2001 Summaries of PUC Court Decisions

First Quarter

Peek ‘N Peak Resort & Conference Center v. Pa. PUC

No. 3464 C.D. 1997 (Pa. Cmwlth.) (February 7, 2001).
In an unreported opinion, Commonwealth Court affirmed a Commission decision not to issue a requested declaratory order. The court held that, under Section 331(f), the decision as to whether a declaratory order should be issued is a matter with the agency’s sound discretion, and that the there was no abuse of this discretion here because the PUC lacked the legal support necessary to resolve the case.

Accordingly, the PUC did not abuse its discretion by not resolving in Peek’s favor the issue of whether Penelec would come under the New York Public Service Commission’s (NYPSC) jurisdiction if it provided service to the Peek N’ Peak resort in New York. The PUC believed that it could not decide the matter in a vacuum that excluded the NYPSC and that both Peek and Penelec failed to secure a declaration by the NYPSC as to whether the delivery of electricity at a point of service in Pennsylvania for consumption in New York would subject a Pennsylvania utility to New York’s authority. In addition, the PUC did not abuse its discretion by not declaring that Penelec shall deliver electric service to Peek at a point of delivery within Penelec’s service territory. The court agreed with the PUC’s decision that facts were still in dispute.

Milkie v. Pa. PUC

No. 2859 C.D. 1998, 768 A. 2d 1217 (Pa. Cmwlth. 2001) (filed February 23, 2001)
Commonwealth Court affirmed the PUC’s decision to dismiss a consumer’s high bill complaint. The court reasoned that substantial evidence supported the PUC’s implicit finding that the consumer’s general and conclusory testimony regarding usage was outweighed by evidence that the meters had been checked and found to be accurate and that the potential energy use in the home was greater than the use billed.

The court also clarified the “Waldron rule” as providing that, even where a utility presents testimony that a meter has been tested and found to be accurate, a consumer may present circumstantial evidence that metered usage exceeded the actual usage; thus, the rule acts as a protective device to protect a complainant from dismissal due to his inability to marshal direct proof of a meter malfunction. However, the ultimate burden of persuasion remains with the consumer and it was not meet in this case.

City of Lancaster (Water) v. Pa. PUC

No. 2722, et al. C.D. 1999, 769 A. 2d 567 (Pa. Cmwlth. 2002)(filed March 20, 2001), petition for allowance of appeal denied April 18, 2002.
Commonwealth Court denied the PUC’s motion to quash the City of Lancaster’s first petition for review but, on the merits, affirmed the decision of the PUC. The PUC had moved to quash the first petition for a review since reconsideration had been timely granted. However, the court concurred with the City’s argument that one of the critical questions raised in its earlier petition for review was still pending and, therefore, should not be quashed.

On the merits, the court stated that it should not substitute its judgment for that of the PUC when substantial evidence supports the PUC’s decision on a matter within the commission’s expertise. The court found that the ratemaking issues raised by the City were within the PUC’s expertise and supported by substantial evidence and, accordingly the court affirmed the PUC’s determinations as to the common equity return allowance and the 28% tax factor adjustment.

Armstrong Communications v. Pa. PUC

No. 1359 C.D. 1999; Citizens Telephone Co. of Kecksburg v. Pa. PUC, No. 1463 C.D. 1999, 768 A. 2d 1230 (Pa. Cmwlth. 2002)(filed March 12, 2001).
Commonwealth Court affirmed the decision of the PUC in these two consolidated cases holding that its interpretation of Section 251(f) rural exemption provisions of the Telecommunications Act of 1996 (TA-96) was supported by substantial evidence and should be given due deference.

First, the PUC found that the ILEC was exempt under TA-96 from interconnection obligations because it was “providing” cable service on February 8, 1996. The PUC and the court accepted the argument that being physically able to provide the service as of that date was enough to satisfy the statutory standard for the exemption. Second, the PUC held that the granting the interconnection request would be economically burdensome to the ILEC and would require local rate increases, compared to Armstrong’s apparent fitness and technical ability to deliver telecommunications services over its distinctly independent cable network.

Third, the court held that, given the intent of TA-96 to promote competition, the CLEC was not required to demonstrate public need for the proposed service. Finally, the court held that the PUC was within its power to rule that the ILEC exemption was not perpetual and to set a timetable for its removal; this was viewed, by the court, as an appropriate time period to allow the ILEC to prepare for competition.

