New England Tel. and Tel. Co. v. PUB. UTIL. COM'N

Decision Date15 June 1983
Docket NumberCiv. No. 83-0166-P.
Citation565 F. Supp. 949
PartiesNEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY, Plaintiff, v. PUBLIC UTILITIES COMMISSION OF MAINE, Peter A. Bradford, Cheryl Harrington, and Ralph H. Gelder, Defendants.
CourtU.S. District Court — District of Maine


Ralph I. Lancaster, Jr., Everett P. Ingalls, Portland, Me., for plaintiff.

Joseph G. Donahue, Charles F. Dingman, William E. Furber, Maine Public Utilities Com'n, Augusta, Me., for defendants.


CYR, District Judge.


In this action brought under section 401(b) of the Federal Communications Act of 1934, as amended Communications Act, 47 U.S.C. § 401(b), New England Telephone NET seeks injunctive relief requiring the Maine Public Utilities Commission PUC to adopt, for the purpose of setting NET's intrastate revenues, the depreciation calculations prescribed by the Federal Communications Commission FCC. The motion for a temporary restraining order TRO has been briefed and argued.


On December 14, 1982 the FCC released an order prescribing the use of certain accounting practices in calculating NET's revenues Prescription Order. In paragraph 26 of the Prescription Order, the FCC expressly reserved the question as to whether state utility commissions would be bound to apply the prescribed accounting practices, noting that the question "is before us in a separate proceeding."

Neither the PUC nor NET was a party to that "separate proceeding", which involved (1) a petition filed by American Telephone and Telegraph Company for reconsideration of a prior FCC order declaring that FCC depreciation prescriptions do not have preemptive effect, and (2) a petition for declaratory relief filed by General Telephone Company of Ohio seeking a declaration that the Ohio Public Utilities Commission was preempted from applying depreciation rates different from those prescribed by the FCC. In its decision Preemption Order, released on January 6, 1983, the FCC granted both petitions, holding that "inconsistent state prescribed depreciation rates are preempted by sections 220(a) & (b) of the ... Act." Preemption Order at ¶ 43. The FCC ordered that the Preemption Order be published in the Federal Register ¶ 48 and that copies be served on each state commission ¶ 49.

Despite having received a copy of the Preemption Order, the PUC, on April 26, 1983, issued an order PUC Order setting NET's intrastate revenues by using depreciation calculations different from those prescribed in the Prescription Order.

All other things being equal the application of the accounting conventions prescribed by the FCC would increase NET's intrastate revenues for the current year by $1,667,000.

A. Johnson Act

The PUC contends that the Johnson Act, 28 U.S.C. § 1342, prevents this Court from enjoining the PUC.1 Since the Court's jurisdiction is based upon section 401(b) of the Communications Act and not solely upon diversity of citizenship or on repugnance of the PUC order to the Federal Constitution, the Johnson Act does not apply. The PUC incorrectly contends that because only the Supremacy Clause, U.S. Const. art. VI, renders state law subordinate to federal law, this Court's jurisdiction is, for purposes of the Johnson Act, based solely on the repugnance of the PUC order to the Federal Constitution. Not only would the PUC's interpretation of the Johnson Act render the Act's first requirement a virtual nullity,2 such an interpretation also tortures the plain meaning of the language of that provision. The use of the word "solely" indicates at least that where, as here, jurisdiction over a claim is based principally upon an Act of Congress the Johnson Act does not apply. The circumstances surrounding its enactment indicate that

the Act, adopted in 1934, was designed to further the same policies reflected in the three-judge court requirement which had been enacted in 1910. Alabama Public Service Commission v. Southern Railway, 341 U.S. 341, 357, 358, 71 S.Ct. 762, 772, 95 L.Ed. 1002 (1951) (Frankfurter, J., concurring). Hence, the Supreme Court's analysis of the legislative purpose of the three-judge court provision is relevant to our construction of the Johnson Act:
Their the Congress' ire was aroused by the frequent grants of injunctions against the enforcement of progressive state regulatory legislation, usually on substantive due process grounds.... In contrast, a case involving an alleged incompatibility between state and federal statutes ... involves more confining legal analysis and can hardly be thought to raise the worrisome possibilities that economic or political predilections will find their way into a judgment.

