United States v. Public Serv, Com'n of Dist. of Columbia

• Court: D.C. Court of Appeals
• Writing for the Court: Pryor
• Citation: United States v. Public Serv, Com'n of Dist. of Columbia, 465 A.2d 829 (D.C. 1983)
• Decision Date: 18 August 1983
• Docket Number: No. 82-988.,82-988.
• Parties: UNITED STATES, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent, The Chesapeake and Potomac Telephone Company, Office of People's Counsel, Intervenors.

465 A.2d 829

UNITED STATES, Petitioner, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent The Chesapeake and Potomac Telephone Company, Office of People's Counsel, Intervenors.

No. 82-988.

District of Columbia Court of Appeals.

Argued November 17, 1982.

Decided August 18, 1983.

COPYRIGHT MATERIAL OMITTED

William G. Cole, Atty., Dept. of Justice, Washington, D.C., with whom Stuart E. Schiffer, Deputy Asst. Atty. Gen., Stanley S. Harris, U.S. Atty., and Lawrence A.G. Moloney, Atty., Dept. of Justice, Washington, D.C., were on briefs, for petitioner.

Lloyd N. Moore, Jr., Washington, D.C., for respondent.

D. Michael Stroud, with whom, Washington, D.C., Lee A. Satterfield, Mark J. Mathis, and Robert A. Levetown, Washington, D.C., were on briefs, for intervenor, The Chesapeake and Potomac Telephone Co.

Joseph N. Sharlitt, Washington, D.C., with whom Brian Lederer, People's Counsel, and Elizabeth Noel, Deputy People's Counsel, Washington, D.C., were on briefs, for intervenor, People's Counsel.

Before PRYOR and TERRY, Associate Judges, and BARNES, Associate Judge, Superior Court of the District of Columbia.¹

PRYOR, Associate Judge:

On November 12, 1981, the Chesapeake & Potomac Telephone Company (hereinafter C & P) filed an application with the Public Service Commission of the District of Columbia (hereinafter PSC or Commission), designated Formal Case No. 777, requesting permanent authority to increase its schedule of rates and tariffs for telephone service in the District of Columbia by $132.1 million dollars. The People's Counsel was authorized to represent the consumers of the District of Columbia; as a matter of right, however, intervention was granted to the United States General Services Administration (hereinafter GSA) by PSC Order No. 7459² GSA appeals from a settlement agreement approved by the Commission over its objection which granted C & P a rate increase of $40.3 million dollars. We reject petitioner's claims and affirm the orders of the PSC on all challenged grounds.

FACTS AND PROCEDURAL HISTORY

When C & P filed its application for an increase in rates, all parties and intervenors, with the exception of GSA, agreed to a settlement of the revenue portion of the case, with the understanding that numerous rate design issues would be tried while the rate increase went into effect. A joint motion for approval of the settlement proposal was filed on March 17, 1982, just before the following scheduled events were to have taken place: the filing of initial expert testimony; the filing of expert rebuttal testimony; and hearings to include cross-examination of all company and intervenor witnesses on their pre-filed testimony. GSA then filed a written objection to the settlement proposal, contending that a trial-type hearing was necessary to explore disputed issues.

A hearing with a right of cross-examination of all expert witnesses was not afforded to GSA. However, a hearing was held on April 6, 1981, at which each intervenor was permitted to present one witness to testify as to whether approval of the joint settlement motion was in the public interest. The Commission thereafter published Final Order No. 7546, granting C & P a rate increase of $40.3 million dollars, less than one third of its original request. The final order was approved by all parties and intervenors, with the exception of GSA, and rate design hearings were scheduled to begin immediately.

GSA appeals from Final Order No. 7546, and from Order No. 7603, in which GSA's application for reconsideration of the revenue requirements order was denied.

SCOPE OF REVIEW

In analyzing GSA's contentions, we realize that Congress has delegated ratemaking authority to the Commission, not to this court, and we therefore accord great deference to the expertise and decisions of the Commission. Washington Gas Light Co. v. Public Service Commission, 450 A.2d 1187, 1193 (D.C.1982) (per curiam). We have repeatedly stated that "[o]ur review of a utility commission order is the narrowest judicial review in the field of administrative law." Id., citing Potomac Electric Power Co. v. Public Service Commission, 402 A.2d 14, 17 (D.C.) (en banc), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979).

