Opinion
No. 79-1461
Decided July 23, 1980.
Public Utilities Commission — Telephone companies — Service classifications — Constitutionality.
APPEAL from the Public Utilities Commission.
On July 8, 1976, the Public Utilities Commission issued an opinion and order in case No. 74-761-TP-AIR which approved, among other things, the substitution by the Ohio Bell Telephone Company (Ohio Bell) of measured rate local business service for flat rate service.
On April 17, 1978, a complaint was filed requesting reclassification of elementary and secondary schools as residential. On May 15, 1978, Ohio Bell and the complainants entered into a stipulation, agreement, and recommendation wherein the schools agreed to dismiss their complaint and Ohio Bell agreed to modify the measured rate service as it applied to them by placing a ceiling on the amount they could be charged under the measured rate system in recognition of their unique needs. On May 25, 1978, the commission found the stipulation, agreement, and recommendation to be reasonable and approved a tariff giving the schools this special treatment.
Subsequently, numerous complaints were filed regarding the adequacy and sufficiency of the classification system used by Ohio Bell to determine which customers received measured rate service, including one filed June 8, 1978, by the County Commissioners' Association of Ohio, appellants herein, on behalf of the association and the state's county governments (case No. 78-940-TP-CSS). Due to the large number of complaints filed, the commission, on its own motion, on December 14, 1978, initiated an investigation into the classification system (case No. 78-1487-TP-COI).
Numerous parties intervened, including the appellants. After taking testimony, in February 1979, the commission ordered, on July 18, 1979, that the investigation be dismissed and no new classifications be created. Because the special treatment of schools was the product of an approved stipulation, the commission further ordered that the situation be reviewed in a separately docketed proceeding. A number of parties, including appellants, did not argue that the schools should not be given special treatment, but rather that the counties should receive the same treatment as the schools. The commission refused to make such an order.
A hearing had been held on appellants' complaint on August 1, 1978, prior to the initiation of the commission's investigative case. The notice regarding the investigative case stated as follows:
"ORDERED, That upon written request of the parties of record in any other case seeking reclassification under Ohio Bell's existing tariff, notice be taken of the portions of the transcript in said cases shown to be relevant to the subject matter of the instant investigation, and the same be adopted into this proceeding."
At the hearing in the investigative case the County Commissioners' Association requested that the record from this complaint case be adopted into the investigative case. It was noted that Ohio Bell requested that the record from the investigative case be adopted into the record of all pending complaint proceedings. The hearing examiner granted the association's request. In the complaint case, the commission administratively noticed the record of the investigative case.
On November 28, 1979, the commission entered its findings and order in the complaint case, which incorporated the conclusion of the investigative case and ordered that the matter be dismissed without altering the classification as urged by the appellants.
Appellants appealed both decisions to this court, arguing that the differentiation between schools and county governments is contrary to statute and in violation of the guarantees of equal protection and due process of law contained in the Ohio and United States Constitutions. In addition, appellants argue that the disposition of their complaint (case No. 78-940-TP-CSS) is invalid because (1) the length of time taken to decide the case was unreasonably long, (2) the order did not contain sufficient findings of fact, and (3) it was the result of administratively noticing the record of the investigative case.
The cause is now before this court as a matter of right.
Messrs. Lucas, Prendergast, Albright, Gibson, Newman Gee, Mr. Rankin M. Gibson, Mr. Robert J. Walter and Ms. Sharon V. Fladen, for appellants.
Mr. William J. Brown, attorney general, and Mr. Marvin I. Resnik, for appellee Public Utilities Commission.
Mr. Donald Morrison and Mr. Charles S. Rawlings, for intervening appellee Ohio Bell Telephone.
Appellants argue that there is no reasonable basis for distinguishing between schools and counties and, as a consequence, that the decisions and orders of the commission must be found to be unlawful and unreasonable based upon R.C. 4905.33 and 4905.35. Appellants also contend that the differentiation between counties and schools is violative of the Equal Protection and Due Process Clauses of the United States Constitution as well as the substantially equivalent guarantees afforded in Sections 1, 2, 16, and 19 of Article I of the Ohio Constitution.
In the case at bar appellants are arguing that the counties should receive the same treatment as the schools. This court can only reverse an order of the Public Utilities Commission on statutory grounds if it is unlawful or unreasonable. R.C. 4903.13.
R.C. 4905.33 states, in relevant part:
"No public utility shall directly or indirectly, or by any special rate, rebate, drawback, or other device or method, charge, demand, collect, or receive from any person, firm, or corporation a greater or lesser compensation for any services rendered, or to be rendered, except as provided in Chapters 4901, 4903, 4905, 4907, 4909, 4921, 4923, and 4925 of the Revised Code, than it charges, demands, collects, or receives from any other person, firm, or corporation for doing a like and contemporaneous service under substantially the same circumstances and conditions."
R.C. 4905.35 states:
"No public utility shall make or give any undue or unreasonable preference or advantage to any person, firm, corporation, or locality, or subject any person, firm, corporation, or locality to any undue or unreasonable prejudice or disadvantage."
