Case Name: In the Matter of the Application of HAWAIIAN TELEPHONE COMPANY for increased rates and charges. In the Matter of the Investigation of HAWAIIAN TELEPHONE COMPANY and the Lawfulness of the Charges for and Adequacy of its Intrastate Communications Services
Court: Supreme Court of the State of Hawaii
Jurisdiction: Hawaii
Decision Date: 1973-09-10
Citations: 54 Haw. 663
Docket Number: No. 5298
Parties: In the Matter of the Application of HAWAIIAN TELEPHONE COMPANY for increased rates and charges In the Matter of the Investigation of HAWAIIAN TELEPHONE COMPANY and the Lawfulness of the Charges for and Adequacy of its Intrastate Communications Services
Judges: Richardson, C.J., Marumoto, Abe, Levinson and Kobayashi, JJ.
Reporter: Hawaii Reports
Volume: 54
Pages: 663–681

Head Matter:
In the Matter of the Application of HAWAIIAN TELEPHONE COMPANY for increased rates and charges In the Matter of the Investigation of HAWAIIAN TELEPHONE COMPANY and the Lawfulness of the Charges for and Adequacy of its Intrastate Communications Services
No. 5298
September 10, 1973
Richardson, C.J., Marumoto, Abe, Levinson and Kobayashi, JJ.

Opinion:
OPINION OF THE COURT BY
KOBAYASHI, J.
On August 19, 1968, the Public Utilities Commission (hereinafter PUC) instituted a general investiga tion of the lawfulness of Hawaiian Telephone Company's (hereinafter appellee) rates and charges and the adequacy of appellee's communications services.
On June 26, 1970, the appellee filed an application with the PUC for increased rates and charges.
The proceedings on both the investigation and the application were consolidated and the PUC rendered the following numbered decisions and orders relevant herein.
1. Decision and Order No. 2754 granted appellee an interim increase in its rates and charges to produce $4,840,000 per annum effective April 15, 1971.
2. On November 9, 1971, Decision and Order No. 2853 granted appellee additional increases in rates to produce additional intrastate revenues of $6,380,315 per annum over and above the $4,840,000 interim increase.
3. On December 23, 1971, Decision and Order No. 2862 approved appellee's revised rates and charges reflecting the increase granted in Decision and Order No. 2853.
The Director of Regulatory Agencies (hereinafter appellant) contends as follows:
A. Decision and Orders Nos. 2853 and 2862 are void because the Commission's ultimate conclusions are not supported by reliable, probative and substantial evidence as required by the Hawaii Administrative Procedure Act.
1. Once the Commission rejected all evidence on the fair rate of return, it erred in not dismissing the Company's application.
2. The establishment of the separations procedure is not based on substantial evidence.
3. The application and implementation of the separations procedure adopted to the test year results is not based on substantial evidence.
4. The Company did not carry its burden in proving its new rate structure non-discriminatory.
5. The Commission failed to impose the duty upon the Company to show that the investment in its switching equipment was prudently made; the Commission's findings and conclusions are not supported by substantial evidence.
B. Decision and Orders Nos. 2853 and 2862 are void because they are not supported by specific findings and conclusions on major ratemaking matters, and the evidence does not support such findings of the Commission.
1. The Commission failed to make findings on prudent investment rate base of the Company.
2. The Commission erred in failing to make findings- on the Company's traffic expense.
3. The Commission's findings that the expenses incurred in directory service advertising in the amount of $1,730,754 are reasonable is not supported by the evidence. The Commission failed to make any findings on other categories of commercial expense.
C. Decision and Orders Nos. 2853 and 2862 are void because the Commission failed to afford fair hearings to the Staff and thereby deprived the consumer interest of a fair hearing.
1. The hearing strategy of the Company was to promote the Staff's position as the exclusive protector of the consumer interest, and then to limit the participation by the Staff. The Staff was not afforded full rights as a party before the Commission. The result was less than a fair hearing.
Appellee contends as follows:
I. Whether the appellant [and the attorney general] can meet their heavy burden of showing that the Commission's decision is unjust and unreasonable in its consequences or is clearly erroneous in view of the whole record.
II. Whether the appellant [and the attorney general] have met their burden of showing that the hearings were not fair.
III. Whether the appellant [and the attorney general] have any standing to appeal the decision of the Commission and whether their appeal is timely.
IV. If the appellant [and the attorney general] have met their burden on the foregoing and have standing, what relief should be afforded.
OPINION
Standing to appeal:
A. In the instant case, we are of the opinion that the attorney general is without standing as a party to the proceedings before PUC or as an appellant herein. HRS § 28-1 and § 661-10 are not pertinent to the question.
B. We are of the opinion, however, that the Director of Regulatory Agencies is, by operation of law, a party to the proceedings before PUC and is an appellant herein in good standing. HRS § 26-9 (Supp. 1972) in pertinent parts provides:
§26-9 Department of regulatory agencies. The department of regulatory agencies shall be headed by a single executive to be known as the director of regulatory agencies.
