GEORGIA PSC v. ALLTEL COMMUNICATIONS

• Citation: 536 S.E.2d 542,244 Ga. App. 645
• Decision Date: 27 June 2000
• Docket Number: No. A00A0397.,A00A0397.
• Parties: GEORGIA PUBLIC SERVICE COMMISSION et al. v. ALLTEL GEORGIA COMMUNICATIONS CORPORATION et al.
• Court: United States Court of Appeals (Georgia)

536 S.E.2d 542

244 Ga. App. 645

GEORGIA PUBLIC SERVICE COMMISSION et al. v. ALLTEL GEORGIA COMMUNICATIONS CORPORATION et al.

No. A00A0397.

Court of Appeals of Georgia.

June 27, 2000.

Thurbert E. Baker, Attorney General, Robert S. Bomar, Deputy Attorney General, Harold D. Melton, Senior Assistant Attorney General, Thomas K. Bond, John H. MacLean, Atlanta, for appellants.

Long, Aldridge & Norman, Edgar H. Sims, Jr., Bruce P. Brown, Gregory S. Brow, Alan R. Jenkins, Atlanta, for appellees.

Newton M. Galloway, Griffin, amicus curiae.

BLACKBURN, Presiding Judge.

The Georgia Public Service Commission (Commission) appeals from the decision of the Superior Court of Fulton County which reversed the Commission's order reducing the rates that ALLTEL Georgia Communications Corporation could charge long distance providers for use of ALLTEL's telecommunications network within Georgia. We reverse for the reasons set forth below.

This case having already appeared before this Court and the Supreme Court of Georgia,¹ we repeat the pertinent facts:

The appellants (collectively "ALLTEL") are related companies and are "Tier 2" local exchange companies [ (see OCGA § 46-5-162(10)(B)) ] that provide telephone service in mostly rural areas of the state. In 1993 ALLTEL and the Public Service Commission, exercising its regulatory authority, agreed upon a five-year "Regulatory Plan." Under the Regulatory Plan, the PSC permitted ALLTEL to retain any excessive earnings in exchange for making significant capital improvements. The Plan called for periodic earnings reviews and, if ALLTEL's rates of return exceeded an allowed return, required ALLTEL to accelerate its capital expenditures. The rationale for this plan was the PSC's determination that requiring upgraded service was a more appropriate use of ALLTEL's overcharges than a rate reduction because the area over which ALLTEL has a monopoly suffered from such poor service.

In 1995, the Georgia legislature enacted the Georgia Telecommunications and Competition Development Act, [OCGA § 46-5-160 et seq.,] which created a new regulatory model for telecommunications services reflecting the transition to market-based competition. [OCGA § 46-5-161(a)(1).] The Act allows companies to elect marketbased alternative forms of regulation. [OCGA § 46-5-161(a)(2), (3), (b)(1), (5).] On June 14, 1996, before the conclusion of the agreed-upon Plan, ALLTEL filed a notice that it was electing alternative regulation and specified July 15, 1996, as the date alternative regulation would become effective. On June 21, 1996, the PSC issued a rule nisi directing an immediate review of ALLTEL's earnings and rates. Following a hearing, the PSC determined that ALLTEL's return on equity earnings exceeded that authorized and ordered ALLTEL to apply its over-earnings to reduce its intrastate access rates.

ALLTEL Ga. Communications Corp. v. Ga. Pub. Svc. Comm., 270 Ga. 105, 106, 505 S.E.2d 218 (1998).

Thereafter, ALLTEL sought judicial review of the Commission's decision. Fulton Superior Court reversed the Commission's decision finding that the Commission lacked jurisdiction to conduct the rule nisi. This Court reversed the decision of the superior court, holding that:

during the transition period occurring between the date of an incumbent LEC's [(local exchange company)] election of alternative regulation and the date alternative regulation becomes effective, the [Commission] retains its authority to adjust the existing rates of incumbent LECs so that such rates remain reasonable and just.

Ga. Pub. Svc. Comm. v. ALLTEL Ga. Communications Corp., 227 Ga.App. 382, 385, 489 S.E.2d 350 (1997). The Supreme Court affirmed the decision of this Court. 270 Ga. 105, 505 S.E.2d 218.

Upon remand, the superior court once again reversed the order of the Commission. On appeal, the Commission enumerates as error the superior court's finding that: (1) ALLTEL was denied due process; (2) the Commission shifted the burden of proof to ALLTEL; (3) the Commission did not carry its burden of proving that ALLTEL's existing rates were unjust and unreasonable; and (4) that the Commission order violated OCGA §§ 46-2-25(d) and 46-5-166(f)(2). The Commission also contends the superior court erred by ordering that the proceedings against ALLTEL be dismissed, rather than ordering the Commission to correct the alleged errors.