Second Quarter

City of Chester v. Pa. PUC, No. 2212, C.D. 2000; Consolidated Rail Corp. v. Pa. PUC

No. 2225 C.D. 2000; County of Delaware v. Pa. PUC, No. 2359 C.D. 2000, 773 A. 2d 1280 (Pa. Cmwlth. 2001) (filed April 27, 2001), petition for allowance of appeal and cross-petitions denied October 5, 2001.
Commonwealth Court vacated the PUC’s decision and remanded the case to the PUC for an additional hearing and to reapportion costs for the repair and maintenance of the Lloyd Street Bridge. The court held that the PUC was required to follow state court’s interpretation of the federal tax exemption statues, which holds that the allocation of rail/highway repair costs are not “taxes or fees” within the scope of the federal tax exemption statutes. Accordingly, the court ruled that Amtrak and SEPTA were to be allocated costs associated with repair and maintenance of the Lloyd Street Bridge. The court also held that the consent decree between the PUC and SEPTA was violating the due process rights of those who were not a party to that settlement and, therefore, the decree was not binding on those parties not part of that agreement. However, the court affirmed the decision by the PUC that the financial condition of the city and its ability to pay the fees associated with the cost of maintaining a crossing is not controlling or determinative for purposes of allocating costs.

National Railroad Passenger Corp. v. Pa. PUC

No. 01-302, 159 F. Supp. 28 (E.D. Pa. 2001)(filed May 10, 2001).
The U.S. District Court for the Eastern District of Pennsylvania denied the PUC’s motion to dismiss the declaratory and injunctive relief sought by National Railroad Passenger Corporation (Amtrak). The PUC contended that the court lacked subject matter jurisdiction, that the claim was barred under Anti-Injunction Act, that the abstention doctrine should be applied, and that the dispute was not ripe for adjudication. The court held that it did have subject matter jurisdiction based upon the legislative history of Amtrak’s enabling legislation. A suit against Amtrak is a federal question irrespective of the underlying cause of action. The court followed the U.S. Supreme Court and the circuit courts historical interpretation of the Anti-Injunction Act as inapplicable to state administrative proceedings, and therefore concluding that the Act is irrelevant in this case.

The court also held that abstention was unwarranted because the court has a duty to enforce Amtrak’s arbitration agreement pursuant to the FAA. The PUC’s contention that Amtrak’s complaint is not yet ripe for adjudication was refuted under the courts three-step analysis for ripeness. The court held that the parties’ interest, probable conclusiveness of a judgment, and practical utility to the parties of rendering a judgment determined the complaint ripe for adjudication.

Elite Industries Inc. v. Pa. PUC

Nos. 1485 and 2109 C.D. 2000 (Pa. Cmwlth. 2001) (filed May 14, 2001).
In an unreported decision, Commonwealth Court affirmed the orders of the PUC granting certificates of public convenience for two common carriers. At the outset, the court noted that it will defer to the PUC’s administrative expertise and interpretation of its governing statute and regulations regarding common carrier entry standards.

As to the first carrier (Adamo), the court held that the PUC appropriately applied the evidentiary criteria at 52 Pa. Code §41.14 and that substantial evidence supported the PUC’s conclusion that the carrier was financial fit and that formal balance sheet information was not essential to this determination. The court also noted that the protestant failed to demonstrate that the new carrier’s entry would impair the operation of existing carriers.

As to the second carrier (Schumacher), the court noted this was an appeal of the PUC’s reconsideration order and that the scope of review was whether the PUC abused its discretion. The court held that the PUC properly determined that the petitioner did not offer any new evidence that would warrant granting reconsideration and, accordingly, there was no abuse of discretion.

Wheeling & Lake Erie Railway v. Pa. PUC

No. 1840 C.D. 1999, 778 A. 2d 785 (Pa. Cmwlth. 2001)(filed June 11, 2001).
Commonwealth Court affirmed the decision of the PUC directing Wheeling & Lake Erie Railway to remove the existing rail highway crossing bridge and construct a new bridge at its sole costs, as recommended by the ALJ. Wheeling appealed the PUC’s authority to regulate rail-highway crossings and allocate costs, whether the PUC’s decision was supported by substantial evidence, and whether the PUC’s order allocating the entire costs of reconstructing the bridge constitutes an unconstitutional taking without just compensation.

Wheeling contended that the PUC’s authority was preempted by the ICC Termination Act. The court held that the Act does not expressly preempt the states’ traditional police power over the public safety of the “rail highway crossings.” Congress intended to preempt only the states previous authority to economically regulate the rail transportation. Therefore, the PUC authority under the Code to regulate the safety of the bridge and allocate cost of its reconstruction has not been preempted by the ICC Termination Act.

Wheeling also contended that the PUC’s decision was not supported by substantial evidence. The court held that Wheeling had an obligation to maintain the bridge, that it benefits from the bridge, and that the failure Wheeling and its predecessors to maintain the bridge caused its deterioration. As a result the court concluded that the PUC had amply supported the evidence in the record. Wheeling finally contended that the PUC’s decision constituted an unconstitutional taking, but they failed to raise the issue before the ALJ, causing the issue to be waived.

