Far North Sanitation, Inc. v. Alaska Public Utilities Com'n

CourtSupreme Court of Alaska (US)
Citation825 P.2d 867
Docket NumberNo. S-3796,S-3796
PartiesFAR NORTH SANITATION, INC., an Alaska Corporation, Appellant, v. ALASKA PUBLIC UTILITIES COMMISSION, Appellee.
Decision Date07 February 1992

Kirsten Tinglum, John C. McCarron, Asburn & Mason, Anchorage for appellant.

Glenn M. Gustafson, Asst. Atty. Gen., Anchorage, Douglas B. Baily, Atty. Gen., Juneau, for appellee.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

RABINOWITZ, Chief Justice.

I. FACTS AND PROCEEDINGS.

Far North Sanitation, Inc. (Far North) is a garbage collection company located in Fairbanks (City). It operates both inside and outside the city limits. Before 1980, the Alaska Public Utilities Commission (APUC) regulated Far North's rates only for garbage collection outside the City's limits. Similarly, the collection rates of Far North's competitor, Marche Sanitation (Marche), who operated only within the City's limits, were unregulated.

In 1980 the legislature extended APUC's jurisdiction to include garbage collectors inside municipalities. AS 42.05.711; see Ch. 136, § 12, SLA 1980 (repealing AS 42.05.221(f)); Ch. 76 § 1 SLA 1973. Marche, however, was still exempt from regulation because its revenues were less than $200,000 per year. AS 42.05.711(i). At that time, Far North and Marche were engaged in litigation over competition and rates in Fairbanks. After the APUC's jurisdiction was expanded, Far North, Marche, and the City submitted a stipulation and agreement to APUC, under which the City would oversee and control the refuse collection rates.

In February 1981, APUC adopted a modified version of the stipulation, and issued an order exempting from regulation Far North's rates for garbage collection within city limits. The order noted that Marche was already exempt from regulation, and that this order would "ensure that these two utilities--Far North and Marche--will be able to compete on equal footing." Additionally, the order stated,

this exemption, in effect a granting of permission to compete for the business of the commercial refuse customer, is in the nature of an experiment. This is particularly so in that if they are to work effectively, both the exemption and the Stipulation and Agreement require reliance on the good offices of the City of Fairbanks and the Fairbanks City Council to make them work: to monitor the rates, quality of service and management practices of these two utilities and to respond to customer complaints and to do the same with respect to its own refuse collection operations.

Pursuant to this order, the City set a maximum rate for the two utilities. While Far North and Marche remained in competition, neither charged the maximum rate. In 1983 Far North purchased Marche and later raised its rates. However, the new rates remained below the maximum rates set by the City.

On November 18, 1986, APUC issued an "interim order" revoking Far North's exemption from rate regulation. At all times, Far North's rates outside the City had been subject to regulation; however, at the time of the interim order, Far North was charging its outside customers an unauthorized above-tariff rate. The interim order noted this violation, and declared all of Far North's subsequent rates both inside and outside the City to be "interim" rates and subject to refund pending final rate determination:

Since competition in the provision of commercial refuse service no longer exists within the city limits of Fairbanks, the Commission will revoke FNS' exemption from regulation for that portion of its operation within the limits of the City of Fairbanks and require FNS to submit a revenue requirement filing based on a 1986 test year, in accordance with 3 AAC 48.275(a) and 3 AAC 48.270.

APUC held a hearing in March 1988 at which Far North presented evidence on the issue of the appropriate rate for refuse collection inside the City. 1 At that hearing, Far North did not contest the legality of APUC's interim order.

In August 1988, APUC issued its final rate determination for Far North's operations inside the City (final order). The rate established by APUC was lower than what Far North had been charging, so APUC ordered Far North to refund the difference dating back to November 18, 1986. Far North filed a motion for reconsideration which was granted in part, but led to no change in the result.

