WPC_2 # VUNa % 0Nb 0  w@j  m 0D 4  0J* 0@t 0T 0^ 0hf 0r 0|@ B 0 0_ 1u 0dd D3U,>B)ADCj AMU*0$yTu*1G[! !#2%'v~i)v* AO0 1 0D1 D/2 BB2HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPT0 '"  Z 6Times New Roman Regular(&y$   - -((2I$ y!     X5-X   `   0  AT&T v. Greer, et al. - Concurring Opinion    ' IB011C20IB011C2 .    ӀEDDVUӀ U(#$  0  D 3|x2 0Indent123  ("$    2" 0Indent20 23  2, 0Indent30 0 23  26 0Indent40 0 0 23  2@ 0Indent50 0 0 0 23  2J 0Indent60 0 0 0 0 23   d2T 0Indent70 0 0 0 0 0 23  2^ 0Indent80 0 0 0 0 0 0 23   !"#%& ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P 8Mac DefaultMac Default ` X$$$$'dxd<  9p`(&Times New Roman% Line 7 d22227Border 1dd3C << G<  9p`(Arial & !  #d#11   55   YYY FILED5XDecember6,1996CecilW.CrowsonAppellateCourtClerk   o !#d#11   $    1X         ActofMay25,1995,ch.408,1995Tenn.Pub.Acts___(3Tenn.CodeAnn.1995AdvanceLegislativeServ.,Chapter398414atp.205).  !#d#11   $    1X         Thischoicewasnotdifficultforincumbenttelephonecompaniestomakebecausetheirnewcompetitorswerenotgoingtobesubjecttotheburdensomeregulatoryratemakingprocess.  !#d#11   $    1X         Bythesametoken,theGeneralAssemblyauthorizedincumbentcompaniestoseekhigherinitialratesiftheircurrentearnedrateofreturnwaslessthantheircurrentlyauthorizedfairrateofreturn.  !#d#11   $    1X         Tenn.Comp.R.&Regs.r.122041.10(2)(a)(1988). = !#d#11   $    1X         ` XpXTenn.Comp.R.&Regs.r.122041.11(1)(a)(1988). u !#d#11   $    1X         ThecommissionenteredanorderonAugust28,1995,permittingtheConsumerAdvocatetointerveneasan officialpartyofrecord.  !#d#11   $    1X         ThecommissionpermittedSouthCentralBellTelephoneCompanytointerveneasapartyonJuly24,1995.OnAugust18,1995,itenteredanorderpermittingAT&TCommunicationsoftheSouthCentralStates,Inc.tointerveneandparticipateintheproceedings.SimilarorderswereenteredonAugust28andAugust30,1995forMCIMetroAccessTransmissionServices,Inc.andMCITelecommunicationsCorporationrespectively.  !#d#11   $    1X         ThestaffactuallyfiledanauditreportearlieronAugust16,1995.However,thecommissionrejectedthisauditonSeptember5,1995becauseitdidnotinvolveUnitedTelephonesmostrecent3.01report.  !#d#11   $    1X         ThecommissionhaddeterminedinDecember1994thatUnitedTelephonesauthorizedfairrateofreturnshouldbebetween8.85%and10.05%.ThestaffauditinSeptember1995concludedthatUnitedTelephonescurrentearnedrateofreturnforthetwelvemonthsendingonMarch31,1995was8.69%.  !#d#11   $    1X         ݛAT&ThadrequestedadeclaratoryrulingfromthecommissionconcerningtheseissuesonJuly14,1995.ThecommissiondeniedtherequestonAugust22,1995.  !#d#11   $    1X         ݛTennesseesdecisiontoclassifyratemakingasacontestedcaseratherthanasarulemakingproceedingpointstoaclearcontrastbetweentheStatesandthefederalgovernmentsunderstandingoftheϢthenatureofaratemakingprocessproceeding.Theratemakingmandatedbyfederallawisviewedasinformalrulemaking.See,e.g.,ConsolidatedAluminumCorp.v.T.V.A.,462F.Supp464,475(Supp.1978).  !#d#11   $    1X         ݛNeitherthemajoritynorIhavereachedthemeritsofAT&Tsconstitutionalargumentssincewehaveinvokedthedoctrineofcollateralestoppel.PtPtHH(FG(HH(d'hStyl{WP}01  HH  2$HH  Geneva  <Px443!#4$*$$*$ KK  Geneva  Geneva .,6 Geneva   inion Geneva  inion Geneva C<< CLevel 1Level 2Level 3Level 4Level 5($$   1  ' dxdP Pd ! . 