Third Quarter

PP&L Industrial Customer Alliance v. Pa. PUC

No. 1881 C.D 2000, 780 A. 2d 773 (Pa. Cmwlth.2001)(filed July 10, 2001).
Commonwealth Court affirmed the decision of the PUC dismissing PPLICA’s petition requesting a declaratory order prohibiting the implementation of a tariff interpretation change to PP&L’s billing method for customers who purchase generation supply from another electric generation supplier. PPLICA contended that that the PUC erred in adopting PP&L’s interpretation of the tariffs and that the PUC’s tariff interpretation violated the Competition Act because PP&L was being permitted to discriminate against customers who obtain generation supply from EGSs.

The court held that the PUC’s acceptance of PP&L’s interpretation of tariffs was not contrary to the settlement agreement and valid. The court also reasoned that a mechanism had to be in place so that during periods of peak demand there are no brownouts or blackouts in the system. Since there are no reasonable alternatives, competition needed to bend to ensure overall system reliability. The PUC’s tariff interpretation was valid because it was supported by substantial evidence and the PUC is entitled to substantial deference.

Fourth Quarter

National Railroad Passenger Corp. v. Pa. PUC

No. 86-5357 (2001)(filed October 17, 2001).
The U. S. District Court for the Eastern District of Pennsylvania denied all motions made by Amtrak and SEPTA to modify an injunction. Amtrak wanted to expand a previous federal court injunction enjoined the PUC from imposing on Amtrak any cost of maintenance of the Cassatt Avenue Bridge structure to include “any bridge” crossing Amtrak’s right of way. The motion was prompted by the potential allocation of costs to Amtrak in the Lloyd Street Bridge litigation in Commonwealth Court. The federal court reasoned, however, that modification of an injunction is only proper if the original purposes of the injunction are not being fulfilled in any material respect. Amtrak does not contend that the Commission has threatened Amtrak in any way concerning the Cassatt Avenue Bridge and as a result the motion is denied.

Philadelphia Suburban Water Authority v. Pa. PUC

No. 616 C.D. 2001 (Pa. Cmwlth.)(filed October 23, 2001).
In an unreported decision, Commonwealth Court of Pennsylvania denied the PUC’s motion to quash Philadelphia Suburban Water Authority’s petition for review and answer in opposition. The court concluded that Philadelphia Suburban was an intervenor in the proceeding before the PUC and has demonstrated a direct interest in the PUC’s adjudication.

Harrisburg Taxicab & Baggage Co. v. Pa. PUC

No. 2252 C.D. 2000, 786 A. 2d 288 (Pa. Cmwlth. 2001)(filed October 25, 2001).
Commonwealth Court affirmed a decision by the PUC that adopted the decision of the ALJ sustaining a complaint against a common carrier for violations of PUC regulations. The petitioner questioned whether the PUC possessed the statutory authority to enforce the Vehicle Code, whether the jurisdiction of the PUC encompasses enforcement of PA Department of Transportation (DOT) vehicle inspection authority, whether PUC Enforcement Officer is a police officer, and whether the PUC may expand its jurisdiction through the adoption of regulations.

The court reasoned that the Public Utility Code and the Vehicle Code overlap, however, the PUC is clearly assigned authority and such an overlap does not divest the PUC of its statutory duty. The claim that PUC is trying to expand its jurisdiction by incorporating DOT regulation was denied because of their overlapping authority. The court agreed that the decision of the PUC to incorporate DOT’s vehicle safety regulations in its own regulation represents exactly the type of sensible cooperation and mutual adjustment between the agencies advocated by the United States Court of Appeals.

In a dissent, Judge Kelly argued that nothing in the Public Utility Code empowers the PUC to adopt and enforce the regulations of a different agency and, for that reason, the purported vehicle safety violations should have been dismissed.

Redstone Water Co. v. Pa. PUC

No. 531 C.D. 2001 (Pa. Cmwlth.) (filed October 30, 2001)(decision withdrawn by order issued January 8, 2002).
Commonwealth Court vacated an order of the PUC that required Redstone Water Co. to perform an engineering study for the purpose of addressing their water quality. The PUC had determined that the utility’s water service was in adequate in violation of Section 1501 due to poor water quality. The court reasoned, however, that since enforcement of the Safe Drinking Water Act is assigned to the PA Department of Environmental Resources (DEP) and since the PUC’s authority is limited to “service”, the PUC lacks concurrent jurisdiction to regulate water quality.

