Southwestern Bell Telephone Co. v. Oklahoma Corp. Commission

897 P.2d 1116, 1994 WL 707043

• Court: Supreme Court of Oklahoma
• Decided: April 4, 1995
• Docket: 83179
• Status: Published

Opinions

SUMMERS, Justice.

The Corporation Commission issued Order No. 380024 in Cause No. RM 930000090, and thereby promulgated rules that required telephone companies to upgrade their service, upgrade their networks, and provide lifeline service. The Order also provided for wide area calling plans. Southwestern Bell Telephone Company (SWBT) appealed, seeking review of the Order. SWBT then sought before the Commission a stay of the newly adopted rules pending the present appeal. The Commission denied the stay, and SWBT seeks a stay of the Order from this Court.

SWBT argues that the stay is mandatory pursuant to OMa. Const. Art. 9 § 21. Article 9 § 21 states in pertinent part that:

Upon the giving of notice of appeal from an order of the Corporation Commission, the Commission, if requested, shall suspend the effectiveness of the order complained of until the final disposition of the order appealed, and fix the amount of suspending or supersedeas bond.

This language clearly states that the Commission shall stay an order, if requested, conditioned upon a suspending bond. The Commission argues that because of statutes that amended the Constitution it now may not stay an order that creates a rule.

Article 9 § 35 of the Oklahoma Constitution gives the Legislature the power to alter, amend, revise, or repeal Art. 9 §§ 18 to 34, inclusive.¹ In 1993 the Legislature amended the Oklahoma Administrative Procedures Act (OAPA):

“The Corporation Commission shall be required to comply with the provisions of Article I of the Administrative Procedures Act except for subsections A, B, C and F of Section 303 of this title and Section 306 of this title. To the extent of any conflict or inconsistency ivith Article I of the Administrative Procedures Act, pursuant to Section 35 of Article IX of the Oklahoma Constitution, it is expressly declared that Article I of the Administrative Procedures Act is an amendment to and alteration of Sections 18 through ¾ of Article IX of the Oklahoma Constitution.” (emphasis added)

75 O.S.Supp.1993 § 250.4(A)(2), effective July 1, 1993. The question now becomes whether the amended Article I of the OAPA contains provisions inconsistent with A’t. 9 § 21.

Article I of the OAPA is codified at 75 O.S.1991 §§ 250.2-308.2, as subsequently amended. The Commission relies upon two sections of A’ticle I, §§ 308.2 and 306. Section 308 states in part:

Rules shall be valid and binding on persons they affect, and shall have the force of law unless amended or revised or unless a court of competent jurisdiction determines otherwise. Except as otherwise provided by law, rules shall be prima facie evidence of the proper interpretation of the matter to which they refer.

75 O.S.1991 § 308.2(C).

This statute plainly states that rules are valid until a court determines otherwise. The Commission argues that such language means that the Commission (or court) may not stay the effect of a rule until the Commission (or court) finally adjudicates a suit challenging the rule.

The Commission also relies upon § 306, which contains language similar to § 308.2:

“Rules promulgated pursuant to the provisions of the Administrative Procedures Act are presumed valid until declared otherwise by a district court of this state or the Supreme Court.” § 306(C).

Section 306 also provides for challenging an administrative rule by way of a declaratory judgment action in the District Court. § 306(A) and (D).

The Commission’s arguments may be summarized as saying (1) that the sections together prohibit District Courts from granting stays in declaratory judgment actions attacking administrative rules, and (2) further prohibit the Commission and the Supreme Court from granting stays in appeals from Commission rules. We must first take note of some basic principles underlying this controversy.

Declaratory judgments may be sought in a District Court to challenge an administrative rule. 75 O.S.1991 § 306. We have in numerous cases affirmed trial court declaratory judgments granting temporary and permanent injunctive relief.² We have explained that a declaratory judgment is an appropriate remedy when a person is adversely affected by an invalid statute and is threatened with its enforcement. State ex rel. Board of Examiners in Optometry v. Lawton, 523 P.2d 1064, 1065-1066 (Okla.1974). Because of the nature of such a suit courts use temporary injunctions to restrain the enforcement of statutes and ordinances in order to protect property rights pending resolution of a controversy. Anderson v. Trimble, 519 P.2d 1352, 1356 (Okla.1974) cert. denied, 419 U.S. 995, 95 S.Ct. 308, 42 L.Ed.2d 269 (1974). Courts have historically used their equitable powers to give parties temporary relief from the enforcement of challenged rules, ordinances, and statutes, so that rights are protected during litigation.