International Brotherhood of Electrical Workers v. Public Service Commission, 614 F.2d 206, 211 (9th Cir.1980) quoting Swift & Co. v. Wickham, 382 U.S. 111, 127, 86 S.Ct. 258, 267, 15 L.Ed.2d 194 (1965). In International Brotherhood of Electrical Workers, the Court held that jurisdiction over a claim that Congress by "occupying the field" had preempted state regulation was not based "solely on repugnancy to the Constitution." The argument for finding that the first test of the Johnson Act has not been satisfied is even stronger where, as in this case, the plaintiff claims that the prohibition against state action is explicit. See id. at 210.

Finally, it is simply inaccurate to say that the first test "is always found to be satisfied." Several cases, in addition to International Brotherhood of Electrical Workers, have held that the first test is not met where a state agency's order is challenged as violative of federal statutory law. See, e.g., Munoz v. Porto Rico Ry. Light & Power Co., 83 F.2d 262, 267 (1st Cir.), cert. denied, 298 U.S. 689, 56 S.Ct. 955, 80 L.Ed. 1408 (1936); Beckenstein v. Hartford Electric Light Co., 479 F.Supp. 417, 420 n. 1 (D.Conn.1979); Cabot Corp. v. Public Service Commission, 332 F.Supp. 370 (S.D.W. Va.1971).

B. The Motion for a TRO
In the First Circuit, a plaintiff must satisfy four criteria in order to be entitled to a preliminary injunction. The Court must find: (1) that plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which granting injunctive relief would inflict on the defendant; (3) that plaintiff has exhibited a likelihood of success on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction.

Planned Parenthood League of Mass. v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981);3 Women's Community Health Ctr., Inc. v. Cohen, 477 F.Supp. 542, 544 (D.Me.1979).

1. Irreparable Harm.

Depreciation being an expense, whatever depreciation accrues in a given year is generally recoverable in that year from ratepayers. Accordingly, the PUC's refusal to adopt the higher depreciation rules prescribed by the FCC will reduce NET's weekly revenues during the current year by $32,058. In its Complaint ¶ 10(a), NET contends that since utilities are generally not allowed to increase rates in order to recoup past losses, see Federal Power Commission v. Natural Gas Pipeline Co., 315 U.S. 575, 590, 62 S.Ct. 736, 745, 86 L.Ed. 1037 (1942), the loss of income constitutes irreparable injury. But it is uncontroverted that all of NET's capital investment will eventually be returned either in depreciation or amortization and that, in the meantime, because of the corresponding increase in its rate base NET will earn a "fair rate of return." It is well established that a mere delay (during which interest is earned) in receiving money is not considered irreparable injury, see 11 C. Wright & A. Miller, Federal Practice and Procedure, § 2948 at 434 (1973).

At oral argument and in its post-argument memorandum NET contended that the delay itself would cause irreparable injury. NET relies on the FCC's finding in the Preemption Order that delayed capital recovery "could delay or prevent modernization which would add to the costs borne by ratepayers and could, ultimately, threaten carriers' ability to fully recover their invested capital." Preemption Order ¶ 37.4 But this finding relates only to the perceived potential adverse effects of prolonged underdepreciation. None of the FCC's findings address the significance of a delay in recovering the relatively small amount of additional revenue NET would receive as the result of a TRO. Indeed, none of the FCC's findings pertain to NET directly. And the record is devoid of evidence that this underdepreciation, which apparently has been going on for some time, has threatened NET's "ability to fully recover its invested capital." NET has presented no evidence and indeed has made no allegation that it is, or absent a TRO may become, undercapitalized or unable to obtain capital funds.

Accordingly, the Court finds that NET has failed to meet its burden of proving irreparable injury.

2. The Relative Harm.

Since NET has not shown that it will suffer irreparable injury absent a TRO, it has also failed to satisfy the second Bellotti criterion.

3. Likelihood of Success on Merits.

Although the complaint asserts three independent theories in support of NET's request for injunctive relief, at oral argument and in its memoranda in support of its motion for a TRO NET has pressed and the Court will consider only the theory that the Preemption Order is enforceable against the PUC under section 401(b) of the Communications Act.5 Section 401(b) provides as follows:

(b) If any person fails or neglects to obey any order of the Commission other than for the payment of money, while the same is in effect, the Commission or any party injured thereby, or the United States, by its Attorney General, may apply to the appropriate district court of the United States for the enforcement of such order. If, after hearing, that court determines that the order was regularly made and duly served, and that the person is in

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