Under the Administrative Procedure Act (APA), "the Commission is the finder of fact and weighs the credibility of the evidence." Ga. Pub. Svc. Comm. v. Southern Bell, 254 Ga. 244, 246, 327 S.E.2d 726 (1985). In reviewing the decision of the Commission, the superior court "shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact." OCGA § 50-13-19(h). However,

[t]he court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law; (5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

OCGA § 50-13-19 (h). "Upon further discretionary appeal to this Court, our duty is not to review whether the record supports the superior court's decision but whether the record supports the final decision of the [Commission]." (Punctuation omitted.) Sawyer v. Reheis, 213 Ga.App. 727, 729(1), 445 S.E.2d 837 (1994).

1. In several enumerations of error the Commission correctly argues that ALLTEL was given reasonable notice and an opportunity to be heard. The superior court erred by reversing the Commission order on due process grounds, so we reverse the superior court.

The constitutionally-guaranteed right to due process of law is, at its core, the right of notice and the opportunity to be heard. Nix v. Long Mountain Resources, 262 Ga. 506(3), 422 S.E.2d 195 (1992). Neither the federal nor the state constitution's due process right guarantees a particular form or method of procedure, but is satisfied if a party "has reasonable notice and opportunity to be heard, and to present (its) claim or defense, due regard being had to the nature of the proceeding and the character of the rights which may be affected by it."

Cobb County School Dist. v. Barker, 271 Ga. 35, 37(2), 518 S.E.2d 126 (1999).

(a) Although the superior court found that the rule nisi failed to give ALLTEL adequate notice, we disagree. The rule nisi gave reasonable notice, sufficient for ALLTEL to prepare its defense. ALLTEL was notified that the hearing would address its return on equity and that its rates might be adjusted.

Under the APA, a notice must state the issues involved. OCGA § 50-13-13(a)(2)(D). The rule nisi identified the issue to be considered at the hearing:

You are hereby notified that [the Commission] will hold a hearing ... for the purpose of conducting an earnings review of [ALLTEL]. The scope of the earnings review shall be limited to hearing evidence regarding any appropriate change in the authorized return on equity of the ALLTEL Companies, and any rate adjustments that may be necessary in order to reflect such a change in the authorized return on equity.... This earnings investigation shall focus on and be limited to a determination of the level of earnings that should be authorized for the ALLTEL Companies, based upon the appropriate return on equity.... In the event that the return on equity should be adjusted, then this investigation shall at the same time determine any rate changes that should be made in order to reflect such a change in the earnings.

The rule nisi further identified as the "Matters Asserted and Issues Involved":

(1) What is the appropriate return on equity that should be adopted at this time, for the authorized earnings level for [ALLTEL]? It is asserted that [ALLTEL's] earnings level may need to be adjusted to reflect a current, appropriate authorized return on equity. (2) What rate adjustments, if any, should be made in order to reflect the authorized earnings level for [ALLTEL], given the appropriate return on equity? It is asserted that [ALLTEL's] rates may need to be adjusted to reflect a current, appropriate authorized return on equity.

Thus, the rule nisi expressly and repeatedly advised ALLTEL that the Commission intended to investigate ALLTEL's authorized return on equity and, if needed, to adjust its rates prior to its election of alternative regulation.

ALLTEL argues erroneously that this notice was insufficient because it did not include a detailed statement of facts and analyses showing that the company was earning an excessive return, a procedure which ALLTEL asserts is typically done. However, due process does not guarantee a particular procedure. Cobb County School Dist., supra. The rule nisi provided reasonable notice.

Furthermore, the notice is eminently reasonable when viewed in the circumstances of the Regulatory Plan, which "was designed to allow the ALLTEL Companies' high rates to remain in effect for the fixed five-year time period to provide them with the capital necessary to meet their upgrade commitments." 227 Ga.App. at 386(2), 489 S.E.2d 350. ALLTEL was still operating under the Regulatory Agreement when it notified the Commission on June 14, 1996, of its election of alternative regulation effective 30 days later, the shortest period allowed by OCGA § 46-5-165. Under that statute, upon the effective date of the election, "a company's rates are deemed `just and reasonable' and not subject to traditional PSC regulatory authority." 270 Ga. at 106, 505 S.E.2d 218; OCGA § 46-5-165(d). A company must give at least 30 days notice to the Commission of its...