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stating that "[u]nlike determinations of fact which are given great deference, questions of law are reviewed by a court de novo"
Summary of this case from Byers v. RobinsonOpinion
No. 91-1761
Submitted April 14, 1992 —
Decided July 8, 1992.
APPEAL from the Public Utilities Commission of Ohio, No. 88-452-TP-COI.
The history of these proceedings, although somewhat extended, may be summarized for purposes of this opinion. Appellants are several local exchange telephone companies ("LECs"). Prior to AT T's divestiture, the LECs held a monopoly over pay telephone services within their respective franchised, exchange areas. For some time, appellee, the Public Utilities Commission of Ohio ("commission"), has required the LECs to supply directory assistance to public pay phones free of charge. This policy is founded primarily upon a concern for transient phone users in need of help in emergency situations.
In 1984, as part of the divestiture effort, the Federal Communications Commission removed impediments to competition in the pay phone market. The commission, in turn, authorized customer-owned, coin-operated telephones ("COCOTs") within the Ohio intrastate network. All COCOTs were required, consistent with the traditional practice, to supply directory assistance free of charge. In the Matter of the Commission Investigation into the Regulation of Customer-Owned, Coin-Operated Telephone Service (Jan. 29, 1985), PUCO No. 84-863-TP-COI. As regular business-line customers, COCOT providers, it appears, were charged by some LECs, but not all, for the directory assistance calls placed by the phone users.
The commission reexamined its COCOT policies in the following year. COCOT providers requested at that time that they be relieved of their burden of reimbursing the LECs for directory assistance calls. This proposal was denied. In the Matter of the Commission Investigation into the Regulation of Customer-Owned, Coin-Operated Telephone Service (Mar. 17, 1987), PUCO No. 84-863-TP-COI, at 8-10.
In 1988, the commission again undertook a reevaluation of the COCOT issue. Interested parties were invited to file comments and an "informal workshop" was conducted. The commission thereafter reaffirmed its requirement that directory assistance be provided to pay phone users without charge. However, the commission went on to direct that the LECs would no longer be permitted to bill the COCOT providers for such calls. This reversal was predicated upon a suspicion that the LECs were recouping the costs of their own directory assistance service through the general ratepayers. Meanwhile, the COCOT providers — who compete with the LECs in the pay telephone market — had to bear the expense of directory assistance themselves. The order reasoned that:
"* * * [T]he Commission believes that there is a legitimate controversy on the issue of whether the LEC ratepayers are subsidizing the provision of pay station service by the LECs. The controversy exists because it cannot be determined, with certainty, on the basis of the record in this case whether the LECs have appropriately included the costs associated with the provision of directory assistance service when they determined their charge for pay station service. Similar treatment of the costs associated with providing pay station service is necessary if the COCOT providers are to have the ability to compete with the LECs in a manner which is fair and just to all concerned. The Commission believes that the resolution of this issue can best be resolved in a rate case or a similar regulatory proceeding in which the cost of an individual company can be thoroughly examined."
The commission stressed that it was merely adopting "an interim policy position" which would continue while further investigation was pursued. In the Matter of the Investigation Relative to the Compliance of Customer-Owned, Coin-Operated Telephones with Commission-Ordered Guidelines (May 8, 1991), PUCO No. 88-452-TP-COI. Ensuing applications by the LECs for a rehearing were denied on July 3, 1991.
The cause is now before this court upon an appeal as a matter of right.
Michael J. Karson, William H. Hunt and Charles S. Rawlings, for appellant Ohio Bell Telephone Company.
Frost Jacobs and Mark H. Longenecker, for appellant Cincinnati Bell Telephone Company.
Joseph R. Stewart, for appellant GTE North Incorporated. Thomas L. Jacobs; Jones, Day, Reavis Pogue and Helen L. Liebman, for appellant United Telephone Company of Ohio.
Schneider Prohaska and J. Raymond Prohaska, for appellant Ohio Telephone Association.
Lee I. Fisher, Attorney General, James B. Gainer and Ann E. Henkener, for appellee Public Utilities Commission.
Hahn Loeser Parks, Janine L. Migden and Randy J. Hart, for intervening appellee Ohio Public Communications Association.
