NEW ENGLAND TEL. AND TEL. v. PUB. SER. BD. OF VT.
| Decision Date | 14 December 1983 |
| Docket Number | Civ. A. No. 83-305. |
| Citation | 576 F. Supp. 490 |
| Court | U.S. District Court — District of Vermont |
| Parties | NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY v. PUBLIC SERVICE BOARD OF VERMONT, V. Louise McCarren, Chairman, Rosalyn L. Hunneman, Board Member, Samuel S. Bloomberg, Board Member. |
Christopher M. Bennett, Boston, Mass., Martin K. Miller, Samuelson, Portnow, Miller & Eggleston, Ltd., Burlington, Vt., for plaintiff.
Thomas N. Wies, Gen. Counsel, Public Service Bd. of the State of Vt., Montpelier, Vt., for defendants.
New England Telephone and Telegraph Company (NET) seeks declaratory and injunctive relief pursuant to 47 U.S.C. § 401(b) (1962) to compel the Vermont Public Service Board (VPSB) to adopt depreciation rates and methods prescribed by the Federal Communications Commission (FCC).
The court originally scheduled a hearing on the request for preliminary injunctive relief on September 1, 1983. The hearing was postponed by stipulation of the parties "to a later date" with the unusual provision that in the event judgment is entered for the plaintiff and the defendants are ordered to approve a rate schedule as requested by the plaintiff — "the effective date of such rates may be set (by means of a surcharge or other method as may be appropriate) as of the same date as would have been fixed had the hearing been held on September 1, 1983."
This stipulation was followed by an agreed statement of facts and extensive written argument. The rescheduled hearing on the request for a preliminary injunction was consolidated with the trial on the merits. Upon consideration of the record presented, the plaintiff has failed to persuade the court that it has jurisdiction to grant the relief requested. The plaintiff's petition for preliminary and permanent injunctive relief must be denied for the reasons stated in this opinion.
The basic facts submitted by written stipulation of the parties is attached as Appendix A to this order. More briefly stated, it appears that on December 14, 1982, the FCC prescribed, pursuant to 47 U.S.C. § 220(b), new depreciation rates and methods1 applicable to NET's telephone service in Vermont. The parties agree that no appeal was taken from the Prescription Order, and it now has become final. In its order of December 14 the FCC left open the issue of the preemptive effect of its prescription on intrastate telephone rates.
On December 1, 1982 the plaintiff NET filed revised rate schedules with the Vermont PSB to obtain authority to increase telephone rates by approximately $16,500,000 in annual revenues to be derived from intrastate telephone service in Vermont. In support of its justification for the rate increase, NET included increased depreciation expense computed from the application of methods termed Remaining Life (RL) and Equal Life Group (ELG) authorized by the FCC.
The rate proceedings on NET's petition filed December 1, 1982, were concluded by final order of the PSB dated August 11, 1983.2 As noted above, NET had requested the Vermont regulatory agency to allow depreciation expenses charged in the accounting procedures and methods according to prescribed RL and ELG rates approved by the FCC. The Vermont PSB declined the request and applied the Whole Life (WL) method in computing NET's allowable depreciation expense. Had the PSB allowed the depreciation methods prescribed by the FCC for the Bell Companies in calculating NET's annual revenue requirements, the result would have produced an increase of approximately $971,000 over that obtained from the tariffs authorized by the order of August 11, 1983.
In the interim, on December 8, 1982, indeed only one week after the filing of NET's revised tariffs, the FCC prescribed depreciation rates for nine Bell Operating Telephone Companies, including NET, authorizing RL and ELG methods and systems of accounting for depreciation expense. In its order of December 8, 1982 the FCC determined that it had jurisdiction under Section 220(b) of the Communications Act of 1934 (47 U.S.C. § 220(b)). The Commission, however, explained:
We do not decide in this order the effect of our prescribing these rates for intrastate ratemaking purposes. Rather, the preemptive effect of this Commission's accounting and/or depreciation determinations is before us in a separate proceeding initiated by a further Petition for Reconsideration filed by AT & T ... and a Petition for Declaratory Ruling filed by the General Telephone Company of Ohio.
The separate proceedings just referred to in the quoted text were concluded by the FCC in its Memorandum and Opinion and Order, CC 79-105, slip op. at 17 (FCC January 6, 1983), 48 Fed.Reg. 2324, appeal pending sub nom. Virginia Corporation Commission v. FCC, 4th Cir. No. 83-1136. This administrative ruling reconsidered and revised an earlier Prescription Order of April 27, 1982, wherein the FCC determined that Section 220(b) of the Communications Act of 1934 did not preempt inconsistent state depreciation prescriptions.
The second preemption order was issued after public notice of the petitions for reconsideration was published in the Federal Register on June 22, 1982. The notice invited public comments on the respective petitions of AT & T and General Telephone of Ohio. The notice specified that both petitions "relate to the Commission's preemptive jurisdiction under Section 220 (of the Act)." The Vermont PSB received a copy of the public notice, but did not submit comment in the proceedings. The FCC order of January 6, 1983 was served on the Vermont PSB as directed by the Commission. In granting the petition of AT & T and GTE, the Memorandum Opinion and Order states:
We find that the most logical and reasonable interpretation of Section 220(b) of the Act is that where the Commission prescribes depreciation rates for classes of property, state commissions are precluded from departing from those rates. Since the depreciation method utilized is a material part in determining the rate to be applied, state commissions are also precluded from departing from the depreciation methods prescribed by the Commission.... Accordingly, we find that this Commission's depreciation policies and rates ... preempt inconsistent state depreciation policies and rates.
Memorandum Opinion and Order, supra, slip op. at 17.
The Vermont PSB's refusal to heed and apply the FCC precept of preemption in determining NET intrastate charges constitutes the root and stock of the plaintiff's complaint and prayer for equitable relief. Before undertaking to decide the merits of the serious conflict in this sensitive area of competing federal-state regulatory schemes in the interstate-intrastate wire communication field, the court is first called upon to determine the lively question of its jurisdiction to entertain the action. Courts are reluctant to intrude upon the ratemaking function confided to regulatory bodies absent a clear and certain grant of such authority by the legislative branch. "Maintenance of the proper balance between federal and state concerns in this area" requires caution. Public Utilities Commission of California v. United States, 355 U.S. 534, 546, 78 S.Ct. 446, 454, 2 L.Ed.2d 470 (1958) (Harlan, J., dissenting).
NET has invoked the court's jurisdiction on the strength of the general provisions of 28 U.S.C. §§ 1331, 1337 and, more specifically, section 401(b) of the Communications Act which concerns enforcement of orders of the FCC. The jurisdictional grant in this subsection specifies:
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 disobedience of the same, the court shall enforce obedience to such order by a writ of injunction or other proper process, mandatory or otherwise, to restrain such person, or the officers, agents, or representatives of such person, from further disobedience of such order, or to enjoin upon it or them obedience to the same.
47 U.S.C. § 401(b).
The language of the statute plainly confers the power of enforcement on the district court against disobedient persons — "(i)f after hearing, that court determines that the order was regularly made and duly served, and that the person is in disobedience of the same."
For the purpose of Chapter 5 of the 1934 enactment regulating wire and radio communication, under the table of definitions, Congress provided in 47 U.S.C. § 153(i):
"Person" includes an individual, partnership, association, joint-stock company, trust, or corporation, ....
In a succedent subsection, the lawmakers took the pains to specifically define state commission.
"State commission" means the commission, board, or official (by whatever name designated) which under the laws of any State has regulatory jurisdiction with respect to intrastate operations of carriers.
47 U.S.C. § 153(t).
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