Court Opinion

ID: 5167349
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:49:30.772129+00
Date Added: 2024-06-11T08:23:33.352359
License: Public Domain

WATT, J.,
with whom SIMMS, J., joins dissenting.
¶ 1 The majority opinion turns the policy of the law on its head. The clear purpose of Oklahoma Constitution Art. 18 § 5(a) is to prohibit municipalities from granting noncompetitive franchises without first obtaining the permission of the voters. The majority opinion instead uses § 5(a) to eliminate competition by securing a monopoly for OEC despite the wishes of the Newcastle City Council that OG&E be allowed to compete with OEC.
¶ 2 For some time both OEC and OG&E have happily operated without franchises under the licensing arrangement set up by Newcastle. The only reason this litigation arose is that OEC claims an exemption from obtaining a franchise under 18 O.S.1991 § 437.2(k).1 Section 437.2(k) grants the pow*519er to electric cooperatives who are brought into municipalities to “to continue and extend the furnishing of electric energy or the construction and operation of electric facilities in such area without obtaining the consent, franchise, license, permit or other authority” of the municipality. OEC, therefore, claims that while the statute exempts it from the obligation to obtain a franchise, OG&E is, nevertheless, obliged to do so.
¶ 3 The majority’s holding that a franchise election is mandated under the Oklahoma constitution even when the utility involved is already doing business within the corporate limits makes inescapable the conclusion that 18 O.S. § 437.2(k) is unconstitutional. The majority opinion states that Article 10 § 5(a) Okla. Const, “cannot be overridden by the Legislature ...,” 1998 OK 118 at ¶ 1, 971 P.2d 868 and that “The constitution is the Bulwark to which all statutes must yield,” 1998 OK 118 at ¶ 8, 971 P.2d 868. [Emphasis added.] But the effect of 18 O.S. § 437.2(k) is to relieve electric cooperatives of their clear obligation under Article 10 § 5(a) of the constitution to obtain a franchise.
¶ 4 With very narrow exceptions not applicable here, the legislature has no power to waive constitutional requirements through legislation. State v. Oklahoma Corporation Commission, 1998 OK 118 ¶ 2, 971 P.2d 868. Thus, under the majority opinion, OG&E is now entitled to seek an injunction against OEC to prohibit OEC from extending its service until and unless OEC obtains a franchise on the ground that 18 O.S. § 437.2(k) is unconstitutional and OEC is, therefore, unlawfully operating within Newcastle.
¶ 5 It is hardly reasonable to assume that 18 O.S.1991 § 437.2(k), a statute that is clearly unconstitutional under the majority’s interpretation of Art. 10 § 5(a) of the constitution, may be used as a device to allow OEC to secure a monopoly over the objection of Newcastle’s city council. But that is .exactly what OEC is saying and what the majority has approved.
¶ 6 Despite the majority’s ruling today OG&E would, apparently be entitled to an order from the Oklahoma Corporation Commission authorizing OG&E to extend its service under other opinions of this Court. OEC concedes that OG&E is authorized to do business in the part of Newcastle that was simultaneously annexed by Newcastle and de-annexed by Oklahoma City. As a regulated public utility, OG&E is subject to the Corporation Commission’s power to, “within constitutional and reasonable limitations compel [it] to extend its service within the boundaries of those cities it is now serving.” Oklahoma Natural Gas Co. v. Corporation Commission, 1929 OK -, 88 Okla. 51, 211 P. 401, 402. Thus, because OG&E is now serving Newcastle, the Oklahoma Corporation Commission evidently has the power to enter an order requiring OG&E to extend its service to additional customers within Newcastle’s city limits.
¶ 7 The majority quotes extensively from McPhee & McGinnity Co. v. Union Pac. R. Co., 158 F. 5 (8th Cir.1907), for the proposition that the right granted by Newcastle to OG&E could not be granted by license. Not only does the McPhee opinion not support this proposition it expressly rejects it. In McPhee the City of Denver by ordinance granted a “license and permit” to the Union Pacific Railroad to extend its already existing lines in Denver by building a spur track from its main line to serve a shipper’s warehouse. Plaintiffs sought to enjoin the city and the railroad because the railroad had not obtained a voter-approved franchise, mandated under a constitutional provision similar to Art. 18 § 5(a). The court rejected plaintiffs argument and held that the railroad was not required to obtain a voter-approved franchise to allow the railroad to extend its lines beyond its existing lines, which the railroad was undisputedly authorized to operate. Because the railroad was already operating within the City of Denver and sought only to build a spur track the court concluded that the privilege to extend the spur track that the city *520granted to the railroad was “a license rather than a franchise.” McPhee at 158 F. 11.
¶8 Similarly, the majority’s reliance on Oklahoma Gas & Electric Co. v. Total Energy, 1972 OK 108 ¶21, 499 P.2d 917, is misplaced. There are three significant factual differences between Total Energy and this case: First, Total Energy was not a regulated light and power company; Second, Total Energy was not doing business in The Village prior to its dispute with OG&E; and Third, there is no indication in the Total Energy opinion that Total Energy sought or The Village granted any sort of permission for Total Energy to engage in a light and power business. Thus, it is clear that Total Energy does not support the proposition that OG&E, a regulated public utility, licensed to do business and doing business in Newcastle, is required to obtain a franchise before it can extend its lines.