The scope of review applicable to these proceedings is set forth in R.C. 4903.13 which states, in part:
"A final order made by the public utilities commission shall be reversed, vacated, or modified by the supreme court on appeal, if, upon consideration of the record, such court is of the opinion that such order was unlawful or unreasonable."
In contrast to determinations of fact which are accorded considerable deference, questions of law are examined by this court de novo. Consumers' Counsel v. Pub. Util. Comm. (1979), 58 Ohio St.2d 108, 110, 12 O.O.3d 115, 116, 388 N.E.2d 1370, 1372-1373.
While appellants assert four propositions of law, this appeal may be resolved upon a single statutory requirement. The commission conceded at oral argument that the order of May 8, 1991 effected a utility rate change. As a prerequisite to such action, the commission was obliged to give notice and conduct a hearing in accordance with R.C. 4905.26. MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 269, 527 N.E.2d 777, 780; see Coalition for Safe Electric Power v. Pub. Util. Comm. (1977), 49 Ohio St.2d 207, 210, 3 O.O.3d 326, 327, 361 N.E.2d 425, 427.
That section declares, in part:
"Upon complaint in writing against any public utility by any person, firm, or corporation, or upon the initiative or complaint of the public utilities commission, that any rate, fare, charge, toll, rental, schedule, classification, or service, or any joint rate, fare, charge, toll, rental, schedule, classification, or service rendered, charged, demanded, exacted, or proposed to be rendered, charged, demanded, or exacted, is in any respect unjust, unreasonable, unjustly discriminatory, unjustly preferential, or in violation of law, or that any regulation, measurement, or practice affecting or relating to any service furnished by said public utility, or in connection with such service, is, or will be, in any respect unreasonable, unjust, insufficient, unjustly discriminatory, or unjustly preferential, or that any service is, or will be, inadequate or cannot be obtained, and, upon complaint of a public utility as to any matter affecting its own product or service, if it appears that reasonable grounds for complaint are stated, the commission shall fix a time for hearing and shall notify complainants and the public utility thereof, and shall publish notice thereof in a newspaper of general circulation in each county in which complaint has arisen. Such notice shall be served and publication made not less than fifteen days nor more than thirty days before hearing and shall state the matters complained of. The commission may adjourn such hearing from time to time.
"The parties to the complaint shall be entitled to be heard, represented by counsel, and to have process to enforce the attendance of witnesses. * * *"
There is no indication in the record, and the commission does not argue, that a formal evidentiary hearing was held on the issue of directory assistance reimbursement. The notice and comment format, which was employed instead, has been approved by this court in the generic rate-making process only as an expedient means of following up an actual public hearing. MCI Telecommunications, supra, 38 Ohio St.3d at 269-270, 527 N.E.2d at 780-781. This casual approach does not, by itself, satisfy the detailed requirements of R.C. 4905.26.
The commission contends that it is immune from this statute since the order of May 8, 1991 is a "quasi-legislative" declaration adopted pursuant to the "rule-making" authority granted by R.C. 4905.04 and 4905.06. Regardless of how the action is characterized by the commission, it is still a rate change subject to the procedural requirements of R.C. 4905.26. The plain language of this enactment does not suggest that it is somehow optional. The commission cannot defeat the General Assembly's demand for quasi-judicial proceedings merely by supplying a different label to the attempted modification.
Citing R.C. 4909.18, the commission further argues that a hearing is necessary only for a rate increase. That statute concerns applications by public utilities to establish or modify rates charged to customers and has no bearing in these proceedings. More to the point, the unambiguous terms of the controlling legislation, R.C. 4905.26, fail to support this interpretation.
Accordingly, we hold that before the commission may order a change in utility rates on policy grounds, the procedural requirements of R.C. 4905.26 for notice and a public hearing must first be satisfied.
For the foregoing reasons, we determine that the commission's order of May 8, 1991, is unlawful and is therefore reversed and vacated.
Order reversed and vacated.
SWEENEY, Acting C.J., HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.
JOHN W. REECE, J., of the Ninth Appellate District, sitting for MOYER, C.J.