11          \RA'\\RA'\7_dd7    1ԛ@ INTHECOURTOFAPPEALSOFTENNESSEE@ MIDDLESECTIONATNASHVILLE 1̜AT&TCOMMUNICATIONS  )OFTHESOUTHCENTRAL  )STATES,INC.,    )      ) Plaintiff/Appellant,  )      ) PublicServiceCommission      ) No.9502615VS.      )      ) AppealNo.      ) 01A019512BC00556̜R463A1-j|`  `@RߛH.LYNNGREER,Chairman,  )SARAKYLE,Director,and  )MELVINJ.MALONE,Director, )ConstitutingtheTennessee  )RegulatoryAuthority,   )      ) Defendants/Appellees.  )1@ CONCURRINGOPINION 1 ThemajorityopinionrestsontwoprincipalholdingsfirstthatthiscourtlacksjurisdictiontohearthisappealandsecondthatcollateralestoppelbarsAT&TsattackontheconstitutionalityofTenn.CodeAnn.655209(Supp.1996).IhavepreparedthisseparateopinionbecauseIdisagreewiththemajoritysjurisdictionalanalysis.IwouldholdthatthiscourthasjurisdictionoverthisappealandthatcollateralestoppelpreventsAT&TfrompursuingitsconstitutionalchallengetoTenn.CodeAnn.655209.@ I.  In1995theGeneralAssemblyoverhauledtheprocedureforsettingratesfortelephoneservices. 7   כItreplacedthecumbersomeadministrativeratesettingprocesswithoneinwhichcompetitiveforces,ratherthanregulators,dictatetherates.ThechangerequiredtheGeneralAssemblytoprovidetransitionalmechanismsfromtheformerregulatoryenvironmenttothenewmarketdrivenone.ThisappealinvolvesoneofthesemechanismsthetransitionproceduresinTenn.CodeAnn.655209(c)forincumbentlocalexchangetelephonecompanies. Thenewlegislationrequiredincumbenttelephonecompaniestodecidewhethertheirrateswouldcontinuetobesetusingthetraditional ratebaserateofreturnprocessorwhethertheirrateswouldbecomemoreresponsivetomarketforces. 8   ׀Whileincumbentcompanieshadtherighttobeginoperatingfreefromthetraditionalregulatoryoversight,theirrightwasconditionedonathresholddeterminationthattheirinitialrateswouldbe affordable.Thus,Tenn.CodeAnn.655209(c)requiredincumbentcompaniestoapplytothecommissionfora priceregulationplan.Thesolepurposeofthisproceedingwastoensurethatanincumbenttelephonecompanysinitialrateswouldbe affordable. TheGeneralAssemblyunderstoodthattheinitialrateswerethemostimportantcomponentofanynewpriceregulationplan.Thus,ratherthansimplyassumingthattheincumbentcompanyscurrentrateswere affordable,theGeneralAssemblydecidedthatthecommissionshouldtakeonelastlookatacompanyscurrentratesbeforereleasingitsregulatorygrip.RatherthandirectingthecommissiontoϜcommencealengthyratemakingproceedingforeveryincumbenttelephonecompanyseekingtooperateunderanewpriceregulationplan,theGeneralAssemblydevisedanexpeditedprocedurefordeterminingwhetheranincumbentcompanyscurrentrateswereaffordable. Thisexpeditedprocedureinvolvedcomparingtheincumbentcompanyscurrentearnedrateofreturnwithitscurrentlyauthorizedfairrateofreturn.TheratesthatanincumbentcompanywaschargingonJune6,1995wouldbecometheinitialratesinthecompanyspriceregulationϜplan,aslongasthecompanyscurrentearnedrateofreturndidnotexceeditscurrentlyauthorizedfairrateofreturn.Ifthecompanyscurrentrateofreturnexceededitsauthorizedfairrateofreturn,theGeneralAssemblydirectedthecommissiontocommencea contested,evidentiaryproceedingtosetthecompanysinitialratespresumablyatalowerlevelthanitscurrentrates. 