appellee and The Public Utilities Commission of the State of Colorado and Arnold H. Cook, Ronald L. Lehr, and Andra Schmidt the individual Commissioners thereof Respondents-Appellees, and AT & T Communications of the Mountain States, Inc.; MCI Telecommunications Corporation; the Colorado Association of Radio Common Carriers; Competitive Telecommunications; Association of Colorado and Wyoming; Eagle Telecommunications, Inc.; US Sprint Communications Company; and Universal Telephone Company of Colorado, Intervenors and Co-Respondents-Appellees.

No. 89SA400.

Supreme Court of Colorado, En Banc.

July 15, 1991.

As Modified on Denial of Rehearing Sept. 16, 1991.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Neil L. Tillquist, First Asst. Atty. Gen., Deborah S. Waldbaum, Asst. Atty. Gen., Denver, for intervenor-appellant Colorado Office of Consumer Counsel.

Gorsuch, Kirgis, Campbell, Walker and Grover, Dudley P. Spiller, Jr., Joseph B. Wilson, Denver, for intervenor-appellant Colorado Mun. League.

Eiberger, Stacy, Smith & Martin, Raymond W. Martin, Roy A. Adkins, Laurie Bennett, and Russell P. Rowe, Robert L. Connelly, Denver, for petitioner-appellee.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Mana L. Jennings, Asst. Atty. Gen., Denver, for respondents-appellees.

No appearance by intervenors and co-respondents-appellees.

Justice KIRSHBAUM delivered the Opinion of the Court.

Appellant, the Colorado Office of Consumer Counsel (the Office), seeks review of a judgment of the District Court in and for the City and County of Denver setting aside a decision of the Public Utilities Commission (the Commission) applying provisions of the Intrastate Telecommunications Services Act, sections 40-15-101 to -404, 17 C.R.S. (1984 & 1990 Supp.) (the Act), to services provided by appellee The Mountain States Telephone and Telegraph Company (Mountain States). The district court held that the Commission exceeded its authority in conducting a rule-making proceeding without adhering to requisite procedures established by the State Administrative Procedure Act, section 24-4-103, 10A C.R.S. (1988) (the APA). The Colorado Municipal League (the League) has intervened to join the Office in asserting that the procedural requirements in question were not applicable to the administrative proceedings held in this case because such proceedings were not rule-making proceedings. ¹ We affirm the judgment of the district court.

I

The Act provides for Commission regulation of intrastate telecommunications services in Colorado. ² Part 2 of the Act provides for full Commission regulation of certain basic local services. §§ 40-15-201 to -207, 17 C.R.S. (1984 & 1990 Supp.). Part 4 of the Act provides that certain services shall not be subject to Commission regulation. §§ 40-15-401 to -404, 17 C.R.S. (1984 & 1990 Supp.). Part 3 of the Act provides that emerging competitive services not subject to Part 2 or Part 4 of the Act shall be subject to relaxed Commission regulation. §§ 40-15-301 to -308, 17 C.R.S. (1984 & 1990 Supp.).

Each of these three parts of the Act refers to general types of telecommunications services encompassed within that part's provisions. Thus, the Act provides general basic guidelines for classification of the myriad services and products developed by telecommunications providers subject to Commission regulation.

The Act was approved July 2, 1987. Ch. 313, 1987 Colo.Sess.Laws 1476. By order dated July 2, 1987, the Commission initiated Case No. 6635 to explore in general what telecommunications products and services warranted relaxed regulation pursuant to Part 3 of the Act. The case was not limited to products and services provided by Mountain States. The Commission ultimately suspended its proceedings in Case No. 6635 pending its final decisions in two other cases, Case No. 6645 and Case No. 6647.

By letter dated August 5, 1987, Mountain States informed the Commission of the corporation's intent to delete certain of its services from Commission regulation, pursuant to Part 4 of the Act. The Office, the Colorado Association of Radio Common Carriers, and the Commission staff filed documents in opposition to Mountain States' proposal. The Commission responded by initiating two proceedings to determine which statutory provisions governed Mountain States' tariffed services. On September 28, 1987, the Commission initiated Case No. 6645 as a declaratory order proceeding, pursuant to Commission Rule 60(a) and section 24-4-105(11), 10A C.R.S. (1988), to identify which Mountain States services would be deregulated pursuant to Part 4 of the Act. ³ On October 27, 1987, the Commission initiated Case No. 6647 as a declaratory order proceeding to identify which Mountain States services would be subject to full regulation pursuant to Part 2 of the Act.

