On Petitions for Review of Orders of the District of Columbia Public Service Commission (Formal Case No. 1054).
The opinion of the court was delivered by: Glickman, Associate Judge
Argued September 29, 2008
Before GLICKMAN and KRAMER, Associate Judges, and FARRELL, Senior Judge.*fn1
Concurring opinion by Senior Judge FARRELL at page 50.
This appeal concerns a $350,000 forfeiture levied by the D.C. Public Service Commission against Washington Gas Light Company (WGLC). On July 20, 2007, the Commission ordered WGLC to produce to it a copy of a contract WGLC had signed with a third party. When, in the opinion of the Commission, WGLC willfully and "egregious[ly]" failed to submit an unredacted copy of the contract, the Commission imposed the forfeiture, citing D.C. Code § 34-706 (a) (2009 Supp.) as its primary source of authority to do so. WGLC applied for reconsideration. When its application was denied, the utility appealed, arguing that the Commission had acted arbitrarily and capriciously and denied it due process of law.
Following oral argument, we ordered the parties to submit supplemental briefs addressing several important legal issues. The first three questions we asked were substantive: (1) whether the Commission was constrained to use statutes that address discovery and disclosure failures more specifically than § 34-706 (a) does; (2) whether § 34-706 (a) creates a criminal or a civil penalty; and (3) whether the Commission may impose a § 34-706 (a) forfeiture itself or must maintain an action in Superior Court to enforce the provision. Our fourth question was whether we are foreclosed from considering the first three, given the exhaustion requirements of D.C. Code § 34-604 (b) (2001).
We address the last, threshold issue first. We hold that § 34-604 (b) contains both jurisdictional and non-jurisdictional exhaustion requirements. In order for us to have subject-matter jurisdiction, the party petitioning for review of the Commission's order first must have filed an application for reconsideration. That done, we have jurisdiction to consider every issue the petitioner presents to us, regardless of whether it was raised before the Commission. The statute does, though, codify the judicial doctrine requiring parties to exhaust administrative remedies with respect to every issue. Therefore, we will not examine unexhausted issues unless extraordinary circumstances compel us to do so. In this case, we find that extraordinary circumstances would exist if, as WGLC argues, the Commission lacked the adjudicatory authority to impose the forfeiture.
Turning to the merits of that question, D.C. Code § 34-706 (a) establishes a forfeiture penalty for certain violations of the Public Utilities Act or Commission or court orders. Our examination of the language, history and statutory context of that provision convinces us that the Commission lacks the authority to adjudicate those violations and impose the forfeiture penalty itself. Rather, the Commission is obliged to maintain an action in Superior Court in order to enforce § 34-706 (a) and recover a forfeiture penalty. Because we conclude that the Commission was without authority to impose the $350,000 forfeiture on WGLC in this case, we reverse its order.
In late 2006, WGLC applied to the Commission for permission to raise its rates to District of Columbia consumers. While the rate proceeding was pending in the summer of 2007, WGLC entered into an agreement with Accenture LLP to "provide business process outsourcing and service and technology enhancements." In exchange, WGLC agreed to pay Accenture $350 million. The contract between WGLC and Accenture was nominally 75 pages long, but appendices and exhibits stretched its length to 600 pages. The D.C. Office of People's Counsel (OPC), which represents ratepayers and is an intervenor in this appeal, sought a copy of the contract. So did the Office and Professional Employees International Union Local 2 (OPEIU), which represents some of WGLC's employees. And one week before the rate making hearing was to be held, the Commission filed its Data Request No. 4, which sought "a copy of the executed agreement" between WGLC and Accenture.
WGLC, however, permitted OPC and OPEIU to view only a portion of the contract. It held back certain attachments or exhibits, explaining to the Commission that:
[t]he Accenture contract includes proprietary Service Provider information for which Washington Gas has a mutual Non-Disclosure Agreement in place. In addition due to public disclosure requirements the Company is unable to allow copies of the document. However, [Commission] Staff may view the information at Washington Gas's . . . offices, or the Company is willing to bring the documents to the Commission for viewing.
OPC filed a motion to compel immediate production of the entire contract, citing the impending rate making hearing.
