Court Opinion

ID: 7862436
Source: CourtListenerOpinion
Date Created: 2022-09-08 18:01:42.796246+00
Date Added: 2024-06-11T16:31:01.092789
License: Public Domain

RANDOLPH, Circuit Judge,
dissenting:
Anticipating a decline in demand for its services in the wake of Hurricane Hugo, Vitelco sought interim six-month rate increases to make up the difference. Vitelco described its request as a short-term emergency measure, necessary “to ensure the financial integrity of the Company.” Letter from Gertrude J. White to John Cimko, Chief, FCC Tariff Division 1 (Dec. 1, 1989) (“Cimko Letter”). Despite Vitelco’s failure to present adequate data to support its assertions, the Commission allowed the increases, subject to a refund if investigation showed the interim rates not to be reasonable. The Commission’s investigation, conducted a few months later, conclusively showed just that. Rather than a decline in revenues, Vitelco enjoyed a large increase. My colleagues nevertheless set aside the Commission’s order requiring Vitelco to refund the overcharges. I therefore dissent.
*369The Commission’s mistake, as the majority sees it, was in evaluating Vitelco’s earnings during the time the increased rates were in effect rather than over the conventional two-year monitoring period. The idea is that the Commission’s departure from its normal course caught Vitelco by “surprise.” Maj. op. at 366. One is reminded of General DeGaulle’s quip: since politicians do not believe what they say, they are quite surprised to be taken at their word. Vitelco’s complaint is a horse of the same color.
At Vitelco’s urging, the Commission waived 47 C.F.R. § 61.38’s demand for extensive supporting data to justify rate increases. The Commission did so in light of Vitelco’s representation that the company “will be able to furnish to the FCC a complete update of revenues, expenses and rate base as part of the tariff filing due on April 1, 1990. At that time, sufficient information concerning the recovery effort from Hurricane Hugo will be available to respond to FCC requirements.” Letter from Gertrude J. White, Vitelco counsel, to Judith A. Nitsche, Chief, FCC Tariff Review Branch 2 (Nov. 16, 1989); see also Letter from Gertrude J. White to Donna R. Searcy, Secretary, FCC 4 (Dec. 18, 1989). Rather than passing upon Vitelco’s request beforehand, the Commission deferred final judgment until Vitelco furnished the data. And the Commission did so in the face of Vitelco’s recognition that, in the company’s words, “in the unlikely event that usage returns to pre-hurricane levels in the very near future,” the Commission can take action “to guard against potential overearnings.” Cimko Letter at 1-2. These statements make sense only if Vitelco expected the Commission to evaluate its earnings, not over a two-year period, but during the time the interim rates were in effect. Vitelco indeed invited such an evaluation as the quid pro quo for the Commission’s waiving its rules. The Commission’s final decision therefore came as no surprise to the company. Having allowed the interim rate increases to go into effect “subject to an investigation and an accounting order put in place specifically to protect ratepayers should the decline in demand predicted by Vitelco not materialize,” the Commission simply ordered refunds when Vitelco’s prophesy did not come true. Virgin Islands Tel. Corp., 6 F.C.C.R. 7350, 7351-52 (1991).
Unlike the situation contemplated in American Telephone & Telegraph Co. v. FCC, 836 F.2d 1386, 1391 n. 5 (D.C.Cir. 1988), Vitelco was not seeking increased rates as an adjustment to its authorized rate of return after experiencing shortfalls over, say, the first twelve months of the two-year monitoring period. Instead, “Vitelco increased rates during the access year for the sole purpose of avoiding underearnings that did not occur.” 6 F.C.C.R. at 7351. In further contrast to AT & T, the refund order here does not condemn Vitelco to suffer underearnings in the long run, the medium run, or even the short run. On this point, the Commission’s answer to Vitelco — and now to the majority opinion— strikes me as conclusive: “The Refund Order requires only a one-time refund of charges assessed during an extraordinary six-month period chosen by Vitelco itself for special treatment. Even after Vitelco implements that refund, the company will still have earned at or above its rate of return for that period.” Brief for Respondents at 32.
As to US West, my colleagues find the similarities between it and this case “striking.” Maj. op. at 367. I find them nonexistent. The rates in US West “were part of a partially new regime____ [They] were allowed to take effect at the conclusion of a comprehensive investigation of US West’s and other local exchange carriers’ initial attempts to tariff interstate access services in accordance with the Part 69 access charge system.” Investigation of Special Access Tariffs of Local Exchange Carriers, 5 F.C.C.R. 1717, 1718 (1990). Vitelco’s interim rate increases were nothing of the sort. The Commission properly analyzed Vitelco’s interim rates in terms of the limited objective Vitelco defined for them. The interim rates rested not on any “comprehensive investigation,” but on Vitelco’s predictions, predictions the company admitted lacked adequate supporting data. And in *370US West, the Commission explicitly cautioned against taking its decision to mean “a six month period could [njever establish an adequate basis to measure compliance with a rate of return prescription.” Id.
This should have been a simple ease. No great policy issues were at stake, no fundamental principles hung in the balance. Vitelco thought a hurricane’s destruction threatened its financial integrity. The Commission allowed a temporary rate increase on condition that the telephone company back up its forecast of dire need with facts, as it said it would. When Vitelco could not do this, the Commission — taking Vitelco at its word — properly ordered the company to refund the increased charges. I would deny the petition for review.