S & T Tel. Coop. Ass'n, Inc. v. State Corp. Comm'n of State

• Citation: 48 Kan.App.2d 290,291 P.3d 490
• Decision Date: 02 November 2012
• Docket Number: No. 108,411.,108,411.
• Parties: The S & T TELEPHONE COOPERATIVE ASSOCIATION, INC., Appellant, v. The STATE CORPORATION COMMISSION OF the STATE of Kansas (KCC), Appellee.
• Court: Kansas Court of Appeals

48 Kan.App.2d 290

291 P.3d 490

The S & T TELEPHONE COOPERATIVE ASSOCIATION, INC., Appellant,

v.The STATE CORPORATION COMMISSION OF the STATE of Kansas (KCC), Appellee.

No. 108,411.

Court of Appeals of Kansas.

Nov. 2, 2012.

Syllabus by the Court

1. When the Kansas Corporation Commission initiates an audit under K.S.A. 2011 Supp. 66–2008 to determine the proper payments to be made to a regulated entity from the Kansas Universal Service Fund, the provisions for rate-change requests in K.S.A. 66–117 do not apply.

2. On the facts of this case, when a regulated entity makes a required, factual response to an order of the Kansas Corporation Commission and the entity makes no request for specific relief, the entity's response does not constitute an application, so statutory procedures related to applications do not apply.

Colleen R. Harrell, James M. Caplinger, and James M. Caplinger, Jr., of James M. Caplinger, Chtd., of Topeka, for appellant.

Andrew French and Dana A. Bradbury, advisory counsel, of Kansas Corporation Commission, for appellee.

Before LEBEN, P.J., GREEN and McANANY, JJ.

LEBEN, J.

The Kansas Corporation Commission (KCC) ordered a local telephone company to provide information that would be used to determine future payments to the company from the Kansas Universal Service Fund, and the telephone company provided some of that information. When the KCC failed to take further action within 30 days, the telephone company moved for an order directing increased support from the service fund based on the information the company had provided. The telephone company sought to apply a deadline found in K.S.A. 66–117(c), a Kansas statute that comes into play when a common carrier or utility has applied for some change in rates or charges.

But the KCC denied the motion because it said that the telephone company had made no application under K.S.A. 66–117. We agree. An application is a request for some action or relief, not the mere filing of information in response to the order of a regulatory agency. No application was made here, and the 30–day limit found in K.S.A. 66–117(c) wasn't at issue.

All of this is critical to the telephone company's appeal because we have no jurisdiction over the appeal unless the KCC has taken final action on something before it. The telephone company's assertion that the KCC took final action here is solely dependent upon its claim that the KCC's failure to act constituted action because of the 30–day time limit in K.S.A. 66–117(c). Since that time limit has no application to this case, the KCC hasn't taken any appealable action; we therefore must dismiss this appeal for lack of jurisdiction.

Factual Background

Let's begin by reviewing how this appeal came about since the first question we must address—one that we have found decisive—is whether we have jurisdiction to consider the appeal at all.

During proceedings involving many phone companies, KCC staff concluded that the S & T Telephone Cooperative Association, Inc. (S & T Telephone) was getting more money than it should from the Kansas Universal Service Fund (the Fund). KCC staff filed a motion asking the KCC to order an audit to determine how much support S & T Telephone should receive from the Fund. KCC staff alleged that S & T Telephone was receiving more support from the Fund than could be justified by its cost of service, contending that this had been true in each year from 2005 to 2010.

In response, S & T Telephone said it stood “ready to file any information required by the Commission” and asked that the KCC use data from 2011 as a “test year” upon which to base future payments. S & T Telephone also suggested that it file the required information in “mid to late March 2012” based on its 2011 audited financial data; S & T Telephone said that its 2011 financial audit would be “completed by the first or second week of February 2012.”

Based on these suggestions, the KCC approved using 2011 as the test year and ordered that S & T Telephone provide specified information, “based upon 2011 audited financial information,” by March 15, 2012. S & T Telephone sought a short extension of that deadline and filed a response on March 23, 2012.

The response contained written testimony from Kevin J. Kelly, S & T Telephone's expert witness, and Steve Richards, S & T Telephone's chief executive officer. Richards explained that S & T Telephone was a rural, local-exchange telephone provider to about 2,400 customers in northwest Kansas. Kelly said that the response was a “compliance filing” in response to the KCC's order. Kelly provided financial schedules that showed a “revenue deficiency” for the company of $1,167,107, but he also noted that the company's financial data as reported wasn't from audited statements. He said that S & T Telephone estimated that audited statements would be available within 1 month. Kelly's testimony said that “[o]nce the auditors have issued the [audited] financial statements, S & T will provide the Commission a copy....”