A stay suspends or arrests a proceeding, and is effective as to the parties to the proceeding. DLB Energy Corp. v. Oklahoma Corporation Commission, 805 P.2d 657, 662 (Okla.1991); In re Koome, 82 Wash.2d 816, 514 P.2d 520, 523 (1973). A stay pursuant to Art. 9 § 21 suspends or arrests the effect of a Commission proceeding as to the party appealing to this Court.³

The parties agree that this Court exercises appellate jurisdiction pursuant to Okla. Const. Art. 9 § 20 in this proceeding. That provision states in part:

An appeal from an order of the Corporation Commission affecting the rates, charges, services, practices, rules or regulations of public utilities, or public service corporations, shall be to the Supreme Court only....

The Supreme Court’s review of appeal-able orders of the Corporation Commission shall be judicial only,....

This section shows that the Supreme Court possesses appellate jurisdiction to review rules and regulations of the Commission, and that this review is judicial in nature. See Turpen v. Oklahoma Corporation Commission, 769 P.2d 1309, 1317 (Okla.1988) where we explained our judicial review over an appeal of a rate proceeding. When this Court stays an appealed Commission order that stay is a type of judicial process.

Similarly, when the Commission issues an order and thereby stays the effect of a Commission order on appeal as to an appealing party that stay order is judicial in character. In other words, the Art. 9 § 21 stay is based upon the Commission exercising its discretion, and determining the proper bond for a particular appeal. Such is an exercise of an adjudicative power, and not legislative or executive. See Monson v. State ex rel. Oklahoma Corporation Commission, 673 P.2d 839, 843 (Okla.1983) where we contrasted an act that is legislative in character with an exercise of an adjudicatory power. The decision on the amount of a bond calls for an adjudicative inquiry into the circumstances, i.e., the nature of the order being stayed and the proper amount for the protection of the competing interests. The Commission’s exercise of this Art. 9 § 21 adjudicatory power is not contrary to the OAPA.

The Commission points out that a rule is presumed valid until judicially determined otherwise. So too are statutes. Strelecki v. Oklahoma Tax Commission, 872 P.2d 910, 917 (Okla.1993). But such presumption does not strip a District Court of its power to grant a party temporary equitable relief from the threatened enforcement of a challenged statute in a declaratory judgment proceeding. Similarly, the presumed validity of a rule does not strip from the Commission its adjudicatory power to stay the effect of a rule as to a party appealing that rule to this Court. The presumed validity of a rule refers to the burden of establishing its invalidity that is placed upon the complaining party. Toxic Waste Impact Group, Inc. v. Leavitt, 755 P.2d 626, 630 (Okla.1988); J. Brotton Corp. v. Oklahoma Alcoholic Beverage Laws Enforcement Commission, 822 P.2d 683, 686 (Okla.1991); Hart v. Oklahoma Alcoholic Beverage Control Bd., 412 P.2d 142, 150 (Okla.1966). The presumed validity of a rule does not alter adjudicatory powers of courts or the Commission to grant stays.

The language of § 308.2 provides that rules have the effect of law. We have recently held that a valid rule has the force and effect of law. Indiana Nat. Bank v. State Dept. of Human Services, 857 P.2d 53, 60 (Okla.1993); Coppola v. Fulton, 809 P.2d , 1296 n. 21 (Okla.1991); Toxic Waste Impact Group, Inc. v. Leavitt, 755 P.2d 626, 630 (Okla.1988). We did not so hold based on any statute, but on earlier opinions. Texas Oklahoma Exp. v. Sorenson, 652 P.2d 285, 287 (Okla.1982); Rotramel v. Public Serv. Co., 546 P.2d 1015, 1017 (Okla.1975). We have also stated that rules of the Commission have the effect of law. Henry v. Corporation Commission of State of Okla., 825 P.2d 1262, 1267 n. 11 (Okla.1990); Forest Oil Corp. v. Corporation Commission of Oklahoma, 807 P.2d 774, 787 n. 40 (Okla.1990); Ashland Oil, Inc. v. Corporation Commission, 595 P.2d 423, 426 (Okla.1979).