¶ 9 The policy requiring franchises to be granted by election and discouraging monopolistic franchises is secured under the Oklahoma Constitution, Art. 18 § 5(a) (requiring franchises to be approved by a vote of the people) and Art. 18 § 7 (reserving the right of the state to regulate utilities and prohibiting the granting of exclusive franchises).2 But to apply Art. 18 § 5(a) here as the majority has done reduces competition because Newcastle is now prohibited from allowing OG&E to compete with OEC for light and power business in Newcastle. This result is contrary to the clear public policy of the state as expressed in both Art. 18 § 5(a) and § 7 of the constitution.
¶ 10 The majority’s citation of'the Supreme Court of Colorado’s opinion in Community Tele-Communications, Inc. v. Heather Corp., 677 P.2d 330 (Colo.1984) is puzzling. There the Colorado court held that a municipality had improperly granted a franchise to a cable television concern without a vote of the people. The grant of authority given by the municipality, however, carried with it a right to operate for ten years at a time when the cable company was neither authorized to do business nor was it doing business within the municipality. Thus, the ruling of the Colorado court prevented a municipality from granting a monopoly to a new entrant into the market place without a vote of the people. In stark contrast, the majority opinion perpetuates a monopoly.
¶ 11 City of Englewood v. Mountain States Telephone and Telegraph Company, 163 Colo. 400, 431 P.2d 40, 42 (1967), involved facts very similar to those present here. There the Supreme Court of Colorado En Banc cited the Eighth circuit’s McPhee case, cited above, with approval. The utility had been franchised but the franchise had expired. The utility insisted that it did not have to renew its franchise to continue doing-business in Englewood because it was a licensed public utility already lawfully doing business there. The court agreed. Here the correct result is even more obvious because Newcastle does not insist that OG&E obtain a franchise but agrees that OG&E should be allowed, under its license, to expand its service without a franchise. The Colorado court also pointed out that when determining whether a franchise is required one must distinguish between a statewide publie utility (there a telephone company) and “a city gas or electric company operation whose predominant epicenter usually is. limited to a local focus.” Here, of course, OG&E is a regulated public utility with operations throughout the state and its epicenter is certainly not Newcastle, Oklahoma.
¶ 12 The majority relies upon OG & E v. Wilson & Co., 1930 OK -, 146 Okla. 272, 288 P. 316, 317, for the proposition that a franchise “is a privilege of doing that which does not belong to the citizens of the country by common right.” While I have no disagreement with that statement of the law, it does not support the majority’s conclusion that Newcastle is prohibited under the constitution from licensing OG&E to extend its service. Here, OG&E is a licensed, regulat*521ed, public utility doing business in Newcastle as is OEC. As a result, OG&E already possesses the privilege of conducting a light and power business in Newcastle, although that right is not granted “to the citizens of the country by common right.” Thus, the majority’s holding that OG&E required a voter-approved franchise from Newcastle to extend lines it is already authorized by law to operate is not supported by Wilson.
¶ 13 The foregoing authorities lead irresistibly to the conclusion that Newcastle properly acted within its powers as a municipal corporation in granting utility permits to OG&E to extend its lines within the municipality without the necessity of obtaining a voter-approved franchise. The majority’s conclusion that Newcastle lacked the power to authorize OG&E to extend its lines impedes rather than promotes competition by leaving OEC with a monopoly within the Newcastle city limits. This result is contrary to the constitutional plan the framers envisioned to prevent giving monopoly power to public service companies.
¶ 14 OEC has made no claim, and the majority does not indicate, that Newcastle’s decision to allow OG&E to serve four additional homes in the municipality was detrimental to Newcastle’s citizens. In fact, Newcastle’s actions promoted, not stifled, competition. The majority’s application of Art. 18 § 5(a) is clearly contrary to the intention of the constitution’s framers to promote competition.
¶ 15 Until today, I had never seen, despite diligent research, any case from any jurisdiction holding that a municipality’s legislative body could not license a public utility company, which was regulated by the state and which was lawfully doing business within the municipality, to extend its service. One looks in vain for a rational basis for such a holding.
I dissent.

. Title 18 O.S.1991 § 437.2(k) provides in material part:
... In case an area has been or shall be included, as a result of incorporation, annexation, population growth, or otherwise, within the boundaries of a city, town or village, a cooperative which was furnishing electric energy, or was constructing or operating electric facilities, in such area, prior to such inclusion, shall be entitled to construct, maintain and operate elec-*519trie transmission and distribution lines and related facilities along, upon, under and across all existing and future public thoroughfares, and to continue and extend the furnishing of electric energy or the construction and operation of electric facilities in such area without obtaining the consent, franchise, license, permit or other authority of such city, town or village....

. Art. 18 § 7, Oklahoma Constitution provides:
No grant, extension, or renewal of any franchise or other use of the streets, alleys, or other public grounds or ways of any municipality, shall divest the State, or any of its subordinate subdivisions, of their control and regulation of such use and enjoyment.
Nor shall the power to regulate the charges for public services be surrendered; and no exclusive franchise shall ever be granted.