The court also reasoned that Section 318 which provides that the PUC “may” refer water quality issues to DEP to indicates a legislative intent that reaffirms DEP as the state agency vested with power to assess water quality. Finally, the PUC had found that the Redstone Water Co. failed to provide adequate water pressure. Although this an aspect of service which the PUC can regulate, the court found that this finding was not supported by substantial evidence and, accordingly, must be reversed.

MCI Telecommunication Corp. v. Bell Atlantic-Pennsylvania, Inc.

271 F.3d 491 (3rd Cir. 2001), cert. denied 123 S. Ct. 340 (2002).
The United States Court of Appeals for the Third Circuit affirmed the federal District Court’s denial of the PUC’s and Commissioners’ claims of Eleventh Amendment sovereign immunity from suit in federal court under the Telecommunications Act of 1996 (TA-96). The court found that, under TA-96, a state’s participation in the new regulatory scheme for local telecommunications competition is not mandatory and that the language in Section 252 is clear and puts states on notice that interconnection arbitration decision will be reviewed in federal court.

Accordingly, the court held that by voluntarily accepting the congressional “gift or gratuity” of the power to regulate local telecommunications competition under TA-96, the PUC knowingly waived its Eleventh Amendment immunity and is subject to suit in federal court. In the alternative, the court held that violations of TA-96 constitute ongoing violations of federal law and that under the Ex parte Young doctrine, the carriers may seek prospective relief against individual commissioners in federal court.

As to the merits, the court reversed the District Court’s decision with respect to the wholesale/resale rates set by the PUC and the pricing of unbundled network elements (UNEs) in the MFS III decision. As to wholesale/resale rates, the court found that the rates set by the PUC were not based on the costs actually avoided by Verizon. As to pricing of UNEs, the court found that the matter should be remanded to the District Court in order to determine whether the TSLRIC cost methodology employed by the PUC is, in substance, consistent with the forward-looking, element based cost methodology required by the FCC. The Third Circuit affirmed the District Court’s decision in all other aspects and remanded the case to the District Court for further proceedings consistent with its opinion.

In a companion decision pertaining to the federal court challenge of the UNE rates set in the Global Order, the Third Circuit also held that neither the PUC nor its Commissioners are immune from suit in federal court under TA-96. Bell Atlantic-Pa., Inc. v. Pa. P.U.C., 273 F.3d 337 (3rd Cir. 2001), cert. denied 123 S. Ct. 340 (2002). The court held further that the district court’s denial of PUC’s statute of limitations defense or its defense of res judicata could not serve as basis for court to assert jurisdiction over the matters under collateral order doctrine. The court also held that judicial economy could not serve as basis to vest court with jurisdiction to review issues not otherwise reviewable through collateral order doctrine. Accordingly, this case was also remanded to the District Court for further proceedings.

United Parcel Service, Inc. v. Pa. PUC

No. 822 C.D. 2001, 789 A. 2d 353 (Pa. Cmwlth. 2001) (filed December 5, 2001).
The Commonwealth Court dismissed the PUC’s motion to quash this original jurisdiction matter. On the merits, judgement was entered in favor of the United Parcel Service, Inc., and the case was remanded to the PUC for recalculation of assessments made to the UPS in accordance with the decision.

The court held that challenges to the PUC’s assessments under section 510 should be directed to the court’s original jurisdiction. Second, the court agreed with UPS’s argument that the PUC had erred in using four categories of indirect expenses. The court reasoned that, per Section 510(b), after allocation of its direct expenses, the PUC is required to allocate the balance (i.e., its indirect expenses) to each group of utilities furnishing the same kind of service. The court then remanded the matter to the PUC for a recalculation of UPS’ assessments “utilizing the group of Common Carries once and not dividing its total indirect into four subcategories.”

Public Utility District v. Federal Energy Regulatory Commission

No. 00-1174, 272 F. 3d 607 (D.C. Cir. 2001)(filed December 11, 2001).
The Court of Appeals for the District of Columbia dismissed the claims by several electric utilities and others for a lack of standing since they have suffered no injury in fact. Petitions were brought challenging the Federal Energy Regulatory Commission's (FERC) authority to issue order specifying minimum characteristics and functions of Regional Transmission Organizations (RTOs). The utilities challenge only certain aspects of Order 2000 and base their challenges on the premise that it is not voluntary. The court found, however, that the terms of Order 2000 do not mandate participation, only a filing requirement, and that any alleged injuries would occur only if a public utility opts to participate in an RTO. Accordingly, the court held that, with no injury in fact, the utilities lacked standing to challenge Order 2000.

The court also held that a local utility district (Snohomish) lacked standing to challenge FERC’s refusal to require that every RTO proposal demonstrate cost-effectiveness; and that a state-created public service authority (South Carolina) lacked standing to challenge FERC’s refusal to forbid 100% passive ownership of RTOs by market participants.