We view the language of § 308.2 as Legislative recognition of this judicially-established principle. We decline to adopt the Commission’s view which would elevate administrative rules above statutes, and thereby place rules beyond the power of a District Court (or the Commission) to stay pending judicial resolution of a controversy. Thus the language of § 306 and § 308.2 does not prohibit a District Court, this Court, nor the Commission from staying the applicability of a rule or statute as to a party before it.

The Commission also argues that the OAPA contains no provision for a stay, and that such silence strips the Commission and the Courts from staying the effect of a rule pending appeal. We disagree. In Scripps-Howard Radio, Inc. v. Federal Communications Commission, 316 U.S. 4, 62 S.Ct. 875, 86 L.Ed. 1229 (1942) the U.S. Supreme Court explained the importance of a judicial stay during an appeal.

No court can make time stand still. The circumstances surrounding a controversy may change irrevocably during the pen-dency of an appeal, despite anything a court can do. But within these limits it is reasonable that an appellate court should be able to prevent irreparable injury to the parties or to the public resulting from the premature enforcement of a determination which may later be found to have been wrong. It has always been held, therefore, that, as part of its traditional equipment for the administration of justice, a federal court can stay the enforcement of a judgment pending the outcome of an appeal.

Id. 316 U.S. at 9-10, 62 S.Ct. at 879-80, footnote omitted. The importance of a stay is not lessened even when an appeal is from an act of an administrative agency and the issuance of the stay discretionary. The Court went on to say:

If the administrative agency has committed errors of law for the correction of which the legislature has provided appropriate resort to the courts, such judicial review would be an idle ceremony if the situation were irreparably changed before the correction could be made.

The existence of power in a reviewing court to stay the enforcement of an administrative order does not mean, of course, that its exercise should be without regard to the division of function which the legislature has made between the administrative body and the court of review. ‘A stay is not a matter of right, even if irreparable injury might otherwise result to the appellant. It is an exercise of judicial discretion. The propriety of its issue is dependent upon the circumstances of the particular case.’

Id. 316 U.S. at 10-11, 62 S.Ct. at 880, citations omitted.

After explaining the importance of a stay to judicial review the Court concluded that such importance would “compel the assumption that Congress would not, without clearly expressing such a purpose, deprive the Court of Appeals of its customary power to stay orders under review.” Id. 316 U.S. at 11, 62 S.Ct. at 880.⁴ The same may be said with regard to legislative enactments and appellate review in our state courts. Legislative silence on judicial stays in Article I of the OAPA does not deny to courts nor the Commission the power to grant them.

We conclude that the OAPA, as amended in 1993, has not revoked the Commission’s stay power pursuant to Okla. Const. Art. 9 § 21, and the Commission continues to own that power to stay the enforcement of a rule as to a party properly challenging the rule by an appeal to this Court. Okla. Const. Art. 9 § 21.

Parties in a court action may obtain, in the proper circumstances, temporary equitable relief from the threatened enforcement of a challenged statute or administrative rule. SWBT is treated the same as other parties, and may obtain an adjudicative stay of rules it has challenged. When SWBT presented its motion for a stay the Commission merely ruled that it could not issue a stay, and did not reach the usual issues resolved on a motion for stay such as the amount of a suspending bond. See MCI Telecommunications Corp. v. State, 823 P.2d 351, 353-354 (Okla.1992), where the Commission granted a stay to MCI and U.S. Sprint contingent upon a suspending bond. The Commission must determine the amount of the bond.

SWBT argues that network upgrades and rate changes are required by the rules challenged here, and that the same changes are required in SWBT’s Commission case PUD 662. SWBT further argues that it has pledged a $350,000,000 corporate bond in PUD 662 to insure compliance with PUD 662 and that a further bonding requirement is not necessary to insure compliance with this appeal and the underlying rules.

The proceeding before us is separate from PUD-662. To insure compliance with this Commission order on appeal SWBT must provide a suspending bond as determined by the Commission. Whether the bond in PUD-662 may be amended to include this proceeding and still protect the ratepayers and insure compliance in PUD-662 is a decision for the Commission to make in the first instance. See Wells Fargo & Co. Express v. State, 45 Okla. 115, 144 P. 1021 (1914), appeal dismissed, 242 U.S. 662, 37 S.Ct. 114, 61 L.E. 550 (1916) where this Court affirmed the Commission’s order for suspending bonds to stay an order prescribing rates, rules, and regulations applicable to all intrastate express business in Oklahoma. Pursuant to Okla. Const. Art. 9 §§ 20, 21, the Commission is hereby directed to determine the proper suspending bond for the challenged rules in this appeal and issue the appropriate stay.

