Opinion ID: 158201
Heading Depth: 2
Heading Rank: 1

Heading: Any Order Affecting Rates

Text: 18 U S West contends that: (1) the Johnson Act does not bar federal jurisdiction to consider a constitutional challenge to a state statute or a state constitutional provision, and (2) the Johnson Act is inapplicable because it does not seek to enjoin any order affecting rates. However, the manner in which U S West characterizes its claim is not dispositive of whether the Johnson Act applies to bar federal jurisdiction. See Nelson, 146 F.3d at 722 ([T]he way that the U S West companies have chosen to describe their grievance does not control whether the Johnson Act bars this action.). The threshold question is whether the complaint challenges any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision. 28 U.S.C. 1342. 19 U S West contends that the Johnson Act by its terms does not bar federal jurisdiction to hear constitutional challenges to a state statute/law made by the legislature or a state constitutional provision. U S West asserts that if Congress had intended the Johnson Act to encompass state statutes and state constitutional provisions, it would have used very different statutory language. (Brief of Appellants at 15.) 20 As a preliminary matter, we note that any challenge on appeal to the constitutionality of Article XI, 7 of the New Mexico Constitution, is moot because Article XI, 7 was repealed, effective January 1, 1999. See Ashcroft v. Mattis, 431 U.S. 171, 172-73 (1977) (claim for declaratory relief moot when no present right is involved); Adarand Constructors, Inc. v. Slater, 169 F.3d 1292, 1296 (10th Cir. 1999) (To qualify for adjudication in the federal courts, an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.) (internal quotation and citations omitted). Article XI, 7 was replaced by 52 of the New Mexico Public Regulation Commission Act (NMPRCA), 63-7-1.1 NMSA, effective January 1, 1999. 21 The Commissioners contend that U S West cannot challenge 52 of the NMPRCA on appeal because it was not raised before the district court and it is not ripe for review. (Brief of Appellees at 18-19 n.12.) U S West responds that its challenge is ripe because the application of the statute to it is inevitable and deciding the issue here would serve a useful purpose and be of great practical assistance to all concerned. U S West points out that the district court could not have considered the statute as it was not enacted until after the district court rendered its decision. (Appellants' Reply Brief at 5 n.2.) 22 The case or controversy requirement of Article III admonishes federal courts to avoid 'premature adjudication' and to abstain from 'entangling themselves in abstract disagreements.' Keyes v. School Dist. No. 1, Denver, Colo., 119 F.3d 1437, 1443 (10th Cir. 1997) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967)). [T]he doctrine of ripeness is intended to forestall judicial determinations of disputes until the controversy is presented in clean-cut and concrete form. New Mexicans for Bill Richardson v. Gonzales, 64 F.3d 1495, 1499 (10th Cir.1995) (citations and quotations omitted)). Whether a claim is ripe for judicial review is a question of law which we review de novo. Keyes, 119 F.3d at 1444. The two-part ripeness inquiry requires us to evaluate (1) the fitness of the issue for judicial resolution and (2) the hardship to the parties of withholding judicial consideration. New Mexicans for Bill Richardson, 64 F.3d at 1499 (internal quotations omitted). The customary ripeness inquiry is relaxed, however, in circumstances where there is a facial challenge implicating the First Amendment. Id. In such instances, we also consider the chilling effect the challenged law may have on First Amendment liberties. Id. at 1500. In making these inquiries, we caution against a rigid or mechanical application of a flexible and often context-specific doctrine. Sierra Club v. Yeutter, 911 F.2d 1405, 1417 (10th Cir. 1990). 23 Whether a challenge is fit for judicial resolution requires the court to consider both the legal nature of the question presented and the finality of the legislative action. Harvey E. Yates Co. v. Powell, 98 F.3d 1222, 1237-38 (10th Cir. 1996) (quotation omitted). We conclude that both of these factors weigh in favor of concluding that U S West's challenge to 52 of the NMPRCA is ripe for review. The relevant language of Article XI, 7 and 52 of the NMPRCA is identical. Article XI, 7 provided and 52 of the NMPRCA provides, that in 24 fixing rates of telephone and telegraph companies, due consideration shall be given to the earnings, investments and expenditures as a whole within the state. The commission shall include in that consideration the earnings, investments and expenditures derived from or related to the sale of directory advertising and other directory listing services. 25 New Mexico Const. article, XI, 7 (repealed Jan. 1, 1999); 63-7-1.1(B) NMSA. The dispute over the constitutionality of this language does not depend on whether its is found in the New Mexico Constitution or in the New Mexico statutes. It is a purely legal question, and there is no question that the legislative action is final. 26 In considering the hardship the parties may suffer in withholding review, we conclude that U S West and the Commissioners would both suffer hardship if we dismiss U S West's challenge to 52 of the NMPRCA. In evaluating potential hardship to the parties, a court should consider (1) whether the challenged rule has had a direct impact on the party challenging the rule, and (2) the possible harm to the parties of delaying judicial consideration. Harvey E. Yates Co., 98 F.3d at 1238 (quotation omitted). Section 52 of the NMPRCA has a direct impact on U S West as the relevant language authorizes imputation of directory advertising revenue in fixing rates. See Mountain States Tele. and Tele. Co. v. Corporation Comm'n, 653 P.2d 501, 505-06 (N.M. 1982) (interpreting the same language of Article XI, 7 to allow imputation of directory advertising revenue). Both U S West and the Commissioners have expended a great deal of time and money in presenting the imputation issue in federal court. It would be a waste of time, money, and judicial resources should we delay review. Further, any chilling effect the statute may have on U S West's First Amendment rights counsels in favor of ripeness. The harm alleged by U S West is not contingent upon uncertain or speculative future action. See Sierra Club, 911 F.2d at 1419 (judicial intervention is inappropriate based on the contingent and speculative nature of the harm). 