9   ׀ TheGeneralAssemblydirectedthecommissiontobaseitscomparisonofanincumbentcompanysearnedandauthorizedratesofreturnonitsstaffsauditoftheincumbentcompanys mostrecent...3.01report.SeeTenn.CodeAnn.655209(c),209(j).The3.01reportisamonthlyfinancialreportfiledbytelephonecompanieswithmorethan6,000accesslines. :   ףItdetailsthecompanysrevenuesandexpensesandprovidesmonthly,yeartodate,andtwelvemonthstodateinformationconsistentwiththeUniformSystemofAccountsasadoptedandamendedbytheFederalCommunicationsCommission. ;   כItmustreflectallratemakingadjustmentstothecompanysoperatingrevenues,expenses,andratebasecontainedinthecommissionsmostrecentorderapplicabletotheincumbentcompany.SeeTenn.CodeAnn.655209(j). TheGeneralAssemblydidnotprovideclearanswerstotwoimportantquestionsconcerningtheexpeditedTenn.CodeAnn.655209(c)procedure.First,itdidnotindicatewhetherthehearingduringwhichthecommissionreceivesandactsonthestaffauditofanincumbentcompanys3.01reportwouldbeacontestedcaseproceeding.Second,itdidnotdescribewhatrole,ifany,anincumbentcompanyscustomersorcompetitorscouldplaywithregardtothecommissionsconsiderationofthestaffauditoftheincumbentcompanys3.01report.Thiscasedemonstratestheproblemscausedbytheseoversights.̜Ǜ@ II.  UnitedTelephoneSoutheast,Inc.appliedforapriceregulationplanlessthantwoweeksafterthe1995legislationtookeffect.Duringthenexttwomonths,thecommissionenteredaseriesoforderspursuanttoTenn.CodeAnn.45310(1991)andTenn.CodeAnn.652107(1993)permittingtheConsumerAdvocate <   ׀andfourofUnitedTelephonescustomersandcompetitors =   כtointerveneandparticipateintheproceeding.OnAugust7,1995,thecommissionpublishedanoticethatitwouldholdacontestedcasehearingonUnitedTelephonesapplicationforapriceregulationonSeptember7,1995.ThenoticestatedthatthehearingwouldbeconductedinaccordancewiththeUniformAdministrativeProceduresAct. OnAugust30,1995,theConsumerAdvocatefiledamotionsuggestingthatthecontestedcaseproceedingscheduledforSeptember7,1995wasinappropriate.TheConsumerAdvocatelikenedUnitedTelephonesapplicationforapriceregulationplantoanaudit,andarguedthatNationalHealthCorp.v.Snodgrass,555S.W.2d403,405(Tenn.1977)stoodforthepropositionthatauditswerenotcontestedcases.OnSeptember5,1995,thecommissionenteredanorderrescindingitsAugust7,1995noticeofhearingonthegroundthat thereisnostatutoryauthorityforacontestedproceedingatthisjuncture. ThecommissionsstafffiledthereportofitsauditofUnitedTelephonesmostrecent3.01reportonSeptember15,1995. >   ׀ThereportconcludedthatUnitedTelephonescurrentearnedrateofreturnwaslessthanitsauthorizedfairrateofreturn. ?   ׀OnSeptember20,1995,thecommission,withoutconductingacontestedcasehearing, accepteditsstaffϜreport.ItalsodeterminedthatUnitedTelephonesratesineffectonJune6,1995wereaffordableandwouldbecometheinitialratesunderUnitedTelephonespriceregulationplaneffectiveonOctober15,1995,unlessUnitedTelephonerequestedacontestedevidentiaryhearingwithintendays. UnitedTelephoneimmediatelyinformedthecommissionthatitdidnotintendtorequestacontestedevidentiaryhearing.Inaddition,AT&T,oneoftheinterveningparties,requestedthecommissionto clarifyitsSeptember20,1995orderbymakingseparatefindingswithregardtoeachofUnitedTelephonesbasicandnonbasicrates.OnOctober13,1995,thecommissionentereditsfinalorderauthorizingUnitedTelephonetobeginoperatingunderapriceregulationplanbasedonitsratesineffectonJune6,1995.ThecommissionalsodeniedAT&TsrequesttoconveneahearingbecauseitlackedtheauthoritytomakefurtherfindingswithregardtoUnitedTelephonesratesandbecausetheotherreliefrequestedbyAT&Texceededitsauthority. Theproceedingstookacuriousturnatthispoint.OnOctober6,1995,AT&TfiledapetitionpursuanttoTenn.CodeAnn.45224(1991)intheChanceryCourtforDavidsonCountychallengingtheconstitutionalityofTenn.CodeAnn.655209. @   ׀Whilethisproceedingwaspending,AT&TalsoappealedthecommissionsOctober13,1995ordertothiscourtinaccordancewithTenn.CodeAnn.45322(b)(1)(Supp.1996)andTenn.R.App.P.12.ManyofAT&Tsissuesonthisdirectappealwerethesameasthoseraisedinitspendingdeclaratoryjudgmentproceeding. ThecommissionmovedtodismissAT&TsdirectappealonthegroundthatthiscourtlackedsubjectmatterjurisdictionbecauseitsOctober13,1995orderwasnotthefinalorderinacontestedcaseproceeding.OnApril12,1996,thiscourtdeclinedtodismisstheappeal.Wedeterminedthatthiscourt,ratherthanthecommissionorthetrialcourt,shoulddecidelegalquestionsconcerningourownjurisdiction.AT&TCommunicationsoftheS.Cent.States,Inc.v.Bissell,App.No.01A019512BC00556(Tenn.Ct.App.April12,1996)(orderdenyingmotiontodismissappeal). Notwithstandingthiscourtsdenialofthemotiontodismissthisappeal,AT&Tcontinuedtopressforwardwithitsdeclaratoryjudgmentactioninthechancerycourt.FollowingahearinginmidFebruary1996,thechancerycourtfiledamemorandumandorderonMay7,1996findingAT&TsattacksontheconstitutionalityofTenn.CodeAnn.655209tobewithoutmerit.AT&TCommunicationsoftheS.Cent.States,Inc.v.Bissell,No.953094II(DavidsonChan.Ct.May7,1996).Ratherthanappealingthisdecision,AT&Tturneditsattentiontothisappeal.However,thecommissionassertedthatthedoctrineofresjudicatapreventedAT&TfromϢrelitigatingitsconstitutionalissuesbecausethechancerycourthadalreadydecidedthemadverselytoAT&Tinthedeclaratoryjudgmentproceedingandbecausethechancerycourtsjudgmenthadbecomefinalwithoutbeingappealed.@ III.  OurauthoritytoreviewthecommissionsdecisionsstemsfromTenn.CodeAnn.45322(b)(1)(Supp.1996)whichprovidesforadirectappealtothiscourtfrom anyfinaldecisionofthecommissionoritssuccessor,theTennesseeRegulatoryAuthority.Eventhoughthephrase anyfinaldecisionisquitebroad,consideringitinlightofϜbothTenn.CodeAnn.45322(a)(1)andTenn.R.App.P.12indicatesthatitincludesonlyfinaldecisionsincontestedcases.Thus,thiscourthasdirectappellatejurisdictionoverthecommissionsfinaldecisionsincontestedcases. ThemajoritysjurisdictionaldecisioninthiscaseisbasedonitsconclusionthatthecommissionsdecisionsettingtheinitialratesunderUnitedTelephonespriceregulationplanwasnotafinaldecisioninacontestedcase.Thisconclusionignorestheexistingstatutesgoverningpracticebeforethecommissionandcreatesaspeciesofratemakingproceedingthatiscompletelyshieldedfromjudicialreview.IfindnoindicationinTenn.CodeAnn.655209'slegislativehistorythattheGeneralAssemblydesireddecisionswithsuchfarreachingfinancialconsequencestobeessentiallyunreviewable,orthattheGeneralAssemblydecidedtodepartfromthecommissionspracticeofpermittinginterestedandaffectedpartiestointerveneandparticipateinaratemakingproceeding.@ A.  ATenn.CodeAnn.655209proceedingtoapproveapriceregulationplanforanincumbenttelephonecompanyisessentiallyaratemakingprocedure.Itsprimarypurposeistofixtheratesthattheincumbentcompanywillchargeonceitspriceregulationplanhasbeenapproved.Theproceedingisnotsimplyan auditeventhoughtheevidentiaryfoundationforthecommissionsdecisionisthestaffauditoftheincumbentcompanysmostrecent3.01report.Thus,theholdinginNationalHealthCorp.v.Snodgrass,555S.W.2d403,405(Tenn.1977)thatanauditisnotacontestedcasehasnobearingonthisappeal. BoththeUniformAdministrativeProceduresActandthestatutesspecificallyapplicabletothecommissionsproceedingsdefineratefixingproceedingsascontestedcases.Tenn.CodeAnn.652101(2)(Supp.1996)statesthat