Opinion ID: 1500938
Heading Depth: 1
Heading Rank: 3

Heading: review of expenses by psc

Text: In this appeal, Pepco's major contention is that the Commission failed properly to review the reasonableness of the expenses sought to be assessed against it. In addition, Pepco raises the following specific allegations: (1) that the Commission erred in directing it to pay OPC's expenses for attorneys and consultants which have been incurred for duplicative, unnecessary, undocumented, and ill-defined work, for work performed at unreasonable rates of compensation, and for work for which Commission approval is sought as a precondition to performance of work; (2) the Commission erred in directing Pepco to pay for basic operating expenses and salaries of OPC; (3) the Commission erred in directing Pepco to pay for expenses outside the scope of a Commission proceeding; and (4) the Commission erred in directing Pepco to pay expenses of parties other than the Commission and OPC. Authority for the Commission's review of OPC's requests for deposit orders is found in D.C.Code 1981, § 43-612(a). That section authorizes the Commission to call upon the utility in question for the deposit of such reasonable sum or sums as in the opinion of said Commission, it may deem necessary .... D.C.Code 1981, § 43-612(a) (emphasis supplied). In Washington Gas Light Co. v. Public Service Commission, supra, as noted above, we have affirmed the Commission's conclusion that this section imposes upon PSC the authority and duty to assess the reasonableness of OPC requests before ordering expense deposits. This court's review of the Commission's issuance of deposit orders pursuant to its determination of the reasonableness of requests is limited to a determination of whether the Commission's decision is unreasonable, arbitrary, or capricious. D.C.Code 1981, § 43-906. The arguments and record before us indicate that all the expenses approved by the Commission may not be reasonable. Our review is hindered, however, by the Commission's summary treatment of its duty to assess the reasonableness of these expenses. The deposit orders entered by the Commission contain no statement of reasons supporting the allowance of these expenses. It is not apparent from the record before us that the Commission has employed meaningful criteria by which to determine reasonableness, rather than uncritically approving the amounts requested by OPC. Because it is the Commission's duty to assess reasonableness, Washington Gas Light Co. v. Public Service Commission, supra, and because the incomplete record before us would not permit this court properly to review the Commission's decisions as to each of the 21 assessment requests, see Washington Public Interest Organization v. Public Service Commission, D.C.App., 393 A.2d 71, 76-79 (1970), cert. denied sub nom. Potomac Electric Power Co. v. Public Service Commission, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979), we find it necessary to remand to the Commission for a meaningful review of the requests. [8] We find it appropriate, however, in light of the record before us, to establish some general guidelines regarding reasonableness of expenses. The specific contentions of Pepco and Washington Gas Light point out that certain of the OPC expenses allowed by the Commission may be unreasonable. Below we discuss each of these contentions and set forth considerations that are necessary to an adequate determination of reasonableness.
Many of the deposit orders indicate that OPC expended substantial amounts of money in hiring multiple lawyers and law firms within a single proceeding before the Commission. Petitioner Pepco and WGL, as intervenor, complain that the assessment requests did not state the specific responsibilities or division of work that the various lawyers and firms performed. They argue that OPC did not support their requests with adequate documentation, but merely submitted contracts with generalized statements of services to be performed. The necessary conclusion, according to the utilities, is that the Commission allowed expenses for overprepared, disorganized, and duplicative work. We cannot create a per se rule, as WGL urges, barring OPC's practice of using multiple law firms in the same case. However, we do find it per se unreasonable for OPC to hire lawyers to perform duplicative work. The duplication of work efforts by various attorneys results in expenses which the Commission surely cannot deem necessary. D.C.Code 1981, § 43-612. In light of the history of OPC's creation, it is illogical to conclude that the Commission may give free reign to OPC's use of outside counsel by approving amounts expended for unnecessary, overprepared work. [9] In order for the Commission to conduct a meaningful review of the reasonableness of the attorney's fees sought by OPC, it must be able to ascertain as precisely as is practicable what legal services are involved. The requisite degree of specificity necessarily depends on whether expense requests are considered before or after the work is performed. [10] Obviously, less precision is possible in estimating future needs than in reporting work already performed. But even where, as in this case, expenses are approved in advance, the mere submission of a contract containing vague boilerplate provisions is insufficient to justify a conclusion that the attorney's fees are reasonable. [11] The Commission must be informed more specifically of the tasks involved, the time to be expended for each service, and the charge of the attorney or law firm for that time or that service. Only when the Commission has such information at hand can it begin to assess reasonableness and ensure that amounts are not being expended unnecessarily for duplicative efforts. When the Commission conducts its review for attorney's fees, it must consider the appropriateness of the work in conjunction with the time involved and rates charged. The nature of the proceeding, the quality of the representation, and the customary expenditures required for services in similar cases are other factors which should be considered by the Commission when reviewing the OPC requests. We do not here set forth a complete list of specific factors which must be considered by the Commission as to every request for attorney's fees, although we recommend that the Commission consider those factors approved by the Court of Appeals for the D.C. Circuit for determining the reasonableness of attorney's fees in the calculation of awards under various federal statutes. See, e.g., National Association of Concerned Veterans v. Secretary of Defense, 219 U.S.App.D.C. 94, 675 F.2d 1319 (1982); Environmental Defense Fund, Inc. v. Environmental Protection Agency, 217 U.S.App.D.C. 189, 672 F.2d 42 (1982); Copeland v. Marshall, 205 U.S.App.D.C. 390, 641 F.2d 880 (1980) (en banc); Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). [12] Because these standards were developed for purposes of post-hoc fee awards, they are particularly relevant when expense requests are made at the close of a proceeding. However, many of the same factors can also be applied at the outset of a case, albeit with less specificity. What we deem indispensable is that the Commission review the OPC requests for attorney's fees in accord with reasonable criteria and that its deposit orders reflect the precise reasons supporting the approval of any amounts. Provided with such a statement of reasons, this court can be assured that the Commission has fulfilled its statutory obligation of review and we will be able to conduct our limited review to ensure that the Commission's action has not been arbitrary or capricious. Consultant fees assessed against the utilities must also comply with the general guidelines discussed above. It is necessary that the Commission be informed of the specific nature of the services to be performed by the consultant or expert. In addition, the Commission must provide a statement of reasons supporting its determination of reasonableness. As with attorney's fees, of course, the Commission must safeguard against unreasonable rates of compensation. [13]
