Turpen v. Oklahoma Corp. Com'n, s. 66038

Decision Date08 November 1988
Docket Number66686,Nos. 66038,s. 66038
PartiesMichael C. TURPEN, Attorney General of Oklahoma, Appellant, v. OKLAHOMA CORPORATION COMMISSION and Southwestern Bell Telephone Company, Appellees.
CourtOklahoma Supreme Court

The Attorney General appeals from an Oklahoma Corporation Commission order which authorized Southwestern Bell Telephone Company to implement permanent rates and charges to recover a revenue deficiency of $47,544,561.00 over and above the interim relief the Commission had previously granted. The Attorney General brings a second appeal from the Commission's ruling that dismissed his motion for modification of the contested rate order. The two appeals stand consolidated for disposition by a single opinion.

THE COMMISSION'S DISMISSAL OF THE ATTORNEY'S GENERAL MOTION TO MODIFY THE RATE ORDER IS AFFIRMED; THE COMMISSION'S RATE ORDER IS AFFIRMED IN PART AND REVERSED IN PART AND PROCEEDING IS REMANDED WITH DIRECTIONS TO CONDUCT FURTHER INQUIRY AND MAKE ADDITIONAL FINDINGS.

Michael C. Turpen, Atty. Gen., Marc Edwards, Robert A. Butkin, Asst. Attys. Gen., Oklahoma City, for appellant.

Lindil C. Fowler, Jr., Gretchen P. Hoover, Jane P. Olson, Oklahoma Corp. Com'n, Oklahoma City, for appellee Corp. Com'n.

G. Michael Bauer, Oklahoma City, for appellee Southwestern Bell Telephone Co.

OPALA, Justice.

Two issues are presented for review: Did the Corporation Commission [Commission] err by dismissing the Attorney's General motion to modify its rate order? and Is the Commission's order authorizing Southwestern Bell Telephone Company [SWBT] to implement new rates and charges to recover a revenue deficiency sustained by law and substantial evidence?

To resolve the second issue we must consider whether the Commission acted within its discretion by: (a) investigating and addressing the impact on Oklahoma ratepayers of SWBT's status qua subsidiary of a holding company; (b) deciding to address in SWBT's next rate relief request what imputed benefit or value the other Southwestern Bell Corporation [SWBC] subsidiaries receive from the use of the Southwestern Bell name; (c) investigating and addressing whether revenues and expenses were properly imputed from Southwestern Bell Publications, Inc. to SWBT; [d] deciding to address in SWBT's next rate relief request whether SWBT's transfer of its directory operations to Southwestern Bell Publications, Inc. was properly effected at the assets' net book value; [e] basing SWBT's authorized rates on a capital structure of 55.32% equity and 44.68% debt; [f] not addressing the disposition to be made of reimbursements received by SWBT from AT & T; [g] adopting a Universal Service Option plan; and [h] including prepaid expenses in SWBT's rate base.

We give a negative response to the first question. We answer the second question by affirming the Commission's rate decision as to parts (a), (b), (c), (e) and (g), supra; but because the Commission failed either to address or treat adequately issues material to that decision in parts (f) and (h), we reverse the rate order with regard to these parts and remand this proceeding with directions to conduct further inquiry and make additional findings; and although part (d) is legally efficacious we direct that the Commission on remand address whether SWBT's transfer of its directory

operations to SWB Publications was properly effected at the assets' net book value.

THE IMPACT OF DIVESTITURE

On August 11, 1982 the U.S. District Court for the District of Columbia entered a "modified final judgment" [MFJ] in the government antitrust case against A.T. & T. The MFJ was later examined and amended in United States v. American Tel. & Tel. Co. [A.T. & T.]. 1

The MFJ required A.T. & T. to divest itself of the portions of its twenty-two operating companies that supplied local telephone service. These divested operating companies were reorganized into seven new operating companies that would supply local telephone service in an "exchange area." SWBT is one of these seven new operating companies whose primary roll is to provide quality, economical local telephone service. 2

The present case is the first Oklahoma decision to address the impact of the national telecommunications network's restructuring. While attempting to conform to whatever past precedent is still applicable, the court recognizes the fundamental changes in rate regulation necessitated by divestiture.

The general principles in A.T. & T. provide insight into the present matter, but it must be remembered that A.T. & T. dealt with antitrust, not rate regulation, and addressed issues quite different from the ones before us today.

