Title: Tri County Telephone Ass'n, Inc. v. Wyoming Public Service Com'n

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Tri County Telephone Ass'n, Inc. v. Wyoming Public Service Com'n1996 WY 19910 P.2d 1359Case Number: 94-268Decided: 02/08/1996Supreme Court of Wyoming

TRI COUNTY TELEPHONE ASSOCIATION, INC., and U S WEST 
COMMUNICATIONS, INC.,  

Appellants (Petitioners), 

 

v. 

 

THE WYOMING PUBLIC SERVICE COMMISSION; BIL TUCKER, 
JOHN R. SMYTH, and STEPHEN N. ELLENBECKER, in their official capacities as 
Commissioners of the Wyoming Public Service Commission,  

Appellees (Respondents).

 

Certification from the District Court of Laramie 
County,  

Edward L. 
Grant, Judge

 

 

Bruce Asay, Cheyenne, for 
Appellant Tri County Telephone Ass'n, Inc. 

Paul J. Hickey and Richard 
D. Bush of Hickey, Mackey, Evans, Walker & Stewart, Cheyenne, and Walter M. 
Kelly, II, U S West Law Department, Denver, Colorado, for Appellant U S West 
Communications, Inc. 

Joseph B. Meyer, Attorney 
General; Michael L. Hubbard, Senior Assistant Attorney General; and Kristin Lee, 
Assistant Attorney General, Cheyenne for Appellees.

 

Before GOLDEN, C.J., and 
THOMAS, MACY, TAYLOR and LEHMAN, JJ.

TAYLOR, Justice. 

[¶1]      Overzealous 
regulation by an administrative agency thwarted U S West Communications, Inc.'s 
attempt to sell certain telephone exchanges in Wyoming. The administrative 
agency set a cap on the sale price of certain telephone exchanges. In the 
absence of statutory authority, the administrative agency's order cannot 
stand.

 

[¶2]      We reverse and 
remand.

 

I. 
ISSUES

 

[¶3]  Appellant, U S West Communications, Inc. 
(U S West), states the issues as:

 

I.

Should the PSC's unilateral adjustment of the 
telephone exchange purchase price be set aside as unlawful agency 
action?

 

II.

 

Is the price cap imposed by the PSC an 
unconstitutional regulatory taking without just 
compensation?

 

[¶4]      Appellee, The 
Wyoming Public Service Commission (PSC), articulates the following 
issues:

 

I. Did the Public Service Commission act within the 
scope of its authority?

 

II. Did the Public Service Commission act arbitrarily 
or capriciously when it set a ceiling price?

 

III. Did the Public Service Commission order an 
unconstitutional regulatory taking of U S West's property?

 

II. 
FACTS

 

[¶5]      This case is a 
result of the PSC's excessive regulation of the communications industry. 
Following a determination that the citizens of the state would be best served by 
high quality communications systems, the PSC ordered U S West to upgrade the 
telephone exchanges it owned in Wyoming. After studying the systems in place, U 
S West chose to sell twenty-seven of the telephone exchanges rather than 
upgrade. Bids were entertained and Tri County Telephone Association (Tri County) 
and Union Telephone Company, Inc. (Union)1 contracted with U S West to 
purchase certain telephone exchanges.

 

[¶6]      US West and the 
two suitors, Tri County and Union, petitioned the PSC for a transfer of the 
certificates of necessity held by U S West.2 Absent the transfer of the 
certificates, neither Tri County nor Union could lawfully exercise any rights 
associated with the telephone exchanges the two companies intended to 
purchase.3 The PSC concluded that the proposed 
sales were in the best interest of the public and Tri County and Union were 
ready, willing and able, both financially and technologically, to provide the 
required upgrades. However, the PSC also concluded that neither Tri County nor 
Union should be allowed to pay more than 1.7 times the net book value of the 
telephone exchanges. The price agreed to by U S West and the two purchasers was 
more than 1.7 times the net book value of the telephone exchanges. Therefore, 
the PSC refused to transfer the certificate of necessity from U S West to the 
purchasers until the parties agreed on a price of not more than 1.7 times the 
net book value of the telephone exchanges. US West and the two potential 
purchasers have appealed the PSC's decision to cap the purchase price. 