In keeping with the tenor of D.C. Code § 43-906 (1981), our scope of review is limited to "questions of law, including constitutional questions; and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary or capricious." In examining PSC Order No. 7459, our role is to determine whether its overall impact is just and reasonable, People's Counsel v. Public Service Commission, 399 A.2d 43, 46 (D.C.1979), and to insure that the ". . . Commission has respected procedural requirements, has made findings based on substantial evidence, and has applied the correct legal standards to its substantive deliberations." Potomac Electric Power Co. v. Public Service Commission, supra, 402 A.2d at 18, quoting Williams v. Washington Metropolitan Area Transit Commission, 134 U.S.App.D.C. 342, 362, 415 F.2d 922, 942 (1968), cert. denied, 393 U.S. 1081, 89 S.Ct. 860, 21 L.Ed.2d 773 (1969).

Rate-making orders are presumptively valid, and, unless GSA can carry its heavy burden of demonstrating that a "fatal flaw" exists in the action taken, Final Orders Nos. 7546 and 7603 will not be disturbed. Washington Gas Light Co. v. Public Service Commission, supra, 450 A.2d at 1194. See also People's Counsel v. Public Service Commission, 455 A.2d 391 (D.C. 1982), citing Goodman v. Public Service Commission, 309 A.2d 97, 101 (D.C.1973).

The central issues presented on appeal are whether the Public Service Commission can authorize a nonunanimous settlement, and, if so, what procedures it must follow to remain within the spirit of the D.C. Administrative Procedure Act (codified at D.C.Code § 1-1509 (1981)). This court has recognized that the Commission has both the flexibility to consider settlement offers and the responsibility to evaluate such offers "on their merits in light of the evidence of record even if the proposed settlement fails to receive the unanimous support of the parties." Metropolitan Washington Board of Trade v. Public Service Commission, 432 A.2d 343, 363 n. 40 (D.C.1981). See also Placid Oil Co. v. Federal Power Commission, 483 F.2d 880, 893 (5th Cir.1973), aff'd sub nom. Mobile Oil Co. v. Federal Power Commission, 417 U.S. 283, 94 S.Ct. 2328, 41 L.Ed.2d 72 (1974). This is a logical, efficacious approach to dispute resolution which is often used in other forums. We think it is clear that the Commission is not bound to hold a hearing on every question and does have the authority to impose a settlement which is substantially acceptable to most, if not all, of the parties.

Having concluded that the Commission has the authority to act on a nonunanimous settlement, we now turn to the appropriate procedural requirements. This question has been considered by the Supreme Court:

"If a proposal enjoys unanimous support from all of the immediate parties, it could certainly be adopted as a settlement agreement if approved in the general interest of the public. But even if there is a lack of unanimity, it may be adopted as a resolution on the merits, if . . . [the Commission] makes an independent finding supported by `substantial evidence on the record as a whole' that the proposal will establish `just and reasonable rates' for the area." Mobil Oil Co. v. Federal Power Commission, supra, 417 U.S. at 314 [94 S.Ct. at 2348], citing Placid Oil Co. v. Federal Power Commission, supra, 483 F.2d at 893. (Emphasis in original.)³

The Commission, in this instance, did make the requisite independent inquiry of record, at its hearing of April 6, 1981, to determine whether the settlement proposal was in the public interest. GSA contends that the hearing was inadequate and failed to comply with the local statute.

There is no question that in the District of Columbia an application for a rate increase by a public utility requires that a hearing be held before the Commission. The statutory requirement for a hearing can be found in D.C.Code § 1-1509(b) (1981) which provides that "[e]very party shall have the right to present in person or by counsel his [or her] case or defense by oral and documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts." (Emphasis added.) See also D.C.Code §§ 43-608,601(d) (1981).

Although GSA was given the right to participate at the April 6, 1981 hearing, it argues that it was denied the opportunity to cross-examine thirty-three witnesses who had submitted pre-filed testimony, and that the Commission thereby ignored the requirements of a "formal hearing." While GSA's opportunity to cross-examine witnesses may have been limited, some cross-examination was permitted. A bifurcated proceeding concerning only the issues of revenue requirements, as presented in the settlement proposal, was held, and rate design hearings were scheduled to begin on April 15, 1982. As an intervenor, GSA was permitted to have one witness testify as to whether approval of the joint settlement motion was in the public interest.⁴ In addition, all participants were afforded the opportunity to submit pre-filed and supplemental testimony and to conduct discovery.

GSA raised its objections to the proposed order at the time of the hearing, and again when it filed an application for reconsideration of the proposed order. At the April 6, 1982 hearing, GSA sought to explore "what it believed to be a large number of disputed issues" concerning depreciation, repression, and rate of return. It was not until filing an application for reconsideration of the approved settlement agreement that GSA identified 21 specific issues for consideration.

The Commission found that GSA's application for...