Opinion
No. 91-1652
Submitted May 6, 1992 —
Decided August 12, 1992.
APPEAL from the Public Utilities Commission of Ohio, No. 91-377-EL-CSS.
On January 20, 1984, intervening appellees, Cincinnati Gas Electric Company, Dayton Power Light Company, and Columbus Southern Ohio Electric Company (n.k.a. Columbus Southern Power Company), entered into an agreement to convert the William H. Zimmer Nuclear Power Station ("Zimmer") to a coal-burning facility. On October 23, 1984, appellee Public Utilities Commission ("the commission") initiated PUCO No. 84-1187-EL-UNC, In the Matter of the Restatement of the Accounts and Records of Cincinnati Gas Electric Company, Dayton Power Light Company, and Columbus Southern Ohio Electric Company, to determine what portion of the Zimmer nuclear plant should be excluded from plant assets for regulatory purposes should the conversion be successful. After formal negotiations, the parties to that proceeding, except appellant city of Cincinnati ("the city") and the Board of County Commissioners of Hamilton County, entered into a stipulation resolving the case. The commission unanimously approved the stipulation by its order of November 26, 1985, after conducting a series of public hearings as to its reasonableness, and upon due consideration of the city's testimony and arguments opposing its adoption.
Zimmer was successfully converted to a coal-burning facility and commenced operations in the spring of 1991, at which time intervening appellees filed applications for rate increases, in part to recover the cost to construct the plant. On July 27, 1990, apparently in anticipation of the rate filings and the application of the stipulation in the rate proceedings, the city made a public records request of the Governor's office for all documents related to Zimmer. The response to this request, received by the city in September 1990, contained a memorandum dated June 25, 1985 from the then-chairman of the commission, Thomas V. Chema, to then-Governor Richard F. Celeste. The memorandum reveals that the chairman had had conversations with intervening appellees' chief executive officers ("CEOs"), prior to their request for formal negotiations in PUCO No. 84-1187-EL-UNC, in which he encouraged the utilities to propose a settlement to the Zimmer issues pending before the commission. Specifically, the chairman informed the CEOs that the commission would be amenable to a plan which had three basic components: a substantial disallowance of the existing embedded cost to construct Zimmer as a nuclear facility, a ceiling on the total value of the plant recoverable in a future rate proceeding if the proposed conversion proved successful, and a commitment to use Ohio coal. The memorandum does not reveal on its face that the chairman's conversations with the CEOs advanced beyond this initial suggestion.
At the time of these discussions, other Zimmer issues were pending in PUCO Nos. 83-1321-EL-COI, In the Matter of the Commission Investigation into the Disposition of Zimmer Nuclear Power Plant Construction Costs, and 84-259-EL-CSS, Office of Consumers' Counsel v. Cincinnati Gas Electric Company et al. The city filed petitions to intervene in these proceedings on June 21, 1984. The commission served notice of the formal settlement conference in PUCO No. 84-1187-EL-UNC upon the parties and persons who had filed petitions to intervene in these related Zimmer cases, noting that resolution of PUCO No. 84-1187-EL-UNC could also affect their interests. (Pursuant to Ohio Adm. Code 4901-1-05[D] persons who have filed motions to intervene are to be served copies of all pleadings and other papers as if a party.) The city fully participated in this settlement conference. The stipulation in PUCO No. 84-1187-EL-UNC also resolved the issues presented in these related cases.
The CEOs subsequently presented the chairman with a proposed stipulation which would have authorized a $665 million disallowance and a $4.1 billion ceiling. In his memorandum to the governor, the chairman stated that, in his judgment, a stipulation should be accepted if a disallowance of $850 million and a ceiling of between $3.1 and $3.4 billion could be obtained. The stipulation ultimately negotiated by the parties and approved by the commission authorized a $861 million disallowance and a $3.6 billion ceiling.