On the Friday before the Monday on which the rate making hearing was to take place, the Commission entered two orders. Order No. 14,383 "direct[ed] [WGLC] to file its responses to the Commission's Data Request . . . No. 4 by 9:00 a.m., Monday, July 23, 2007." The Order also warned WGLC that the Commission was "concerned with [WGLC's] failure to provide information to the Commission and the parties as requested in the discovery phase of this proceeding. Accordingly, any subsequent failure by [WGLC] to comply with the lawful directives of the Commission may result in a show cause order and or fine." The second order, No. 14,384, granted in part OPC's motion to compel, finding it in general "well founded." Nevertheless, it acknowledged WGLC's claims of privilege as to certain portions of the Accenture contract and so gave the utility a choice -- "to produce its records to OPC or deliver them to the Commission Secretary's Office, for in camera inspection by 12 noon on Saturday, July 21, 2007."
WGLC chose the latter path. On July 21, it submitted a copy of "the Confidential Master Services Agreement between Accenture and Washington Gas that contains the critical features of the relationship between the parties (75 pages)." It also submitted two exhibits, A.1 and A.6. Finally, it stated that "[t]here are other exhibits and attachments to the [contract] that are not related to the significant issues in this case. . . . If however, the Commission wishes to review in camera exhibits and appendices referred to in the [contract], Washington Gas will make those documents available to the Commission." Apparently to justify its withholding of some documents, WGLC insisted that Securities and Exchange Commission Fair Disclosure regulations prevented it from "making selective disclosures" of the contract. It also claimed that "it is not appropriate -- and not necessary to the vigorous airing of the issues in the rate case -- to provide the parties with actual copies of the documents." WGLC did not submit any further documents on Monday, July 23.
On that Monday, just before the rate making hearing began, the Commission entered Order No. 14,385, granting in part and denying in part OPC's and OPEIU's motions to compel. The Commission determined that WGLC's reasons for withholding the contract were insufficient, and so ordered that "[t]he whole [contract], including all of its Appendices . . . must be produced in discovery by WGL for the Commission, OPC and OPEIU." It continued to issue "a protective order . . . intended to ensure the confidentiality of the [contract]." Therefore, WGLC was required to "submit these records to OPC, OPEIU, and the Commission Secretary's Office by 5:00 p.m. today, Monday, July 23, 2007."
The rate making hearing did not go forward. After briefly reviewing the Commission's new order during a recess, WGLC contended that there was no basis for OPC's argument that the contract affected the rate change it sought. The chair of the Commission interjected: "[T]he Commission also asked for a copy of the contract. It's just not OPC. It's OPC, it is the Commission, and it is the order." WGLC's counsel responded, "I understand that," but continued to argue that the contract was irrelevant and its disclosure was barred by the SEC fair disclosure regulations. WGLC then announced its intent to move for reconsideration of Order No. 14,385. In response, OPC orally moved for a stay of the rate case, arguing that WGLC's foot-dragging was a deliberate litigation strategy. OPC also orally requested sanctions against WGLC, though it did not specify what type of sanctions it thought should be imposed. The Commission heard a response from WGLC, then indefinitely adjourned the hearing. Just before doing so, however, it also ordered the company to show cause why the rate case should not be dismissed for failure to produce the Accenture contract.
Rather than submit the complete contract, WGLC moved to reconsider Order No. 14,385, arguing that it had been given insufficient opportunity to object to the production requests and that the material was proprietary and confidential. The Commission responded with a brief order asking for responses from OPC and OPEIU and directing WGLC to "file its response to the . . . oral motion of [OPC] to stay the proceedings and for sanctions for failure to produce information" to the Commission. WGLC responded on July 27. It contended that the sanctions motion was "totally without merit" and that dismissing the case would result in higher costs for customers.
The Commission took the motions -- WGLC's motion for reconsideration and OPC's motion for a stay and for sanctions -- under advisement. Ordinarily, it would have been required to decide the motion to reconsider within thirty days.*fn2 On August 17, 2007, however, it issued a "tolling order," stating that it needed additional time to fully consider the issues presented by the parties.*fn3
It later issued a similar second tolling order to give itself an additional five days.
On September 28, 2007, the Commission issued its decision. It denied WGLC's motion for reconsideration, "issue[d] a strengthened protective order," and stayed the rate proceeding indefinitely. It found that WGLC's due process concerns were unfounded, because it "had ample opportunity to raise objections to discovery and . . . , in fact, repeatedly [did] so." It also found that any procedural defects were "effectively cured by [the Commission's] consideration of the objections raised in the motion for reconsideration." Substantively, it held that the Accenture contract was relevant because it was necessary for the parties to be able to address whether the "outsourcing arrangement would impair the quality and reliability of service to customers." The Commission also found that WGLC was attempting to recoup some outsourcing-related costs in its rate application.