A.T. & T. was decided by a federal district court. Unless that court's decision is affirmed by the U.S. Supreme Court, it is not binding upon state courts as precedent. 3 When A.T. & T. was summarily affirmed by the U.S. Supreme Court, it became a source of authority for state courts, 4 but the precedential weight of that summary disposition is confined to the narrowest possible grounds. 5 As was stated by the U.S. Supreme Court in Mandel v. Bradley, 6 "a summary affirmance is an affirmance of the judgment only."

In sum, this court, while bound by the result of the federal antitrust divestiture cases, is not required to adhere to their reasoning and specific pronouncements.

FACTS

Shortly after divestiture the newly independent SWBT filed an interim rate On January 29, 1986 the Commission issued Order No. 292337, the rate order On February 11, 1986 the Attorney General and SWBT filed separate motions to modify the rate order; on February 28, 1986 the Attorney General brought an appeal from the order. The Commission granted its Staff's request for dismissal of the Attorney's General and SWBT's modification motions on May 12, 1986; in a second appeal the Attorney General seeks review of this ruling. The two appeals were consolidated for disposition by a single opinion.

increase request with the Oklahoma Corporation Commission. 7 On May 24, 1983 the Commission granted SWBT an interim rate increase of $43.7 million which was followed by interim rate increases of $135,197,000.00 on December 29, 1983 and $32,520,695.00 on February 13, 1985 under examination here, which authorized SWBT to implement permanent rates and charges to recover a revenue deficiency of $47,544,561.00 in addition to the previously granted interim relief. As noted in the dissents, the Commission incorporated previous interim rate increases into the order by reference only. Although this indirect approval of interim rate increases appears to have been the Commission's past practice, in the future the Commission must provide better disclosure of the total rate increase by listing in its orders the number and amount of previous interim rate increases it is making permanent.

INTRODUCTION

Under Art. 9, § 18, Okl. Const., the Commission has the duty of "supervising, regulating, and controlling" SWBT in all public service matters. The bottom-line question on this appeal is whether the Commission adequately performed that duty in the rate proceeding below.

The terms of Art. 9 § 20, Okl. Const., address this court's responsibility when it reviews a rate proceeding to determine whether the Commission fulfilled its constitutional duty:

" * * * The Supreme Court's review of appealable orders of the Corporation Commission shall be judicial only, and ... shall not extend further than to determine whether the Commission has regularly pursued its authority, and whether the findings and conclusions of the Commission are sustained by the law and substantial evidence...." [Emphasis supplied.]

Substantial evidence is more than a scintilla of evidence; it possesses something of substance and of relevant consequence that is fit to induce conviction and may lead reasonable men fairly to differ on whether it establishes a case. 8 In determining if the Commission's findings and conclusions are supported by substantial evidence, the court will review all the evidence found in the record including that which fairly detracts from its weight. 9

A presumption of correctness accompanies the Commission's findings in matters it frequently adjudicates and in which it possesses expertise. 10 The Commission has wide discretion in the performance of its duties. 11 When the Commission fixes rates, it acts in a legislative capacity and is not limited to any particular theory or method. 12

I

THE COMMISSION ACTED PROPERLY WHEN IT DISMISSED THE

ATTORNEY'S GENERAL MOTION FOR MODIFICATION OF ITS RATE ORDER

The Attorney General asserts that the Commission improperly dismissed his modification Under Commission Rule 24 15 a party litigant may file a motion to modify, reopen or rehear a Commission order within ten days of the order's rendition. The Attorney General asserts that the procedural analysis used in determining the effect of § 1031.1 should apply to Commission Rule 24--i.e. the Commission should be empowered to consider motions to modify after the lapse of the maximum time (30 days) for the commencement of an appeal.

motion. His argument rests on 12 O.S. 1981 § 1031.1, 13 which provides that within 30 days of a judgment a district court may modify, correct, open or vacate its judgment sua sponte or upon motion of a party. If the motion is filed within the 30-day span, the district court is empowered to consider it after the lapse of that period. 14

While the Attorney General correctly restates the law with respect to district court jurisdiction after a timely § 1031.1 motion has been filed, he fails to recognize the difference between motions to modify district court judgments and motions to modify Commission orders.

Oklahoma jurisprudence treats a motion to modify a Commission order differently from that of a...

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