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March 8, 1990


Petition for Review of an Order of the Public Service Commission of the District of Columbia

Before Ferren, Belson, and Schwelb, Associate Judges.

The opinion of the court was delivered by: Belson

BELSON, Associate Judge: This appeal calls into question the method the Public Service Commission (PSC) has approved to enable the Chesapeake & Potomac Telephone Company (C&P), a regulated utility, to compete with unregulated competitors for the business of supplying internal telecommunications services to such customers as the United States Senate, the General Services Administration, (GSA), and the District of Columbia Government. Petitioner, Office of the People's Counsel (OPC), seeks review of a final order and a denial of reconsideration by respondent PSC in its Formal Case No. 828. C&P has intervened in support of the orders. The orders at issue in this case were intended to resolve a dispute as to how PSC should implement Order No. 8756, *fn1 which authorized C&P to file individual case basis (ICB) tariffs for Centrex customers with PSC, and Order No. 8871, *fn2 which approved the use of the ICB Cost Manual in ICB tariff filings. In PSC Order No. 9167 (Dec. 13, 1988), the Commission for the first time declared the proper procedure for such ICB tariff filings. It decided that ICB tariffs would be filed as compliance filings under 15 D.C.M.R. § 296 (Amendment No. 1, Feb. 13, 1987, 34 D.C. Reg. 1155) instead of being filed in formal notice and comment proceedings of D.C. Code § 43-601 (d) (1986 Repl.). OPC sought reconsideration of PSC's decision in Order No. 9167 which was denied on April 11, 1989, in Order No. 9267. OPC has petitioned this court for review. For the reasons stated below, we affirm.


The proceedings leading up to the orders under review in this appeal have gone on for several years. We will highlight the portions of the extensive administrative proceedings we consider pertinent to the issues raised in this appeal. In response to C&P's proposed changes to Centrex *fn3 service tariffs to provide the company regulatory flexibility to compete more effectively for Centrex contracts in August 1984, PSC initiated Formal Case No. 828. Order No. 8756, at 2, 8 D.C.P.S.C. at 199. During Phase II of Formal Case No. 828, the parties engaged in extensive discovery and filed written direct and rebuttal testimony, after which PSC held public evidentiary hearings. Order No. 8756, at 9, 8 D.C.P.S.C. at 204. These proceedings culminated in Final Order No. 8756 in which PSC authorized C&P to file ICB tariffs provided that C&P shareholders extend their commitment to absorb any revenue shortfall due to the ICB tariffs. Order No. 9167, at 1 and 5; Order No. 8756, at 76, 8 D.C.P.S.C. at 245. In addition, Order No. 8756 authorized a working group to develop an ICB cost manual to assist PSC with the ICB tariff filings. Order No. 9167, at 1. No particular ICB tariff filing procedure was designated at that time. See Order No. 9167, at 7. After C&P and PSC, with OPC's participation, developed the ICB Cost Manual, PSC approved it in Order No. 8871. Order No. 9167, at 6. For the ICB tariff filings by C&P that followed, there were no clear filing procedures in place. (U.S. Senate, GSA and D.C. Government). See Order No. 9167, at 7. In response to PSC Order No. 9089 (Aug. 9, 1988) requesting additional information as required by the ICB Cost Manual for C&P's Senate ICB tariff filing, OPC filed an application for reconsideration and clarification arguing that notice and comment procedures for ICB tariff filings were required. PSC denied OPC's application in Order No. 9167 and, in addition, took the opportunity in Order No. 9167 to set future procedural guidelines for ICB tariff filings. After a denial of reconsideration of this order, this appeal followed.


C&P broadly argues that this court lacks jurisdiction because OPC waited too long to attack the series of PSC decisions that culminated in the orders before us. At oral argument, PSC joined in C&P's position. This court has jurisdiction over the portion of OPC's appeal that challenges PSC's decision in Order No. 9167 to permit C&P to file all future ICB tariffs under PSC's § 296 compliance procedure instead of complying with notice and comment rate-making procedures. OPC has appealed PSC Order No. 9267, which denied OPC's motion for reconsideration of PSC Order No. 9167, which in turn was the denial of a motion for reconsideration of PSC Order No. 9089.

PSC definitively stated for the first time in Order No. 9167 that it would use the § 296 procedure for future ICB tariff filings. Order No. 9167, at 7. *fn4 OPC then sought reconsideration of Order No. 9167 by the Commission as it is required by statute to do before it can petition this court to review an action of the Commission. D.C. Code § 43-904 (1986 Repl.). The order resulting from this request for reconsideration is Order No. 9267. A petition for review of PSC's denial of this challenge was timely filed with this court. See id.

Although OPC, in seeking reconsideration of Order No. 9167, did not specifically argue that PSC improperly permitted C&P to guarantee that any losses from the ICB tariffs would be covered by C&P's shareholders, it does not make sense to sever that feature from the mosaic that Order No. 9167 completed. This arrangement whereby non-Centrex rate payers would, in effect, be held harmless by C&P shareholders for any loss of revenue due to any below-cost ICB tariffs was requested by PSC and became a permanent feature of ICB tariff filings by virtue of PSC's Final Order No. 8756. *fn5 Order No. 9167, at 5. This guarantee from C&P serves to protect the non-Centrex rate-paying public, a protection PSC deems important. Id. (PSC "made clear when we first sought such a commitment from C&P, that this commitment would allow the Commission to provide prompt regulatory action on C&P's ICB tariff filings."). For obvious reasons, C&P would prefer that we consider the guarantee if we take jurisdiction of the merits issues. Because this shareholder guarantee was one of the central reasons PSC decided to permit the expedited compliance review mechanism that is the subject of this appeal, it is proper to consider it in our decision.


"The scope of this court's review of PSC decisions 'is the narrowest judicial review in the field of administrative law.'" OPC v. PSC, 482 A.2d 404, 407 (D.C. 1984) (quoting Potomac Electric Power Co. v. PSC, 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)). Judicial review of PSC orders or decisions is limited essentially to questions of law, including constitutional questions. D.C. Code § 43-906 (1986 Repl.). "Findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary, or capricious." Id. "Our function is normally exhausted when we have determined 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." Atlantic Telephone Co. v. PSC, 390 A.2d 439, 441 (D.C. 1978) (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, 21 L. Ed. 2d 773, 89 S. Ct. 860 (1969)).

"'It is especially important to accord great respect to the Commission in a complex, esoteric area such as rate making in which the Commission has been entrusted with the difficult task of deciding among many competing arguments and policies.'" OPC v. PSC, 455 A.2d 391, 393 (D.C. 1982) (quoting Goodman v. Public Service Commission, 162 U.S. App. D.C. 74, 78-79, 497 F.2d 661, 665-66 (1974) (footnote and citation omitted)). Moreover,

it is not theory but the impact Of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry . . . is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.

OPC v. PSC, 472 A.2d 860, 862-63 (D.C. 1984) (quoting FPC v. Hope Natural Gas Co., 320 U.S. 591, 602, 88 L. Ed. 333, 64 S. Ct. 281 ...

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