Williams v. Mountain States Telephone & Telegraph Co.

763 P.2d 796, 93 Utah Adv. Rep. 3, 1988 Utah LEXIS 99, 1988 WL 110768

• Court: Utah Supreme Court
• Decided: October 21, 1988
• Docket: 870219
• Status: Published

Opinions

HALL, Chief Justice:

Williams seeks review of a Public Service Commission (“PSC”) order deregulating mobile radio telephone service rates in portions of Utah. Williams contends that the PSC’s findings are not supported by the record, that they are based upon incompetent hearsay evidence, and that the PSC did not adequately consider the factors listed in Utah Code Ann. § 54-8b-3(2) (1986) in reaching its decision.

In August 1985, Mountain States Telephone & Telegraph Company (“Bell”) filed a petition with the PSC seeking, in part, an order deregulating mobile telephone service rates in several Utah communities. Williams, a competitor of Bell’s, opposed this requested relief.

Hearings were held in November 1986. Over Williams’ objection, the PSC admitted testimony and exhibits of witness Murphy, Bell’s only direct witness in support of its petition. Murphy, who was not qualified as an expert, admitted that his testimony and exhibits contained facts obtained from a third-party source about which he had no personal knowledge. Two witnesses presented by the Utah Division of Public Utilities, Capshaw and Compton, admitted that portions of their testimony were based upon Murphy’s testimony.

In April 1987, the PSC issued its report and order stating:

1. Effective immediately, regulated suppliers of mobile telephone service in the following cities and surrounding areas, may remove rate levels from their tariffs:

Moab Monticello

Ogden Salt Lake City

Provo Price

Vernal

Such suppliers need not seek prior approval of changes in rates for mobile telephone service.

2. Rate levels for rural radio service shall continue to be tariffed and subject to all regulatory requirements of title 54.

Williams’ petition for rehearing was subsequently denied, and he initiated this proceeding.

Williams first contends that the PSC failed to follow the procedures expressly established by the legislature for partially or wholly exempting public telecommunications service providers from regulation. As support, Williams cites Utah Code Ann. § 54-8b-3 (1986). That section provides in part:

(1) The commission is vested with power and jurisdiction to partially or wholly exempt from any requirement of this title any telecommunications corporation or public telecommunications service in this state.

(2) The commission, on its own initiative or in response to an application by a telecommunications corporation or a user of a public telecommunications service, may, after public notice and an opportunity for a hearing, make findings and issue an order specifying its requirements, terms, and conditions exempting any telecommunications corporation or any public telecommunications service from any requirement of this title either for a specific geographic area or in the entire state if the commission finds that the telecommunications corporation or service is subject to effective competition, that customers of the telecommunications corporation or service have reasonably available alternatives, and that the telecommunications corporation or service does not serve a captive customer base, and if such exemption is in the public interest of the citizens of the state. In determining whether to exempt any telecommunications corporation or public telecommunications service from any requirement of this title, the commission shall consider all relevant factors including, but not limited to: (a) the number of other providers offering similar services; (b) the intrastate market power and market share within the state of Utah of the telecommunications corporation requesting an exemption; (c) the intrastate market power and market share of other providers; (d) the existence of other providers to make functionally equivalent services readily available at competitive rates, terms, and conditions; (e) the effect of exemption on the regulated revenue requirements of the telecommunications corporation requesting an exemption; (f) the ease of entry of other providers into the marketplace; (g) the overall impact of exemption on the public interest; (h) the integrity of all service providers in the proposed market; (i) the cost of providing such service; (j) the economic impact on existing telecommunications corporations; and (k) whether competition will promote the provision of adequate services at just and reasonable rates.

(Emphasis added.)

Williams argues that since the PSC refused to require and/or accept competent evidence concerning several of these relevant factors, the PSC could not have properly “considered” them, and therefore its findings and order are invalid. Specifically, Williams claims that the PSC failed to consider at least the following: (1) the existence of other providers to make functionally equivalent services readily available at competitive rates, terms, and conditions; (2) the effect of exemption on the regulated revenue requirements of the telecommunications corporation requesting an exemption; (3) the economic impact on existing telecommunications corporations; and (4) the cost of providing services. Williams maintains that the PSC must consider each of the legislatively required factors and that “commission expertise” alone is an inadequate basis upon which to “consider” them.

In response, the PSC in its “Report and Order" and respondents in their brief indicate that the requirements of section 54-8b-3(2) are satisfied when the PSC merely considers whether one or more of the named factors are relevant to an issue before it or when the PSC determines that presentation of evidence regarding a specific statutory factor is, in its own view, unnecessary. In this regard, the PSC in its “Report and Order” stated:

By expressly requiring findings as to the four, but merely indicating that the other [subsections (a) through (k) factors] shall be considered, the Legislature is indicating its intent that the latter are to serve as a general guide of relevant questions to examine but is not necessarily indicating that all of the criteria are necessarily relevant in a given case....

Furthermore, examination of the additional [(a) through (k)] factors demonstrates that it would be virtually impossible to reduce some of them to factual testimony or to precise factual conclusions. Many of them are obviously general policy consideration [sic] that cannot be expressed in precise factual terms.