Simultaneously, the Commission issued a second order granting the OPC's motion for sanctions. It stated that under D.C. Code § 34-907 (2001), it had "broad and unfettered authority to require any public utility to produce any and all contracts." Two of its previous orders, Nos. 14,383 and 14,384, had "compelled [WGLC] to produce the [contract] for the Commission's review." WGLC had not done so, since it had withheld some of the contract appendices. Consequently, the Commission found "clear violations" of its orders. It noted that under D.C. Code § 34-706 (a), "[i]f any public utility . . . shall fail, neglect, or refuse to obey any lawful requirement or order made by the Commission, . . . such public utility shall forfeit and pay to the District of Columbia the sum of $5,000 for each such offense." Furthermore, since D.C. Code § 34-708 (2001) provides that "[e]very day during which any public utility . . . shall fail knowingly or willfully to observe and comply with any order or direction of the Commission . . . shall constitute a separate and distinct violation of such order, or direction, or of this subtitle, as the case may be," the Commission found that each of the seventy days between July 21 and September 28 was a separate violation. Therefore, it calculated, WGLC was to forfeit $350,000.
WGLC immediately moved for reconsideration of the sanction order. It argued that its failure to submit the complete agreement was in good faith, as it thought it had complied with Orders No. 14,383 and No. 14,384. It argued that it thought Order No. 14,384 only directed it to produce the documents that previously had been available at its office (which were a subset of the documents actually constituting the contract.) Those documents were indeed delivered to the Commission by the deadline on Saturday, July 21. It also thought the same submissions satisfied the production directed in Order No. 14,383. WGLC further argued that the orders to produce the documents were, in effect, stayed by virtue of the company's motion to reconsider Order No. 14,385. In WGLC's view, Order No. 14,385 superseded the previous orders because it dealt with materially identical discovery issues. Finally, WGLC contended that it had no idea that the "clock was ticking" on an outstanding obligation, giving it no chance to mitigate the sanctions. The Commission denied the application for reconsideration and WGLC filed this timely appeal.
In its opening brief to this Court, WGLC raised two principal arguments. First, it claimed that the Commission denied it due process of law by the manner in which it imposed the $350,000 forfeiture sanction. Second, WGLC argued that the Commission lacked substantial evidence for its finding, required for the per diem multiplier under D.C. Code § 34-708, that WGLC's violation was "knowing or willful." As noted above, we raised several additional issues in a supplemental briefing order after oral argument. We now turn to the question of whether we may consider those issues, given WGLC's failure to raise them before the Commission.
D.C. Code § 34-605 (a) (2001) gives us jurisdiction over appeals from the Commission's orders. It also dictates the procedure for appealing:
Any public utility or any other person or corporation affected by any final order or decision of the Commission . . . may, within 60 days after final action by the Commission upon the petition for reconsideration, file with the Clerk of the District of Columbia Court of Appeals a petition of appeal setting forth the reasons for such appeal and the relief sought . . . .
The "petition for reconsideration" is more fully explained in D.C. Code § 34-604 (b). Section 604 (b) provides:
Any public utility or any other person or corporation affected by any final order or decision of the Commission may, within 30 days after the publication thereof, file with the Commission an application in writing requesting a reconsideration of the matters involved, and stating specifically the errors claimed as grounds for such reconsideration. No public utility or other person or corporation shall in any court urge or rely on any ground not so set forth in said application. . . . No appeal shall lie from any order of the Commission unless an application for reconsideration shall have been first made and determined.*fn4 On its face, § 604 (b) appears to bar WGLC from seeking relief based on any of the three substantive legal grounds we raised in the supplemental briefing order, since those issues were "ground[s] not . . . set forth in" its application for reconsideration.
WGLC contends, however, that in appropriate circumstances, we should recognize exceptions to § 604 (b)'s rule, such as when allowing the Commission's order to stand would cause a miscarriage of justice or when the order exceeded the Commission's statutory authority. The Commission retorts that § 604 (b) makes exhaustion of every issue a jurisdictional prerequisite, so we lack the power to hear and decide an issue not raised to the agency. And OPC argues that if exceptions exist from the strictures of § 604 (b), WGLC has failed to show that this case merits their application.
The debate thus turns on two distinct questions -- whether we can consider new issues, raised before us for the first time, and whether we will do so. Whether we have the power to consider them depends on the nature of § 604 (b)'s command that no appellant may "urge or rely on any ground not . . . set forth" in its application for reconsideration.*fn5 If this issue-exhaustion requirement is a jurisdictional prerequisite, we lack the authority to consider the issues raised in the supplemental briefing order. After careful consideration, though, we do not think that it is. While we agree that failure to file an application for reconsideration before the Commission ...