This court stated in paragraph ten of the syllabus in Cleveland Elec. Illuminating Co. v. Pub. Util. Comm. (1975), 42 Ohio St.2d 403, as follows: "Different rates for various classes of customers may be charged by a utility where the classifications are based upon the quantity used, the time when used, the purpose for which used, the duration of use, and other reasonable considerations which essentially distinguish the service required to meet the various demands." See, also, Mahoning Co. v. Pub. Util. Comm. (1979), 58 Ohio St.2d 40; F. R. Lazarus Co. v. Pub. Util. Comm. (1954), 162 Ohio St. 223.
If the facts before the commission form a reasonable basis for distinguishing between the counties and schools, we cannot reverse the commission on appellants' statutory claim.
It is urged by appellee Ohio Bell that the different treatment is permissible under R.C. 4905.34. Because of our disposition regarding R.C. 4905.33 and 4905.35, we find it unnecessary to reach this issue.
The equal protection and due process claims involve the failure of the commission to give the counties an economic benefit enjoyed by the schools. Under either guarantee, a rational-basis analysis must be used, for no fundamental right or suspect classification is involved. Massachusetts Bd. of Retirement v. Murgia (1976), 427 U.S. 307; Dandridge v. Williams (1970), 397 U.S. 471; Breard v. Alexandria (1951), 341 U.S. 622; Holloway v. Brown (1980), 62 Ohio St.2d 65, 75. Under this analysis, the state action (which is allowing Ohio Bell to charge schools a rate different from that charged counties) is valid if it bears some rational relationship to a legitimate state interest.
The schools were given special treatment because of (1) their unique status, (2) their unique needs, (3) their inability to pass on costs, and (4) their financial plight. Although there are similarities between the counties and the schools, the differences justify the differential in treatment both under the statutes and the Ohio and United States Constitutions.
It is true that schools and counties are experiencing financial difficulties and both do rely on tax levies to pay their costs. Schools, however, have a relatively inflexible small number of services they are expected to provide the public at large. As a consequence their inability to pass on costs is a highly significant factor herein. On the other hand, counties perform a multitude of services. Some of these, of course, are essential. Financial problems, however, are much more easily handled by the counties without a drop in essential services. Thus, the schools, vis a vis the counties, are uniquely in need of special treatment. Because of this uniqueness, we must hold that the commission's refusal to order that the counties be treated the same as the schools is not unlawful, unreasonable, or unconstitutional.
Appellants argue that they were denied due process of law when the commission administratively noticed the investigative case in appellants' complaint case. In Forest Hills Utility Co. v. Pub. Util. Comm. (1974), 39 Ohio St.2d 1, this court reversed the commission's order in part, because the commission had administratively noticed facts obtained in an independent investigative proceeding in an improper manner.
In Forest Hills Utility, supra, the decision regarding administrative notice was based on the rule contained in Annotation 18 A.L.R. 2d 552, at page 562, as follows:
"Even though an administrative authority has statutory power to make independent investigations, it is improper for it to base a decision or findings upon facts so obtained, unless such evidence is introduced at a hearing or otherwise brought to the knowledge of the interested parties prior to decision, with an opportunity to explain and rebut."
In the case at bar, however, unlike the situation in Forest Hills Utility, supra, appellants had notice and ample opportunity in both proceedings to explain and rebut the evidence administratively noticed.
The notice for the investigative case clearly informed the appellants of such a possibility and the appellants intervened in that case. Following the issuance of the opinion and order in the investigative case, the appellants had ample time to request an opportunity to rebut the record, but there is no indication that they made such a request prior to the hearing.
Appellants claim that, somehow, the length of time required to issue an opinion and order in their complaint case rendered the order invalid. Unreasonable delay may be the basis for the issuance of a writ of mandamus ordering that a decision be issued, see State, ex rel. Turpin, v. Court of Common Pleas (1966), 8 Ohio St.2d 1, but, there is no basis, under the statutes or the Constitution, to invalidate a Public Utilities Commission's decision due to a delay in its issuance.
Finally, appellants contend that the opinion and order of the commission in their complaint case, No. 78-940-TP-CSS, is invalid because it fails to fulfill the requirements for commission orders contained in R.C. 4903.09.
R.C. 4903.09 states:
"In all contested cases heard by the public utilities commission, a complete record of all of the proceedings shall be made, including a transcript of all testimony and of all exhibits, and the commission shall file, with the records of such cases, findings of fact and written opinions setting forth the reasons prompting the decisions arrived at, based upon said findings of fact."
In the complaint case the commission adopted the findings it had made in its investigative case. These findings constituted a sufficient ground for the order issued in the complaint case.
Accordingly, the orders of the Public Utilities Commission are affirmed.
Orders affirmed.
CELEBREZZE, C.J., HERBERT, BELL, P. BROWN, SWEENEY, LOCHER and HOLMES, JJ., concur.
BELL, J., of the Ninth Appellate District, sitting for W. BROWN, J.