Opinion
No. C0-97-606.
Filed December 30, 1997.
Appeal from the Minnesota Public Utilities Commission, Docket No. P-421/C-95-1036.
Gregory A. Ludvigsen, Ludvigsen's Law Offices, (for relator Members of MIPA).
James A. Gallagher, Martha J. Keon, Maun Simon, PLC., (for respondent US West Communications).
Hubert H. Humphrey III, Attorney General, Margie E. Hendriksen, Assistant Attorney General, (for respondent MPUC).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Respondent US West Communications, Inc. (US West) provided only public access lines (PAL) service to relator, members of the Minnesota Independent Payphone Association (MIPA). Respondent Minnesota Public Utilities Commission (MPUC) determined that US West was required to also provide a less expensive one-party, flat-rate business line (1FB) service to MIPA members under Minn. Stat. § 237.121(5) (Supp. 1995) (effective date August 1, 1995). MIPA members challenge the Commission's determination that US West was not required to refund to MIPA members the difference between the amount paid for PAL service and the amount that would have been paid for 1FB service from August 1, 1995 until US West began providing 1FB service to MIPA members. We affirm.
FACTS
In 1984, the MPUC authorized the resale of telephone services through payphones owned by entities other than US West. In re Complaint by Airport Sys., Inc. , Docket No. P-421/C-82-4645 (MPUC June 29, 1984) (1984 customer-owned, coin-operated telephone (COCOT) order). A consumer protection provision in the 1984 COCOT order, intended to ensure that end users received an adequate level of payphone service, required COCOT providers to subscribe to PAL service. PAL service is a bundled service that includes features not included in 1FB service, and US West charges a higher rate for PAL service than for 1FB service.
MIPA is a group of COCOT providers, and its members are authorized to provide payphone service in Minnesota. In the summer of 1995, some MIPA members submitted requests to US West to have PAL lines converted to 1FB lines as of August 1, 1995, when the amendment to Minn. Stat. § 237.121(5) took effect. US West denied the requests because it disagreed with MIPA's interpretation of Minn. Stat. § 237.121(5) and because the 1984 COCOT order required COCOT providers to subscribe to PAL service.
In a complaint filed against US West, MIPA requested that the MPUC order US West to allow COCOT providers to convert from PAL lines to 1FB lines and to refund to MIPA members the difference between the amount paid for PAL service and the amount that would have been paid for 1FB service from August 1, 1995 until US West began providing 1FB service to MIPA members. US West did not provide 1FB service to COCOT providers while the complaint was pending.
The MPUC agreed with MIPA's interpretation of Minn. Stat. § 237.121(5) and ordered US West to offer 1FB service to any COCOT provider requesting it. The MPUC directed US West to continue offering the bundled PAL service and unbundle the services provided by PAL and offer them separately for COCOT providers that did not require all of the services included in the bundled PAL service to provide adequate payphone service. The MPUC declined to order US West to pay any refunds for the following reasons:
First, it appears that during the period in question (August 1, 1995 to present), [US West] did in fact provide the COCOT providers with PAL service (i.e. all the services bundled together as PAL). Although MIPA asserted that many of its members did not need some or all of the additional services involved with PAL as compared with 1FB, the record does not establish which members used what portion of the PAL services.
But even more important, this is the first Order in which the Commission has interpreted and applied the recently enacted Minn. Stat. § 237.121(5) (Supp. 1995). In this Order, the Commission has interpreted the statute as requiring [US West] to sell 1FB service to COCOT providers for resale. The Commission notes that its conclusion in this matter required the careful examination of the issue in a proceeding such as this. [US West's] position, though not eventually adopted by the Commission, was not unreasonable. Many COCOT providers will be unable to provide adequate pay telephone service just using 1FB and will require at least some of the additional services that to-date have been bundled as PAL. Though the Commission has clarified in this Order that [US West] may no longer promote adequate payphone service by COCOT providers by requiring that they use PAL lines for resale, assurance of adequate pay telephone service remains a legitimate concern. The Commission concludes that [US West] proceeded in good faith, in a way it viewed as consistent with a valid Commission Order of long-standing duration and application and tariffs adopted consistent with that Order.