LAVENDER, V.C.J., and SIMMS, HARGRAVE, OPALA, SUMMERS, JJ., concur. KAUGER, J., concurs in part, dissents in part. ALMA WILSON and WATT, JJ., dissent. HODGES, C.J., disqualified.

1 . Okla. Const. Art. 9 § 35 states:

Power of the Legislature After the second Monday in January, nineteen hundred and nine, the Legislature may, by law, from time to time, alter, amend, revise, or repeal sections from eighteen to thirty-four, inclusive, of this article, or any of them, or any amendments thereof: Provided, That no amendment made under authority of this section shall contravene the provisions of any part of this Constitution other than the said sections last above referred to or any such amendments thereof.

2 . Shadid v. Oklahoma Alcoholic Beverage Control Bd., 639 P.2d 1239, 1242 (Okla.1982), (granting injunctive and coercive relief in a declaratory judgment action may be proper under the circumstances); Independent School Dist. No. 89 of Okla. County v. Oklahoma City Federation of Teachers, 612 P.2d 719, 720, 724 (Okla.1980), (issuance of a temporary injunction in a declaratory judgment action affirmed); Pettigrew v. Denwalt, 431 P.2d 333 (Okla.1967), (temporary restraining order followed by a declaratory judgment and an injunction affirmed). See also Nucholls v. Board of Adjustment of City of Tulsa, 560 P.2d 556 (Okla.1977), (Supreme Court affirmed declaratory judgment of district court and injunction restraining Board from enforcing ordinance); State ex rel. Board of Examiners in Optometry v. Lawton, 523 P.2d 1064 (Okla.1974), (Supreme Court affirmed declaratory judgment and injunction against Board). Cf. Oklahoma Publishing Co., v. City of Moore, 682 P.2d 754, 757 (Okla.1984), (judgment for defendant reversed and trial court directed to grant the necessary relief in action seeking declaratory judgment and injunctive relief).

3 . We note that the Commission appears to equate SWBT's request for a stay with a complete injunction upon the enforcement of the challenged rules as to others not before the Court in this proceeding. In a judicial (or quasi-judicial) proceeding the scope of relief is limited to those who are parties to the proceeding. Ford v. Ford, 766 P.2d 950, 954 (Okla.1988). This jurisdictional limitation applies to temporary relief such as a stay.

4 . Scripps-Howard. appears to have withstood the test of time. See Sampson v. Murray, 415 U.S. 61, 74, 94 S.Ct. 937, 945, 39 L.Ed.2d 166 (1974), (the authority to grant a stay exists even though not expressly conferred by the statute which confers appellate jurisdiction over agency decisions); Arrow Transportation Company v. Southern Railway Company, 372 U.S. 658, 671 n. 22, 83 S.Ct. 984, 991 n. 22, 10 L.Ed.2d 52 (1963), (the power to issue a stay to preserve the status quo is incidental to a court’s jurisdiction to review final agency action, and will not be denied as an incidental appellate power in the absence of a clear congressional purpose to withhold that power); Williams v. U.S. Merit Systems Protection Board, 15 F.3d 46, 49 (4th Cir.1994), (a federal court’s power to issue a stay will be curtailed only by express language from Congress); V.N.A. of Greater Tift County, Inc. v. Heckler, 711 F.2d 1020, 1027 (11th Cir.1983), (stays are to prevent irreparable injury resulting from the premature enforcement of an agency decision); Sheehan v. Purolator Courier Corporation, 676 F.2d 877, 884 (2d Cir.1982), (federal court had power to maintain the status quo by injunction pending review of agency action); State v. Norene, 457 P.2d 926 (Alaska 1969), (issued stay that had the effect of exempting a permit holder from the enforcement of state statutes pending the appeal of an injunction); Gering v. Brown Hotel Corporation, 396 S.W.2d 332, 337 (Ky.App.1965), (court may change effective date of law or administrative order only in the form of provisional relief excusing immediate compliance pending judicial review). See also 2 C. Koch, Administrative Law and Practice, § 8.19 (1985) where the author explains the several well established methods to satisfy the need to prevent an agency from acting while a controversy is being litigated).