Court Opinion

ID: 9793578
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:50:15.042544+00
Date Added: 2024-06-11T08:06:06.654198
License: Public Domain

Dolliver, J.
(dissenting) — The majority correctly states the issue before the court is whether charitable contributions by the telephone company be included by the' Washington Utilities and Transportation Commission as part of the rate base in determining the proper rate of return. However, it discusses the wrong question. The question is not who pays for the contributions. That has been determined already by the legislature and should be outside the province of the court. The question rather is whether the commission, in allowing charitable contributions to be part of the rate base, followed the requirements of RCW 80.36.080 that the rates be "fair, just, reasonable and sufficient".
RCW 23A.08.020(13) provides:
Each corporation shall have power:
(13) To make donations for the public welfare or for charitable, scientific or educational purposes; and in time of war to make donations in aid of war activities.
In other words, the legislature has specifically recognized charitable contributions as a legitimate and allowable expense of doing business.
*782The majority brushes aside the relevance of this statute: "No one attacks the legality of the contributions and the issue is irrelevant." But attack the legality of the contribution is precisely what the majority does. It looks to the public service statutes and asserts the Washington Utilities and Transportation Commission has no authority to include charitable contributions in the rate structure and, thus, the sort of corporate contribution allowed to be made by every other corporation in the state is here declared illegal. Although the majority makes the obvious point that the position of a regulated corporate monopoly is different from other private corporations, it nowhere indicates where the legislature has expressed an intention that RCW 23A.08.020(13) does not apply to telephone companies or other corporations regulated by the commission.
The majority's argument seems to have two points: (1) The contributions would be "involuntary" and thus beyond the authority of the commission; and (2) there is no relationship between "prompt, expeditious and efficient" telephone services and the charitable contributions of the telephone companies.
At the root of the majority opinion is a misapprehension as to the true function of the commission toward a regulated and, in this case, a monopoly corporation. The majority claims that to include corporate contributions in the calculation of the rate base would force an involuntary contribution to charity on the part of the ratepayer. Of course it would. But this misses the point. Any charitable contribution on the part of a telephone company or any other corporation, whether charged as a cost of doing business or against profits, is an involuntary contribution on the part of those who purchase the goods and services of the corporation. It is from its customers that income for a corporation is derived. It is from income that charitable contributions. and other costs áre paid. Thus, the argument as to the voluntary/involuntary nature of the contribution is irrelevant.
*783What are the mechanisms used to keep the amount of charitable contributions within reasonable bounds? In a free market economy, this is done by competition. A business whose costs become disproportionate because of excessive charitable giving will soon find its prices also to be disproportionate and its customers patronizing its competitor. Similarly, if a corporation gives to unpopular charitable causes, its customers may go elsewhere. Thus, the actions of the market which also include price as well as public attitudes and regulations as to the kind and degree of charitable contributions, serve as a regulating mechanism to protect the customer.
How is the customer/ratepayer of a regulated monopoly protected? By the competitive surrogate of the commission which is required to set rates — i.e., prices — which are "fair, just, reasonable and sufficient". RCW 80.36.080. Rates are regulated by the commission. RCW 80.01.040. Upon the filing of rate changes by the public service company, public hearings are held at which testimony is received and all parties are entitled to be heard. Following the hearings, the commission enters an order, and fixes the rates for the services provided. At all times, the public service companies are subject to the strict and continuing authority of the Washington Utilities and Transportation Commission. See generally RCW 80.04.
It should not go unnoticed that plaintiffs in this case did not avail themselves of their opportunity to play a role in setting the rates they pay for telephone service by participating in the hearings before the commission. See WAC 480-08-040(4); 480-08-070.
Since the reasonableness of the rate/price structure for a regulated monopoly or the character of its charitable contributions cannot be set by a competitive market, it is done by the commission acting as the representative of the public and as a surrogate for competition. See The Protection of Public Utility Consumers, 28 Baylor L. Rev. 1061 (1976).
In summary, it should be emphasized (1) that public policy in this state specifically allows corporate charitable *784contributions; (2) regardless of the nature of the corporation, the "contribution" of the customer to the corporate charity is involuntary; and (3) the fundamental question is not whether, but how much.
Has the commission taken proper steps to assure that the rate structures, which include these charitable contributions, are "fair, just, reasonable and sufficient"? RCW 80.36.080. Not surprisingly, neither the appellants nor the majority questions this. As the commission stated in this case, "Neither the propriety of nor the amount of the expenditure is questioned by any party to this proceeding."