But the next thing S & T Telephone filed—1 month later—wasn't the audited information.Instead, the company filed a motion asking the KCC to rule that because the KCC had not acted within 30 days after S & T Telephone's March response, S & T Telephone's reimbursements from the Fund must be adjusted according to the financial data S & T Telephone had filed for the 2011 test year. S & T Telephone contended in the motion that its March 23 filing counted as an application for change in rate or charge under K.S.A. 66–117 and that such changes become effective after 30 days if the KCC does not act to suspend the change under K.S.A. 66–117(c).

KCC staff responded that S & T Telephone hadn't made an application of any kind and that the proceeding was governed by K.S.A. 2011 Supp. 66–2008—a specific statute authorizing periodic KCC review of Fund disbursements—not K.S.A. 66–117, the general statute for utility rate-change proceedings.

The KCC agreed with its staff's position, denying S & T Telephone's motion. The KCC ruled that the proceeding initiated by its audit order was a Fund-specific one under K.S.A. 2011 Supp. 66–2008, not a rate proceeding under K.S.A. 66–117. And the KCC found that S & T Telephone's filing wasn't an application for a change of rates or charges under K.S.A. 66–117, so no 30–day time limit applied. The KCC also noted that S & T Telephone hadn't provided audited information, as required by the KCC's earlier order:

“It is irrational to suggest that S & T should be automatically entitled to an increase in [Fund payments] in excess of $1 million based upon a filing which omits mandatory information, particularly when the completed financial statements will likely require S & T to make adjustments to the information and financial data included in its filing.”

S & T Telephone asked for reconsideration, arguing that the KCC's position was contrary to its past practice in Fund-audit proceedings; S & T Telephone cited several Fund-audit proceedings in which the KCC had issued orders suspending any change in Fund reimbursements while the audit was pending, an act consistent with S & T Telephone's position. S & T Telephone didn't dispute its failure to provide audited financial statements in its initial filing, but it said it had provided that information to KCC staff on May 15, 2012—2 weeks after it had filed the motion claiming that the KCC's failure to act on the company's rate-change application within 30 days required that the change be put into effect immediately.

The KCC denied the motion for reconsideration. As to its past practice of issuing suspension orders, the KCC said that “although suspension orders have been issued in past [Fund] audits, the Commission has never decided whether a suspension order is necessary or ruled on the effect of non-issuance.” The KCC again emphasized that S & T Telephone hadn't applied for any relief and that Fund audits were governed by K.S.A. 2011 Supp. 66–2008, not K.S.A. 66–117. As to the lack of audited information, the KCC noted that S & T Telephone still had not filed audited financial information; no filing reflecting audited financial information is found in the record on appeal.

S & T Telephone has appealed to this court.

Analysis

We begin—and end—our analysis with the jurisdiction question. Appeals from the Kansas Corporation Commission are governed by the Kansas Judicial Review Act, K.S.A. 77–601 et seq. The Kansas Supreme Court noted in Bartlett Grain Co. v. Kansas Corporation Comm'n, 292 Kan. 723, 727, 256 P.3d 867 (2011), that the Kansas Judicial Review Act applies to all KCC appeals other than those arising from a rate hearing. See K.S.A. 2011 Supp. 77–603(a). For rate hearings, appeals are directly made to the Court of Appeals (as S & T Telephone has done here), but the Kansas Judicial Review Act applies in other respects. See K.S.A. 2011 Supp. 77–603(a); K.S.A. 77–609; K.S.A. 66–118a(b); K.S.A. 2011 Supp. 66–118c; Citizens' Utility Ratepayer Bd. v. Kansas Corporation Comm'n, 47 Kan.App.2d 1112, Syl. ¶ 1, 284 P.3d 348 (2012).

The significant point from the Kansas Judicial Review Act here is that appeals are allowed only from a final agency action, such as the approval or denial of a requested license, except when postponement of the appeal would result in irreparable harm or an inadequate remedy. See K.S.A. 77–607; K.S.A. 77–608. S & T Telephone doesn't claim irreparable harm or inadequate remedy if its appeal is delayed, so we have a single question that determines our jurisdiction: Has the KCC taken any final action here?

S & T Telephone's claim that the KCC has taken some final action is dependent upon its assertion that the telephone...