On February 22, 1991, the city filed a complaint with the commission, pursuant to R.C. 4905.26, alleging that the former chairman engaged in improper ex parte communications with the CEOs and thus deprived the city of a fair hearing in PUCO No. 84-1187-EL-UNC. By entry of June 27, 1991, the commission dismissed the city's complaint, upon the motions of the intervening appellees, for failure to state reasonable grounds. The commission found that the city's complaint was legally deficient because it alleged impropriety on the part of only one of the five sitting commissioners — each of whom had voted to adopt the stipulation. It reasoned that, even assuming the city's allegation against the chairman to be true, the city would not be entitled to the relief it seeks (vacation of the order adopting the stipulation), because the order is supported by the votes of the four other commissioners and is supported by the record of the proceeding in PUCO No. 84-1187-EL-UNC.
R.C. 4903.081 provides:
"After a case has been assigned a formal docket number neither a member of the public utilities commission nor any examiner associated with the case shall discuss the merits of the case with any party or intervenor to the proceeding, unless all parties and intervenors have been notified and given the opportunity of being present or a full disclosure of the communication insofar as it pertains to the subject matter of the case has been made.
"Failure of any assigned examiner of the public utilities commission or any commissioner to abide by this section may, at the discretion of the commissioners, lead to that examiner's or commissioner's removal from a particular case or appropriate disciplinary action."
The commission denied the city's request for rehearing by entry issued July 30, 1991. The city now appeals to this court as a matter of right.
During the pendency of this appeal, Dayton Power Light Company's ("DP L's") rate case pending before the commission (PUCO No. 91-414-EL-AIR) was resolved by stipulation. The stipulation independently resolves the Zimmer valuation issues as to DP L (by capping the investment recoverable), and explicitly provides that the outcome of this appeal will not affect the stipulation or the rates which it supports. Consequently, the stipulation has rendered moot, as to DP L, the issues presented by this appeal. Accordingly, we grant DP L's motion that this appeal be dismissed as to it.
Fay D. Dupuis, City Solicitor, James F. McCarthy III, Mark S. Yurick, William M. Gustavson and Richard Ganulin, for appellant city of Cincinnati.
Lee I. Fisher, Attorney General, James B. Gainer, Duane W. Luckey and Jeffrey D. Van Niel, for appellee Public Utilities Commission of Ohio.
James J. Mayer and Michael A. Gribler; Squire, Sanders Dempsey, Alan P. Buchmann, Arthur E. Korkosz and Debra J. Horn, for intervening appellee Cincinnati Gas Electric Company.
Marvin I. Resnik and James R. Bacha; Porter, Wright, Morris Arthur, Samuel H. Porter, Kathleen M. Trafford and Daniel R. Conway, for intervening appellee Columbus Southern Power Company.
Stephen F. Koziar, Jr.; Faruki, Gilliam Ireland, Charles J. Faruki and Paul L. Horstman, for intervening appellee Dayton Power Light Company.
We begin our review of this proceeding under the assumption, made by the commission below, that former chairman Chema engaged in improper ex parte communications with the utilities' CEOs. The issue presented is whether the former chairman's assumed conduct would warrant vacation of the order in PUCO No. 84-1187-EL-UNC.
We assume, without finding, that former Chairman Chema engaged in improper ex parte communications with the utilities' CEOs in order to review the basis of the commission's determination below. We note that R.C. 4903.081 only proscribes ex parte communications on the "merits of the case." The face of the June 25, 1985 memorandum does not establish that the merits of PUCO No. 84-1187-EL-UNC were discussed, and thus does not establish that the chairman's conduct was improper.
The city argues that improper ex parte communications by one member of an administrative tribunal impermissibly taint the proceedings in which the improper conduct occurs and require vacation of the order issued therein. The appropriate remedy upon vacation is to remand the case to the administrative agency for reconsideration without the offending member participating. American Cyanamid Co. v. Fed. Trade Comm. (C.A.6, 1966), 363 F.2d 757; Berkshire Emp. Assn. of Berkshire Knitting Mills v. Natl. Labor Relations Bd. (C.A.3, 1941), 121 F.2d 235; and Cinderella Career Finishing Schools, Inc. v. Fed. Trade Comm. (C.A.D.C. 1970), 425 F.2d 583. The commission and the intervening appellees argue that improper ex parte communications do not automatically render an administrative order void, but voidable, and contend that vacation and reconsideration is an inappropriate remedy where, as here, the party complaining has not been prejudiced by the improper conduct. Professional Air Traffic Controllers Org. v. Fed. Labor Relations Auth. (C.A.D.C. 1982), 685 F.2d 547, 564-565. We agree.