The department shall protect the interests of consumers . . . throughout the State. . . .
The . . . public utilities commission . . . and . . . are placed within the department of regulatory agencies for administrative purposes.
Notwithstanding any provision to the contrary, the employment, appointment, promotion, transfer, demotion, discharge, and job descriptions of all officers and employees under the administrative control of this department shall be determined by the director of regulatory agencies subject only to applicable personnel laws.
The technical staff and other personnel that provide services to PUC are all subject to the above control of the director of regulatory agencies. We are of the opinion that through said staff and personnel and a specially designated deputy attorney general (See White v. Board of Education, 54 Haw. 10, 501 P.2d 358 (1972)) the director carries on his statutory duties and responsibilities as a protector of the interests of the consumers before the PUC.
Appellant's contentions:
Because of the hereinafter stated opinion and the record on appeal we do not determine the validity of appellant's several contentions on appeal save and except the following of appellant's allegations:
Decision and Orders Nos. 2853 and 2862 are void because they are not supported by specific findings and conclusions as required by the Hawaii Administrative Procedure Act.
HRS § 91-12 provides:
§91-12 Decisions and orders. Every decision and order adverse to a party to the proceeding, rendered by an agency in a contested case, shall be in writing or stated in the record and shall be accompanied by separate findings of fact and conclusions of law. If any party to the proceeding has filed proposed findings of fact, the agency shall incorporate in its decision a ruling upon each proposed finding so presented. Parties to the proceeding shall be notified by delivering or mailing a certified copy of the decision and order and accompanying findings and conclusions within a reasonable time to each party or to his attorney of record.
In In re Terminal Transportation, Inc., 54 Haw. 134, 139, 504 P.2d 1214, 1217 (1972), we held that the PUC violated the provisions of HRS § 91-12 and stated:
It is a settled rule in administrative law that a separate ruling on each proposed finding filed by a party is not indispensable. . . . All that is required is that the agency incorporate its findings in its decision. . . . In so doing, however, the agency must make its findings reasonably clear. The parties and the court should not be left to guess, with respect to any material question of fact, or to any group of minor matters that may have cumulative significance, the precise finding of the agency. [Citations omitted] (Emphasis added.)
We further stated:
We are dismayed by the Commission's failure to comply with the provisions of the Hawaii Administrative Procedure Act both in this case and in two other recent cases . These provisions may not be disregarded. A fundamental reason for the enactment of the Hawaii Administrative Procedure Act was to insure fairness and impartiality in administrative proceedings. Fairness and impartiality cannot be insured when an administrative agency such as the Public Utilities Commission consistently refuses to abide the clear mandates of the statute.
We are of the opinion that the PUC has again failed to abide with the clear mandate of the Administrative Procedure Act. Its Decision and Order No. 2853 and No. 2862 fail to meet the requirements of HRS § 91-12. PUC has failed to make its findings reasonably clear and we are left with the dilemma of guessing the precise findings of PUC on the material questions of fact involved herein.
Because of PUC's failure to make the necessary findings of fact we are unable to determine the validity of the conclusions or lack of conclusions of the PUC in the herein decisions and orders.
We are of the further opinion that the record on appeal shows that PUC did not recognize appellant as a proper party to the proceedings and thus denied appellant sufficient time to prepare and introduce necessary evidence on the several issues involved in the herein case of statewide import.
CONCLUSION
These proceedings are remanded to PUC for further hearings and PUC shall grant to both appellant and appellee reasonably sufficient time to enable the parties to further prepare, submit, introduce additional relevant, probative and substantial evidence on the several issues involved herein. PUC shall, thereafter, make the necessary findings of fact and conclusions of law in accordance with this opinion.
To meet the equities of the herein proceedings and to secure restitution of the excess rates and charges, if any, in case the orders appealed from should not be sustained in whole or in part, the operation of PUC Decision and Order No. 2754, No. 2853 and No. 2862 is hereby stayed effective thirty (30) days after the entry of judgment on this appeal unless the appellee shall, prior to said thirty days, effectuate one of the following alternatives:
1. Place into an escrow account any and all sums derived from the increase in rates and charges permitted under the herein PUC decisions and orders collected by appellee after said above thirty days; or
Robert P. Jaress, deputy attorney general, for appellant Attorney General.
Richard S. Sasaki, special deputy attorney general, for appellant Director of Regulatory Agencies.
Marshall M. Goodsill and Hugh Shearer (Jenks, Kidwell, Goodsill and Anderson of counsel) for appellee.
Thomas Young, deputy United States attorney, for United States of America.
2. Post a bond with proper sureties with the PUC, providing for restitution to appellee's consumers of any increase in rates and charges mentioned in the decisions and orders herein which may be held unlawful. Said bond shall be constantly enlarged to match the continued receipt by appellee of said increase in rates and charges.
The above said escrow or bond shall remain in effect until the final disposition of this case after remand.