Office of Consumer Advocate v. Iowa Utilities Board

663 N.W.2d 873, 2003 Iowa Sup. LEXIS 107, 2003 WL 21339888
Supreme Court of Iowa·Decided June 11, 2003·No. No. 02-0720·Published·Cited by 2 cases

Opinion

LARSON, Justice.

The Office of Consumer Advocate (OCA)1 appealed a district court ruling approving an Iowa Utilities Board deter[874]*874mination that a rate reduction plan presented by Qwest Corporation (formerly US WEST) for selected telecommunications services should be approved. We affirm.

I. Facts and Prior Proceedings.

A three-year price regulation plan was submitted pursuant to Iowa Code section 476.97(1) (1997) by Qwest on July 1, 1998, and approved by the board. The price plan included provisions for rate increases and, as relevant in this case, provisions for rate decreases as well:

E. Price Decreases. [Qwest] can decrease any BCS [basic communications service] price to any lawful price, upon a showing that the requirements of IAC 38.5(4) are met. Any such decrease may be accumulated and used to offset a decrease or portion thereof required during the following 12 months.
[Qwest] shall decrease its BCS price in a percentage amount equal to the amount that the Productivity offset exceeds the annual rate of inflation ... on an anniversary date of the effective date of this Plan. If the required decrease is less than 2%, the reduction may be deferred for one year. Any required price decrease can be offset by a price increase which would have been permitted during the preceding twelve months.

The annual rate of inflation, according to the plan is

the annual percentage change (the value of the index in the most recent quarter divided by the value of the index for that quarter in the previous year minus one) in the Gross Domestic Product Price Index (GDPPI) constructed using chain-type annual weights as published in the most recently available monthly edition of the U.S. Department of Commerce’s Survey of Current Business, Table 7.1.

Under the Qwest plan, Qwest was required to adjust its prices on November 7, 1999, the beginning of the second year of the plan, if the productivity offset exceeded the inflation rate by two percent or more. On October 8,1999, a month before the end of the first year, Qwest submitted a letter indicating that a 1.41% decrease was required by the plan and notifying the board of its decision to defer the decrease for one year, as allowed by the plan. Qwest used the GDPPI calculations from the September 1999 advance GDPPI to calculate the decrease. On November 8, 1999, Qwest filed an amended calculation using the October 1999 advance GDPPI, which resulted in a reduction of 1.21%. In October 2000 Qwest submitted a proposal to adjust basic service prices using the GDPPI data available on the Bureau of Economic Analysis’s (BEA) website in order to make its calculations under Iowa Code section 476.97(3)(a)(5), and (6) (1999). Iowa Code section 476.97(3)(a)(5) provides:

The plan shall provide for both increases and decreases in the prices for basic communications services reflecting annual changes in inflation and productivity. Prior to January 1, 2000, the board shall use the gross domestic product price index, as published by the federal government, for an inflation measure, and two and six-tenths percentage points for a productivity measure. On or after January 1, 2000, the board by rule may adopt current measures of inflation and productivity.

Iowa Code section 476.97(3)(a)(6) provides rules for deferral and accumulations of price increases. It then provides:

A price decrease for basic communications services shall not be deferred or accumulated, except that price decreases of less than two percent may be deferred by the local exchange carrier for one year. A price decrease required [875]*875under this section may be offset by a price increase for a basic communications service that would have been permitted under this section in the previous twelve-month period, but which was deferred by the local exchange carrier.

In October 2000 the OCA objected to Qwest’s price-plan adjustment, contending the rate of inflation, when measured according to the price plan, was 1.19%, which would result in a difference between productivity and inflation of 1.41%. The OCA also contended the statute and price plan require that reductions must be implemented across the board and that Qwest’s revenue-based method of reductions, to be applied to certain services, was unlawful.

The board ruled that the price plan allowed Qwest to make reductions to selected services, as it proposed, in order to implement the required decrease. The board also allowed Qwest to use the figures from the internet and not the figures provided by OCA, which were from the printed version of the same source. The board reasoned that the critical language in the price plan was that the figures used be the most current available and that the generally accepted definition of “published” was broad enough to include data publicly available regardless of its format— internet as well as printed form.

The OCA filed a petition for judicial review. The district court affirmed the board, concluding that the numbers from the BEA website provided the most accurate values and that the board’s decision to allow Qwest to use them was within the statute and within the zone of reasonableness. The court also found that reductions in price selectively based on revenue, rather than across the board, were reasonable and within the board’s discretion.

II. Standard of Review.

The board construed the applicable statutes in a way that supports its

conclusions, and the amount of deference we give to its interpretation is significant in our analysis of the case. Although courts give only limited deference to an agency interpretation of law, an “agency’s determination of a question of law is given careful consideration in areas of the agency’s expertise.” Madrid Home for the Aging v. Iowa Dep’t of Human Servs., 557 N.W.2d 507, 510-11 (Iowa 1996). The OCA argues that revisions to the Iowa Administrative Procedure Act (IAPA) in 1998 effectively overruled the Madrid Home decision, but we disagree. The revisions were intended to confirm and clarify “that interpretation is normally a judicial function, except when the legislature has delegated the discretionary authority to the agency.” Locate.Plus.Com v. Iowa Dep’t of Transp., 650 N.W.2d 609, 613 (Iowa 2002). One commentator has made the following observations with respect to the court’s determination of whether such authority has been delegated:

The reviewing court, using its own independent judgment and without any required deference to the agency’s view, must have a firm conviction from reviewing the precise language of the statute, its context, the purpose of the statute, and the practical considerations involved, that the legislature actually intended (or would have intended had it thought about the question) to delegate to the agency interpretative power with the binding force of law over the elaboration of the provision in question.

Arthur Earl Bonfield, Amendments to Iowa Administrative Procedure Act, Report on Selected Provisions to Iowa State Bar Association and Iowa State Government

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Office of Consumer Advocate v. Iowa Utilities Board, 663 N.W.2d 873, 2003 Iowa Sup. LEXIS 107, 2003 WL 21339888 (iowa 2003).

663 N.W.2d 873 (Office of Consumer Advocate v. Iowa Utilities Board) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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