DECISION
This proceeding was an expedited contested case proceeding. See Minn. Stat. § 237.081, subd. 2(c) (1994) (if MPUC finds that a complaint raises a significant factual issue, a contested case hearing shall be conducted under chapter 14 unless the parties and the MPUC agree that an expedited hearing is appropriate). The appropriate standard of review, therefore, is the standard applicable to contested case proceedings, not the standard applicable to agency decisions that are legislative in nature. This court may reverse or modify an administrative agency's decision in a contested case proceeding only if the decision is:
(a) In violation of constitutional provisions; or
(b) In excess of the statutory authority or jurisdiction of the agency; or
(c) Made upon unlawful procedure; or
(d) Affected by other error of law; or
(e) Unsupported by substantial evidence in view of the entire record as submitted; or
(f) Arbitrary or capricious.
Minn. Stat. § 14.69 (1996). The party seeking reversal of the agency's decision has the burden of proving that the decision violated one or more of the provisions of Minn. Stat. § 14.69. Markwardt v. State, Water Resources Bd. , 254 N.W.2d 371, 374 (Minn. 1977).
US West argues that the MPUC only is authorized to award only prospective relief under Minn. Stat. § 237.081, subd. 4 (1994), which provides:
Whenever the commission finds, after a proceeding under subdivision 2, that (1) a service that can be reasonably demanded cannot be obtained, (2) that any rate, toll, tariff, charge, or schedule, or any regulation, measurement, practice, act, or omission affecting or relating to the production, transmission, delivery, or furnishing of telephone service or any service in connection with telephone service, is in any respect unreasonable, insufficient, or unjustly discriminatory, or (3) that any service is inadequate, the commission shall make an order respecting the tariff, regulation, act, omission, practice, or service that is just and reasonable and, if applicable, shall establish just and reasonable rates and prices.
In Peoples Natural Gas Co. v. Minnesota Pub. Utils. Comm'n , 369 N.W.2d 530, 534-36 (Minn. 1985), the supreme court held that the MPUC did not have the authority to require a public utility to refund revenues collected from customers in violation of a commission order. In Peoples , the governing statute authorized the MPUC, upon a finding that rates and charges were unreasonable and discriminatory, to set reasonable rates and charges "to be imposed, observed and followed in the future in lieu of those found to be unreasonable or unlawful." Id. at 534-35. Minn. Stat. § 237.081, subd. 1, in contrast, does not limit the MPUC's authority to award only prospective relief.
In In re Application of Minnegasco , 565 N.W.2d 706, 711-13 (Minn. 1997), the supreme court held that, under Minn. Stat. § 216.27, the MPUC had implied authority to order refunds even though the statute did not expressly grant such authority and that the MPUC could order a recoupment remedy to compensate Minnegasco for lost revenue resulting from a rate order that was reversed on appeal. Minnegasco , 565 N.W.2d at 713. The court noted that Minn. Stat. § 216.27 did not expressly limit the MPUC's orders to solely prospective effect and that it would be inequitable to deny Minnegasco a remedy for the MPUC's illegal rate order. Id. at 711-13. We conclude that, under Minnegasco , the MPUC had implied authority to order refunds under Minn. Stat. § 237.081.
MIPA argues that the MPUC erred in declining to order refunds in this case. No mandatory duty is imposed on the MPUC to order refunds. See Minn. Stat. § 237.461, subd. 1 (1994) (MPUC may enforce chapter 237 by criminal prosecution, action to recover civil penalties, injunction, action to compel performance, and other appropriate action); Minn. Stat. § 237.081, subd. 4 (MPUC shall make order that is just and reasonable). MIPA members did not present evidence specifically proving their damages, and the record indicates that some MIPA members needed some or all or the features included in PAL service to provide adequate payphone service to their customers. It would have been impractical for the MPUC to order refunds under these circumstances. Other reasons the MPUC declined to order refunds were that US West's interpretation of Minn. Stat. § 37.121(5) was reasonable and that the provision of only PAL service to MIPA members was consistent with the 1984 COCOT order. Finally, we note that telephone regulation is a technical area, so this court will defer to the agency's expertise in determining an appropriate remedy. See Peoples , 369 N.W.2d at 535 ("[p]ublic regulation of utilities is an intricate, ongoing process"); see also Reserve Mining Co. v. Herbst , 256 N.W.2d 808, 824 (Minn. 1977) (courts should defer to the agency's expertise and special knowledge in the field of their technical training, education, and experience). The MPUC's decision not to order refunds in this case was reasonable, and MIPA has failed to establish that the decision violated a provision in Minn. Stat. § 14.69.