holding that we defer to the Commission’s expertise; that a specific finding of bad faith or imprudence is not a necessary predicate to the disallowance of costs; and that the Commission may determine whether expenses are reasonably necessary in providing utility service to ratepayers
How later courts described this case
- holding that we defer to the Commission’s expertise; that a specific finding of bad faith or imprudence is not a necessary predicate to the disallowance of costs; and that the Commission may determine whether expenses are reasonably necessary in providing utility service to ratepayers
Written by the judges who cited it.
The opinion
James R. Cooper, Judge, concurring. In Southwestern Bell Tel. Co. v. Arkansas Public Service Commission, et al., No. LRC-85-832, — F. Supp_(E.D. Ark. July 18, 1986), the court issued a declaratory judgment that the Commission has “no authority over the wage rates and other related benefits negotiated in interstate commerce.” [Opinion, p. 9] I do not agree that the District Court correctly decided this issue, and, while the majority opinion so holds, I concur to further explain my basis for believing that the District Court was in error.
In the case at bar, the Commission did not attempt to exercise any authority over wage rates and related benefits; instead, it set reasonable rates for intrastate telephone service which incidentally involved the exercise of judgment as to the reasonable wage expenses which were to be recovered from consumers. The Commission did not dictate wage rates nor did it attempt to modify those wage rates which had been negotiated under the National Labor Relations Act. Rather, it specified that the major portion of wage rates would be recoverable from consumers and a small portion of them would not.
I cannot agree that the federal scheme of regulation goes nearly so far as Bell urges, and do not believe Congress so intended. In Massachusetts Nurses Association v. Dukakis, 726 F.2d 41 (1st Cir. 1984), the First Circuit Court of Appeals rejected an argument that a statute aimed at restraining increases in hospital costs impermissibly interfered with the collective bargaining efforts of the Massachusetts Nurses Association in such a way that the statute must be held to be pre-empted by the Labor Management Relations Act, stating:
[I]n any industry the price of whose product or service — such as electric power, telephone, natural gas, or even rent controlled real estate — is regulated, a state would find its regulatory system vulnerable to pre-emptive attack on the ground that the overall control of price was too inhibiting an influence on collective bargaining. Logic, however, would carry beyond simple price control. Any state or municipal program that substantially increased the costs of operation of a business in a competitive market would be similarly vulnerable to the pre-emption argument. Clean air and water laws, selective cutting requirements in forest operations, industrial safety standards, tax increases — all pro tanto hobble collective bargaining in that they constitute part of the universe in which collective bargaining takes place, just as do general prosperity or depression. But they do not add to or detract from the rights, practices, and procedures that together constitute our collective bargaining system.
Id. at 45 . The same reasoning seems particularly applicable to this case.
Bell has failed to persuade me that the NLRA is so broad that the Arkansas Public Service Commission is prohibited, for purposes of establishing reasonable utility rates, from disallowing a small portion of Bell’s wage and salary costs. The Commission does not purport to dictate any of the terms of Bell’s collective bargaining agreement. It simply establishes a prospective revenue level for one aspect of Bell’s utility operations, and restricts those revenues to a level consistent with an amount judged by the Commission to be the reasonable cost of providing service. The Commission did not mandate wage and salary expenditures that the appellant may or may not make — these decisions remain solely within the discretion of Bell’s management. The Commission merely set a limit on what portion of those expenses the appellant will be authorized to recover from Arkansas consumers in the form of rates paid for telephone services.