Far North appealed APUC's final order to the superior court, alleging that the interim order was unauthorized and illegal as retroactive ratemaking. APUC argued to the superior court that Far North had waived this issue by not raising it at the hearing or in its motion for reconsideration. The superior court chose not to decide the issue of waiver, because it was able to dispose of the case on its merits by ruling against Far North. Specifically, the superior court found that:

AS 42.05.141(a) provides a broad grant of authority to the APUC to regulate public utilities and set their rates. In this case, the APUC, in determining that FNS was an utility to be regulated, provided for a "test year" for FNS. This is a common procedure used by the Commission when required to establish an initial rate for a previously unregulated entity. The APUC provides that these initial rates be interim, to protect the utility from having the APUC pick an arbitrary initial rate without the ability to determine its reasonableness and to make the rate refundable to protect the customer so that if the rate FNS had been charging was excessive, consumers would be protected. This test year interim rate-setting appears to be one which was within the liberal construction of AS 42.05.141 which grants the APUC, upon its own motion, the right to investigate and set rates which are fair to consumers and provide a reasonable rate of return and profit to the utility.

Far North appeals, again arguing that the interim order was an exercise in unauthorized retroactive ratemaking.

II. DISCUSSION
A. Has Far North Waived its Right to Obtain Review of the 1986 Interim Order of the APUC? 2

As a preliminary matter, we must determine whether Far North has waived its right to appeal. APUC argues that its interim order was a final order, which Far North should have appealed within thirty days of November 18, 1986. Because no appeal was filed until August 1988, APUC believes the current appeal should be dismissed as untimely. Furthermore, APUC argues that Far North had an obligation to raise the issue of agency authority before the agency itself. Because this issue was not raised until the appeal before the superior court, APUC considers it waived. We review APUC's arguments on waiver de novo, as they were not addressed below.

Appellate Rule 602(a)(2) provides that appeals from administrative agencies are to be taken "within 30 days from the date that the decision appealed from is mailed or otherwise distributed to appellant." However, the time for appeal commences running only if the agency's decision is a final, appealable order. Ostman v. State, Commercial Fisheries Entry Comm'n, 678 P.2d 1323, 1327 (Alaska 1984). The first question, therefore, is whether the APUC's 1986 interim order constituted a final, appealable order.

We employ a "practical" test to determine whether or not an order is a final order. Matanuska Maid, Inc. v. State, 620 P.2d 182, 184 (Alaska 1980). We have stated, "[a]n order by the trial court as a general rule is said to be final if it completely and finally disposes of the contested claims on their merits." Mukluk Freight Lines Inc. v. Nabors Alaska Drilling, Inc., 516 P.2d 408, 411 (Alaska 1973) (footnote omitted). See also Greater Anchorage Area Borough v. City of Anchorage, 504 P.2d 1027, 1030-31 (Alaska 1972) (overruled on other grounds by City and Borough of Juneau v. Thibodeau, 595 P.2d 626 (Alaska 1979)).

In Mukluk, the superior court's decision required the parties to continue discovery before a final decision on the merits would issue. However, the superior court simultaneously had determined that the agency action in question was authorized. Nevertheless, we held that the superior court's decision was not a final order, even though it "disposed of Mukluk's claim for an evidentiary hearing and approved the Commission's proposed use of the procedure." Mukluk, 516 P.2d at 411. We said, "[n]ecessarily another decision must follow resolving those issues initially raised by the Nabors' application. Since this is so, we must conclude that the order of the superior court was not a final order." Id.

Similarly, Far North appeals only the 1986 interim order, not the merits of the 1988 final decision. However, as of November 18, 1986, the APUC gave Far North time to submit a tariff advice letter and a revenue requirements study in support of its rates. Under the Mukluk test, we conclude that the 1986 interim order was not a final, appealable order. The final order was the August 1988 order from which Far North did file a timely appeal. 3 Thus we hold that the instant appeal was timely filed.

Next, APUC argues that Far North had an obligation to raise the issue of the agency's authority to issue interim refundable rate orders before the agency itself. In Amerada Hess Pipeline Corp. v. Alaska Pub. Util. Comm'n, 711 P.2d 1170, 1181 n. 22 (Alaska 1986), we stated, "[a]s a general rule, we will not consider arguments never raised before the trial court. We agree with the APUC that this same rule should apply to arguments never presented to an agency whose decision is appealed." (citation omitted). See also United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37, 73 S.Ct. 67, 69, 97 L.Ed. 54 (1952) ("orderly procedure and good administration require that objections to the proceedings of an administrative agency be made while it has opportunity for correction in order to raise issues reviewable by the courts"); 4 K. Davis, Administrative Law Treatise, 441-44 (2d ed. 1983). However, we have acknowledged that...

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