Pepco argues that certain of OPC's requests for deposit orders improperly sought approval by PSC in advance of the beginning of work under a particular contract. [14] According to Pepco, these requests were an attempt to force the Commission to approve the requests in order to avoid delays in completion of the proceedings. WGL further contends that assessment of expenses of attorneys and consultants in advance of performance of services is per se improper. Although the Commission should always give as thorough a review as possible, we are unable to conclude that assessment of expenses in advance of performance may never be ordered by the Commission. It is up to the Commission, in considering the special circumstances of a particular request, to determine the reasonableness of assessment in advance of performance and to ascertain whether it deems this advance necessary. Correspondingly, determination of when approval of a request must be delayed until after services are performed is primarily a matter for the Commission. We stress, however, that the advanced timing of its review in such cases does not relieve the Commission from its duty of assessing the reasonableness of expenses and explaining the basis for a conclusion of reasonableness. An approval of a large amount of ill-defined expenses to be incurred in the future is clearly improper. [15] Again, we note, provided that the Commission fulfills its duty of providing adequate findings and conclusions, our review of its choice with regard to timing of requests will be limited.
In Formal Case No. 718 the Commission held that the term expenses in D.C.Code 1981, § 43-612 does not include the basic operating expenses or salaries of OPC which are already covered by appropriations even when these costs are incurred in connection with a pending proceeding. The utility may be assessed, however, for extraordinary incremental expenses associated with a pending proceeding in which it is involved. In Washington Gas Light Co. v. Public Service Commission, supra, we have affirmed this aspect of the Commission's interpretation of expenses. Pepco asserts that various deposit orders approved by the Commission included expenses that were basic operating expenses and hence not assessable against it. Specifically, Pepco criticizes expenses for services of one consultant who was responsible for the administration of financial and budget records for several proceedings and another consultant who provided technical analysis with respect to several proceedings. [16] In addition, Pepco argues that certain expenses for delivery, postage, duplication, and typing were improperly assessed. [17] As we stated in Washington Gas Light Co. v. Public Service Commission, supra, those expenses which may be assessed against the utilities may include supplies, equipment, and services. The assessment statute includes no express limits on the kinds of items that are reimbursable. What is required for expenses to be assessed are (1) that these expenses are not already covered by appropriations, and (2) that these expenses are episodic, rather than ongoing. The expenses must be associated with a particular proceeding or investigation. [18] On the record before us we are unable to ascertain whether the expenses involved were in fact episodic. Instead, the possibility exists that these expenses were related to normal day-to-day expenditures or to administrative duties which otherwise would be performed in an on-going fashion by a member of OPC staff. The record does not reflect that the Commission in fact reviewed these requests to ascertain their reasonableness or to ensure that the expenses were in accord with the Commission's own requirements in regard to basic versus episodic expenses, as explained in Order No. 7211. Accordingly, we remand to the Commission for a meaningful review of these deposit orders and a statement of reasons supporting the propriety of these expenses.
Pepco contends that PSC ignored another aspect of its own interpretation of the assessment statute when it issued Deposit Order No. 117F, encompassing expenses for an investigation outside the scope of the proceeding in which the assessment was sought. In Washington Gas Light Co. v. Public Service Commission, supra, we have affirmed the Commission's determination that the utilities are required to bear only those OPC expenses that are incurred in connection with matters pending before the PSC or investigations initiated by it. Pepco argues that the services involved in Deposit Order No. 117F dealt with matters that were not an issue in Formal Case No. 748, the proceeding in which the assessment was sought. We remand to the Commission for a determination on the record as to whether this expense was in fact properly incurred in connection with a PSC matter or investigation.
We turn now to Pepco's final contention. Pepco argues that the Commission in Deposit Order No. 104B allowed expenses for legal fees incurred by 16 parties other than OPC. The Commission agrees that D.C. Code 1981, § 43-612(a) does not permit assessment for the litigation expenses of intervenors. See Chesapeake and Potomac Telephone Company v. Public Service Commission, D.C.App., 339 A.2d 710 (1975). The Commission points out, however, that these 16 other parties intervened only nominally in the appeal undertaken from Formal Case No. 715. According to the Commission, OPC was in control of this appeal and the law firm which wrote the briefs did so only under the direction of OPC; the intervenors were merely permitted to sign on to add prestige to the brief. (PSC brief at 24.) We agree with the Commission that expenses which were incurred under the sole direction of OPC, if otherwise reasonable, are properly assessable. We do not agree that the Commission is free to deny Pepco's objection on these grounds without offering an explanation of its reasons. To allow the Commission to proffer its reasons only later on an appeal to this court would be to permit the Commission to neglect its statutory duty to fully assess the reasonableness of expenses. Accordingly, on remand of this order, along with the other 20 orders, for a proper determination of reasonableness, the Commission should state its findings in regard to the issue of whose expenses were involved in Formal Case No. 715.