 

III. 
DISCUSSION

 

[¶7]      When reviewing an 
administrative agency's decision, this court will consider, among other factors, 
whether the agency exceeded its statutory authority. See Wyo. Stat. § 
16-3-114(c)(ii)(C) (1990). As a creature of the legislature, an administrative 
agency has limited powers and can do no more than it is statutorily authorized 
to do. Montana Dakota Utilities Co. v. 
Public Service Com'n of Wyoming, 847 P.2d 978, 983 (Wyo. 1993) (quoting Tri-County Elec. Ass'n v. City of 
Gillette, 525 P.2d 3, 8-9 (Wyo. 1974)). Any agency decision that falls 
outside the confines of the statutory guidelines articulated by the legislature 
is contrary to law and cannot stand. Wyo. Stat. § 16-3-114(c)(ii)(C). Such 
decisions are arbitrary and capricious. Wyo. Stat. § 
16-3-114(c)(ii)(A).

 

[¶8]      The PSC argues 
that it has the power to cap the sale price of a telephone exchange at 1.7 times 
the net book value of the exchange. Whether the PSC possesses this power will be 
determined by reviewing the statute that grants the PSC its power. That statute 
will be strictly construed. Montana 
Dakota Utilities Co., 847 P.2d  at 983. If there is a reasonable doubt as to 
the existence of a particular power, the statute will be construed as not 
granting that power. Id. (quoting 
Tri-County Elec. Ass'n, 525 P.2d at 8-9).

 

[¶9]      Wyo. Stat. §§ 
37-2-101 to 37-2-221 (1977 & Cum.Supp. 1995) establishes the PSC and sets 
forth the powers that the PSC is authorized to exercise. Among the powers 
granted is the power to issue certificates of necessity to public utilities. See Wyo. Stat. § 37-2-205. The PSC 
argues that Wyo. Stat. § 37-2-205(c) authorizes it to condition the issuance of 
a certificate of necessity by setting a cap on the purchase price of a telephone 
exchange. We disagree.

 

[¶10]   Wyo. Stat. § 37-2-205(c) provides, 
in part:

 

The commission shall have power, after hearing 
involving the financial ability and good faith of the applicant and the 
necessity of additional service in the community, to issue said certificate, as 
prayed for, or to refuse to issue the same, * * * and may attach to the exercise 
of the rights granted by said certificate such terms and conditions as in its 
judgment the public convenience and necessity may require.

 

[¶11]   This statute requires that the PSC 
determine three things prior to issuing a certificate. The PSC must determine 
whether the applicant has the financial ability to provide the proposed service, 
whether the applicant has a good faith intention to provide the proposed service 
and whether the public needs the proposed service. The PSC's own findings 
establish the fulfillment of this criteria. The PSC found that Union and Tri 
County had the financial ability as well as the good faith intent to provide the 
necessary upgrades. Further, the PSC itself ordered the upgrades, and the 
necessity of the upgrades has not been challenged.

 

[¶12]   Once these requirements have been 
satisfied, the PSC has several options under Wyo. Stat. § 37-2-205(c). 
Conditioning the issuance of the certificate on the parties' acceptance of a 
price cap is not, however, one of those options. We hold that the statutory 
scheme that creates and empowers the PSC does not grant the PSC the power to cap 
the price of a telephone exchange at 1.7 times the net book value of the 
telephone exchange. Wyo. Stat. § 37-2-205(c) empowers the PSC to condition 
certificates that have already been issued, but does not empower the PSC to 
attach conditions precedent.

 

IV. 
CONCLUSION

 

[¶13]   The PSC's order capping the sale 
price of the telephone exchanges at 1.7 times the net book value of the 
exchanges is reversed. The order is not supported by the requisite statutory 
authority and is, therefore, arbitrary and capricious. This case is remanded for 
further proceedings consistent with this opinion.

 

Footnotes

1 The appeal involving Union is addressed 
in Union Telephone Co., Inc. v. Wyoming 
Public Service Com'n, 910 P.2d 1362 (Wyo. 
1996).

2 Pursuant to Wyo. Stat. § 37-2-205(c) 
(Cum. Supp. 1995), the PSC is authorized to issue certificates of convenience 
and necessity to public utilities that demonstrate the financial ability and the 
good faith intent to provide service in an area that needs the proposed 
service.

3 Wyo. Stat. § 37-2-205(b) provides that 
"[n]o public utility shall henceforth exercise any right or privilege * * * 
without having first obtained from the commission a certificate that public 
convenience and necessity require the exercise of such right and privilege[.]"