Additionally, respondents now claim:

It is apparent in reviewing paragraph 15.g of the Report and Order in light of the Commission’s interpretation of the statute that the Commission concluded that [an (a) through (k)] factor can be first considered for its relevancy in a particular case. If upon such consideration it is determined that the factor is irrelevant, the Commission need not receive specific substantive evidence on the factor in order to find that sufficient competition exists to grant a full or partial exemption from regulation.

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Here, the Commission considered the subject of the cost of providing mobile telephone service pursuant to Section 54-8b-3(2)(i), but reasoned that evidence of specific costs was not necessary. The Commission interpreted Section 54-8b-3(2) to mean that it must consider the enumerated issues in reaching its decision, but that it did not need to receive specific evidence on each enumerated [ (a) through (k) ] factor. [Citation to the record omitted.] The Commission’s technical expertise concerning the relationship between competitiveness and costs in the mobile telephone industry merits deference from this court.

When reviewing PSC decisions, we generally give them no deference on questions of general law and the greatest deference on questions of basic fact. Between these extremes lie “mixed questions of law and fact” which include “commission interpretations of the operative provisions of the statutory law it is empowered to administer.” ¹ As we noted in Bayle v. Board of Review of Industrial Commission:2 “The construction of a statute by the governmental agency charged with its administration will be given considerable weight by this Court. However, that construction is still subject to judicial review for consistency with the governing legislation and prior decisions of this Court.”³

We do not defer to agency decisions when they are unreasonable or irrational or if the agency has acted in an arbitrary and capricious manner.⁴ When an agency decision is contrary to law in that it fails to meet the criteria of statutory construction generally followed, it is deemed arbitrary and capricious.⁵ Reasonableness, on the other hand, is determined “with reference to the specific terms of the underlying legislation.” ⁶

The position taken by the PSC and the respondents in this case is unreasonable in that it is contrary to the plain language of the statute. The legislature states that “the commission shall consider all relevant factors including, but not limited to: [factors (a) through (k)].” The intent of the legislature is clear; factors (a) through (k) are the minimum factors the commission shall consider. Other factors beyond (a) through (k) shall be considered if relevant. The PSC may not arbitrarily disregard legislative provisions at its convenience, just as it may not rewrite the statutory requirements of section 54-8b-3(2) by declaring “irrelevant” those factors which the legislature expressly deems relevant and instructs the PSC to at least consider. The claim that the PSC may “consider” the enumerated issues in reaching its decision but that it need not receive evidence on each statutory factor contradicts the plain language and object of the statute, and in making such determination, the PSC has exceeded its authority in this case.

Similarly, respondents’ argument that this Court should give deference to the PSC’s expertise in lieu of requiring the PSC to request and accept evidence concerning each of the legislatively mandated factors is also without merit. As this Court stated in Mountain States Legal Foundation v. Utah Public Service Commission: ⁷

[I]f the Commission has not acted within the powers delegated to it by the Legislature, or there is no legal basis in fact for the findings of the Commission, or the findings do not rationally support proper legal conclusions, an order is contrary to law and must be set aside. Commission expertise alone is not an adequate basis upon which ultimate findings as to reasonableness of rates and classifications of customers may be based.⁸

Although Mountain States dealt with a PSC factual determination to which we generally give great deference, the rationale is equally applicable in this instance where the question is one of “mixed law and fact,” to which we give PSC determinations less deference. We will not defer to commission expertise when it acts outside the bounds the legislature dictates. The legislature, in enacting the subject statute, established a clear and concise procedure to be followed by the PSC in determining whether to exempt any telecommunications corporation or any public telecommunications service from the requirements of title 54. Requiring the PSC to follow the legislature’s procedure does not, as respondents claim, “eliminate the Commission’s power,” but rather establishes the perimeters within which the PSC may properly exercise its expertise, authority, and jurisdiction.⁹

Based upon the foregoing, we need not determine the efficacy of Williams’ other points on appeal. The order of the Public Service Commission is vacated and set aside.

HOWE, Associate C.J., STEWART, J., and GREENWOOD, Court of Appeals Judge, concur.

1 . Utah Dep’t of Admin. Servs. v. Public Serv. Comm’n, 658 P.2d 601, 608 (Utah 1983).

2 . 700 P.2d 1135 (Utah 1985).

3 . Id. at 1137 (citing Utah Dep’t of Admin. Servs., 658 P.2d at 610 (quoting McPhie v. Industrial Comm’n, 567 P.2d 153, 155 (1977)); West Jordan v. Department of Employment Sec., 656 P.2d 411, 412 (Utah 1982)).

4 . 658 P.2d at 609-12; Wells Fargo Armored Serv. v. Public Serv. Comm'n, 626 P.2d 450, 451 (Utah 1981).

5 . McPhie, 567 P.2d at 155-56; West Jordan, 656 P.2d at 411-12.

6 . Utah Dep’t of Admin. Servs., 658 P.2d at 611.

7 . 636 P.2d 1047 (Utah 1981).

8 . Id. at 1051.

9 . See id.