In Case No. 6645, the Commission staff prepared a list of tariffed Mountain States services arguably eligible for deregulation under Part 4 of the Act. The Commission invited interested parties to intervene and comment upon the list, whereupon twelve entities filed various pleadings in the case. The Commission assigned burdens of proof, authorized discovery, and set the case for an evidentiary hearing before a hearing examiner. At the outset of the December 3, 1987, hearing, the hearing examiner stated that, although the Commission did not so order, notice had been sent in compliance with those portions of the APA applicable to agency rule-making proceedings.

By decision dated January 6, 1988, the Commission enumerated certain specific tariffed services of Mountain States that were subject to the deregulation provisions of Part 4 of the Act. Mountain States, the Office and other intervenors sought judicial review of that decision. The Commission ultimately confessed error, and Case No. 6645 was remanded to the Commission for new proceedings.

Attached to the Commission order initiating Case No. 6647, which case underlies this appeal, was a document listing ninety-eight tariffed Mountain States services proposed for full regulation pursuant to Part 2 of the Act. On February 10, 1988, the Commission entered an order permitting substitution of another list of services and products prepared by the Commission staff for the initial attachment. The order provided that procedures similar to those used in Case No. 6645 would be utilized in Case No. 6647 and that "any party having a differing view" as to which Mountain States services should be fully regulated under Part 2 of the Act would have the burden of establishing that such services were not correctly identified by the Commission staff as subject to such full regulation.

On that same day, the Commission sent information to several entities inviting their participation in Case No. 6647. Several entities did file pleadings contesting the revised list of Mountain States services arguably subject to full regulation, ⁴ and the Office intervened to support the Commission's position.

A hearing was conducted in Case No. 6647 on March 14, 1988, before three commissioners. On April 27, 1988, the Commission issued its initial decision. See § 40-6-109(6), 17 C.R.S. (1984). The Commission found that Mountain States challenged only fourteen of the ninety-eight services proposed for full regulation and concluded that those fourteen services were subject to full regulation pursuant to Part 2 of the Act. After reviewing petitions for modification or reconsideration filed by Mountain States and other entities, the Commission issued its final decision on October 27, 1988, affirming its initial decision. ⁵ Mountain States timely filed a petition for judicial review of the Commission's decision in the District Court in and for the City and County of Denver. C.R.C.P. 106(a)(4); § 40-6-115, 17 C.R.S. (1984). It asserted that the Commission committed several procedural errors, including failure to comply with APA provisions governing agency rule-making procedures, the imposition of an unfair burden of proof on Mountain States and other intervenors to show that the Commission's initial determination of services and products was improper, and the issuance of a decision without an appropriate hearing and in the absence of essential findings of fact. On August 23, 1989, the district court entered judgment vacating the Commission's decision on the ground that the Commission had in fact conducted a rule-making proceeding without complying with applicable requirements of the APA. ⁶ The Office perfected an appeal pursuant to section 40-6-115(5), 17 C.R.S. (1984).

II

A

The scope of district court review of Commission decisions is controlled by section 40-6-115(3) of the Public Utilities Law, which states in pertinent part as follows:

[T]he district court shall decide all relevant questions of law and interpret all relevant constitutional and statutory provisions. The review shall not extend further than to determine whether the commission has regularly pursued its authority, including a determination of whether the decision under review violates any right of the petitioner under the constitution of the United States or of the state of Colorado, and whether the decision of the commission is just and reasonable and whether its conclusions are in accordance with the evidence.

§ 40-6-115(3), 17 C.R.S. (1984). In recognition of the fact that section 40-6-115(3) does not provide specific standards applicable to the review proceedings therein authorized, this court has drawn upon the agency review provisions contained in section 24-4-106(7), 10A C.R.S. (1988), of the APA to establish appropriate factors for judicial analysis of Commission...