The record is replete with testimony as to the reasonableness of the contributions. Two examples are illustrative: General Telephone testified only 15/10,000 of its annual revenue goes to charity. Pacific Northwest Bell testified that in 1972 manufacturing, banking and utilities generally gave .83 percent, 1.07 percent and .44 percent respectively to charitable and educational organizations. Pacific Northwest Bell gave .31 percent.
In addition, the Washington Utilities and Transportation Commission has devised elaborate monitoring devices to assure the amount and character of the charitable contributions are appropriate. The ratepaying public is fully protected.
At one point in its opinion, the majority asserts the corn: mission is not "the keeper of the social conscience of the citizens of this state". After reading the opinion, the reason soon becomes apparent: The majority chooses to reserve this role for itself. But the social conscience of the public is not the business of either the commission or the court. It finds its expression in the citizenry and its warrant through the legislature which represents the citizens.
The Washington Utilities and Transportation Commission is called upon to protect the ratepayers from unreasonable contributions both as to amount and kind. This it has done, and its actions in this regard are not contested. The commission and the utilities have acted within the statutes. While the majority tantalizes with words such as *785"entanglement" and "constitutional thicket", it declines to reach constitutional questions. I believe it does so with good reason since I believe none exist.
It may be granted that mechanisms to assure fair prices as well as quality products and services to consumers are. faulty at best. Just as the market may malfunction, so may the Washington Utilities and Transportation Commission fail to perform as well here as it might in the test tube of an ideal world. Yet, it is the method the people of this state, through their elected representatives, have chosen and it is one which the people, directly or through their representatives, have the prerogative and the power to change.
As to its second argument, the majority has reduced the entire relationship of ratepayer/utility to the cash nexus of the rate paid and the "direct benefits" received. It claims ratepayers do not benefit through the charitable contribution of the utility. This is, I believe, far too narrow a view of both benefit and social policy.
Simply because it belittles a social conscience, the majority cannot will away those needs which charitable and educational organizations fulfill. The needs of society will be met. The existence of strong, voluntary charitable and educational institutions is a direct benefit to citizens and ratepayers alike. The loss of these institutions would be a detriment which would fall on both citizen and ratepayer. To assure the continued existence of voluntary organizations, I believe it is within the statutory mandate of the Washington Utilities and Transportation Commission to allow the telephone companies to support voluntary charitable and educational institutions so as to help them meet public needs. The alternative to strong voluntary organizations is to have all charitable and educational institutions run by the state and let the taxpayers — which includes the ratepayers — foot the entire bill. This would truly be an "involuntary contribution".
*786It should also be noted in passing that the majority position claims too much. From its analysis, it is difficult to see where the telephone company could "make donations in aid of war activities" or do any number of things an ordinary corporation is allowed to do under RCW 23A.08.020.
The vitality of and the benefits from the voluntary sector in American life have been recognized consistently. This sector is one of those things which has differentiated the American experiment from other countries:
Americans of all ages, all stations in life, and all types of disposition are forever forming associations. There are not only commercial and industrial associations in which all take part, but others of a thousand different types— religious, moral, serious, futile, very general and very limited, immensely large and very minute. Americans combine to give fetes, found seminaries, build churches, distribute books, and send missionaries to the antipodes. Hospitals, prisons, and schools take shape in that way. Finally, if they want to proclaim a truth or propagate some feeling by the encouragement of a great example, they form an association. In every case, at the head of any new undertaking, where in France you would find the government or in England some territorial magnate, in the United States you are sure to find an association.
2 A. de Tocqueville, Democracy in America, "On the Use Which The Americans Make of Associations in Civil Life," ch. 5, at 15 (Anchor ed. George Lawrence transl. 1969). See Giving in America, "Toward a Stronger Voluntary Sector," Report of the Commission on Private Philanthropy and Public Needs (1975); N.Y. Times, July 2, 1978, at 1, col. 5, article entitled "Private Charity Going Out of Style in West Europe's Welfare States"; Pacific Tel. & Tel. Co. v. Public Util. Comm'n, 62 Cal. 2d 634, 677, 401 P.2d 353, 44 Cal. Rptr. 1, 28 (1965) (Peters, J., concurring and dissenting).
If the people wish to abandon voluntarism and the ability of corporations to contribute to private charity, they *787will, after public debate, do so. It should not be done by this court.
Utter, J., concurs with Dolliver, J.