27 Even though the statute was not presented to the district court for review, the relevant language was before the district court in Article XI, 7. Under these circumstances, this is not a new issue on appeal, but simply a new title to the same issue, i.e., whether the relevant language violates U S West's constitutional rights. As such, we shall not invoke our general rule that issues not raised in the district court will not be considered on appeal. See e.g. Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1222 (10th Cir. 1996) ([W]e may consider changes in governing law arising during the pendency of the appeal.). Therefore, we hold that U S West's challenge to 52 of the NMPRCA is ripe for our review. 28 On the merits, U S West's first argument is that its challenge is solely to a state statute, and that the Johnson Act by its terms does not bar federal jurisdiction to hear constitutional challenges to a state statute. In support of this argument, U S West relies on Public Utilities Commission of California v. United States, 355 U.S. 534 (1958). Even assuming, arguendo, that U S West's interpretation of Public Utilities is correct, we think that case is distinguishable from the case at hand. The plaintiffs in Public Utilities really were challenging a state statute--in that case, a state statute which required the United States to submit its negotiated rates with carriers to the California Public Utilities Commission for approval. In this case, by contrast, despite U S West's careful attempts to characterize its case as a challenge to a state statute, the challenge here is not to the statute but to the Commissioners' underlying administrative imputation power itself. 29 U S West's own complaint bears this out. In its prayer for relief, U S West seeks a declaration that any imputation of Yellow Pages revenue to regulated telephone serv[ice] is unconstitutional and void under the First, Fifth, and Fourteenth Amendments, and a permanent injunction prohibiting the Commissioners from imputing Yellow Pages revenue to [U S West's] regulated telephone service, in any manner. (Appellants' App. at 13) (emphasis added). Clearly, U S West wanted the district court not only to declare the statute unconstitutional, but it also wanted the court to declare that the Commissioners' imputation power is also unconstitutional. This is not simply a challenge to a state statute, and therefore U S West's reliance on Public Utilities is misplaced. 30 U S West next claims that, even if its challenge is not directly to a state statute, its challenge to the administrative imputation power is not to any order affecting rates, and therefore the Johnson Act does not apply. U S West presented this precise question to the Ninth Circuit in Nelson, and the court there rejected U S West's argument. Nelson, 146 F.3d at 722-23. We likewise reject U S West's argument. Although U S West's challenge is not phrased as a direct challenge to a rate order itself, the challenge is to an integral part of the rate structure thoroughly presented to and ruled upon by the Commissioners. See id. at 722 (stating that even if imputation accurately is conceived as a Commission practice, a federal district court may not entertain an attack on that practice if it is part of the rate-making structure). See also Tennyson, 506 F.2d at 1140 (stating that [s]ince the late charges made were presented to the Commission as an integral part of the rate structures and so ruled upon by the Commission, it is clear that its rulings were orders 'affecting' rates within the terms of the [Johnson] Act). The Commissioners considered three different methods of imputation presented by the Attorney General, the Commissioners' staff, and U S West, before deciding upon the method advocated by U S West. See Appellants' App. at 356-57 21-25. As such, U S West's challenge does not simply affect rate orders incidentally. Because imputation is a Commission procedure that cannot be separated from its substantive expression in rate orders, the US West companies' challenge to imputation--however phrased--is a challenge to 'any order affecting rates' as a matter of law. Nelson, 146 F.3d at 723. 31 Finally, U S West argues that its challenge is not to any order affecting rates chargeable by a public utility and made by a State . . . rate-making body, because it seeks only prospective injunctive and declaratory relief, and therefore, no rate orders already made will be affected by our ruling. We disagree with U S West's interpretation of the Johnson Act. [F]uture rate orders are a subset of the larger set comprising 'any order affecting rates.' Nelson, 146 F.3d at 723. Furthermore, U S West's interpretation presents an additional problem. Because rate orders continue in effect until a new order is issued, if we were to enjoin only future imputation as unconstitutional, then the Commissioners could continue an unconstitutional practice until such time, if ever, they deemed it necessary to issue a new rate order. We therefore think that U S West's challenge is necessarily to an[] order affecting rates. 32 Therefore, we hold that U S West's challenge to the Commissioners' imputation power is a challenge to an[] order affecting rates. Accordingly, we must proceed to determine whether the four enumerated conditions of the Johnson Act have been met here.