In considering whether the order issued in PUCO No. 84-1187-EL-UNC should be vacated, the current commission conducted an independent review of the record in that proceeding, consistent with our reasoning in Ohio Transport, Inc. v. Pub. Util. Comm. (1955), 164 Ohio St. 98, 57 O.O. 108, 128 N.E.2d 22. There, appellant argued that the commission's chairman should have been disqualified from participating in the case by reason of his alleged prejudice against appellant. We found no such prejudice, but stated:
Four of the five commissioners who participated in PUCO No. 84-1187-EL-UNC, including the chairman, were no longer serving with the commission at the time this independent review was undertaken. The remaining commissioner recused himself from participating in this case.
"[A]ssuming, for the sake of argument, that such prejudice existed we cannot say that it was prejudicial to the appellant. All three members of the Public Utilities Commission agreed on the facts in this case; the dissenting member differed only on the punishment. Even if the member alleged to have been prejudiced should not have participated, this court is of the opinion that the evidence before the commission amply supports the order it made." Id. at 108, 57 O.O. at 114, 128 N.E.2d at 29.
This reasoning finds support in other jurisdictions, including the leading case of Professional Air Traffic Controllers, supra. There, the court considered the effects of ex parte communications on a determination rendered by the Federal Labor Relations Authority. In finding that administrative orders are not rendered automatically void by such conduct, the court established a number of criteria to be considered in determining whether an order should be vacated. Among these criteria is "whether vacation of the agency's decision and remand for new proceedings would serve a useful purpose." Id., 685 F.2d at 565. The court concluded that none of the parties had been prejudiced by the ex parte contacts which had taken place, and held that remand would be a futile gesture when the agency members who would reconsider the proceeding had already stated upon the record that they would support the original determination. Id. at 575. See, also, Seebach v. Pub. Serv. Comm. (App. 1980), 97 Wis.2d 712, 724, 295 N.W.2d 753, 760 ( Ex parte communication did not exert an improper influence on the Public Service Commission when its decision was based on the proper factors with ample supporting evidence. Remand "would be an empty solution where there is little likelihood of a changed outcome in this case."); Ottawa v. Illinois Pollution Control Bd. (1984), 129 Ill.App.3d 121, 84 Ill.Dec. 400, 472 N.E.2d 150 (a county agency which was tainted by improper ex parte contacts was nevertheless fully apprised of all relevant arguments in the case and its original determination [supported by 20-7 majority vote] would unlikely be affected by further proceedings); E E Hauling, Inc. v. Pollution Control Bd. (1983), 116 Ill. App.3d 586, 607, 71 Ill.Dec. 587, 604, 451 N.E.2d 555, 572, affirmed (1985), 107 Ill.2d 33, 89 Ill.Dec. 821, 481 N.E.2d 664 (absent prejudice to appellant from the ex parte communication, reversal and remand "would appear neither appropriate nor productive.").
The city does not allege that the commission's order adopting the stipulation in PUCO No. 84-1187-EL-UNC is not supported by the record in that proceeding, and thus we cannot find that the city was prejudiced by the former chairman's conduct. Ohio Transport, Inc., supra; Cincinnati v. Pub. Util. Comm. (1949), 151 Ohio St. 353, 39 O.O. 188, 86 N.E.2d 10. Absent such prejudice, we too find that it would be a futile gesture to vacate the commission's order in PUCO No. 84-1187-EL-UNC, particularly when the current commission (which would be charged with reconsidering that case) has already reviewed the record made therein and concluded that it supports the previous commission's determination. Accordingly, we affirm the commission's dismissal of the city's complaint.
Order affirmed.
SWEENEY, Acting C.J., YOUNG, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.
WILLIAM W. YOUNG, J., of the Twelfth Appellate District, sitting for MOYER, C.J.