thefixingofratesshallbedeemedacontestedcaseratherthanarulemakingproceeding. A   כTenn.CodeAnn.45102(3)(1991)likewisestatesthatcontestedcaseproceedingsmayincluderatemakingandpricefixing.Statutesinvolvingthesamesubjectmattershouldbeconstruedtogether,Statev.Blouvett,904S.W.2d111,113(Tenn.1995),inordertopromoteconsistencyanduniformity,Stateexrel.Witcherv.Bilbrey,878S.W.2d567,571(Tenn.Ct.App.1994),andtoavoidplacingthestatutesinconflictwitheachother.Croninv.Howe,906S.W.2d910,912(Tenn.1995).Accordingly,wehaveinthepastconstruedthedefinitionsof contestedcaseinTenn.CodeAnn.45102(3)andTenn.CodeAnn.652101(2)inparimateria.TennesseeCableTelevisionAssnv.TennesseePub.Serv.Commn,844S.W.2d151,161(Tenn.Ct.App.1992). Partiestocontestedcaseproceedingsbeforethecommissioninclude [a]llpersonshavingarightundertheprovisionsofthelawsapplicabletothe...[commission]toappearandbeheardandall interestedpersonswhohavebeenpermittedtointerveneandbecomeapartytoanycontestedcase.Tenn.CodeAnn.652107(Supp.1996).Personswhobecomepartiestoacontestedcasebeforethecommissionhaveastatutoryright topresentevidenceandargumentinaccordancewiththerulesofthe[commission].Tenn.CodeAnn.652108(Supp.1996). Thecommissionscriteriaforinterventionwerenotalteredbythe1995legislationprovidingforanewmechanismtosettelephonerates.Tenn.CodeAnn.652107requiresonlythatanintervenorbean interestedperson.Inaddition,Tenn.CodeAnn.45310(a)(2)(1991)requiresthatanintervenordemonstratethattheproceedingwillaffectits legalrights,duties,privileges,immunitiesorotherlegalinterestorthat qualifiesasanintervenorunderanyprovisionoflaw.@ B.  ThefactsinthisrecorddemonstratebeyondperadventurethatthecommissionitselfconsideredAT&TandtheotherintervenorsaspartiestoUnitedTelephonesapplicationforapriceregulationplan.ThecommissionsordersgrantingthepetitionstointerveneinvokedbothTenn.CodeAnn.45310and652107.Oncethecommissionhadgrantedthesepersonstherighttointervene,Tenn.CodeAnn.652108gavethemtherighttopresentevidenceandargument. Thecommissionneverfullyexplaineditsabruptdecisionthat thereisnostatutoryauthorityforacontestedproceedingatthisjuncture.Therearetwopossibleexplanationsforthisdecision.First,thecommissioncouldhaveagreedwiththeConsumerAdvocatesassertionthataTenn.CodeAnn.655209(c)proceedingwasanaudit,notacontestedcase.Second,itcouldhaveconcludedthataTenn.CodeAnn.655209(c)proceedingdidnotbecomeacontestedcaseuntileitherthecommissionortheincumbenttelephonecompanytriggereda contestedevidentiaryproceedingtosetthecompanysinitialrates. Bothrationalesarewithoutmerit.TheConsumerAdvocatescharacterizationofTenn.CodeAnn.655209(c)asanauditissimplywrongand,therefore,NationalHealthCorp.v.Snodgrasshasnobearing.ThenotionthataTenn.CodeAnn.655209(c)proceedingdoesnotbecomeacontestedcaseunlesseitherthecommissionortheincumbenttelephonecompanytriggersa contestedevidentiaryproceedingisequallyuntenable.Inadditiontooverlookingthecomplimentarydefinitionsof contestedcaseinTenn.CodeAnn.45102(3)and652101(2)statingthatratemakingproceedingsarecontestedcases,itignorestheparticipatoryrightsgrantedtointervenorsinTenn.CodeAnn.652108. ThelegislativehistoryofTenn.CodeAnn.655209providesnoindicationthattheGeneralAssemblyintendedtopreventinterestedpartiesfromparticipatinginTenn.CodeAnn.655209(c)proceedingsjustastheycanparticipateinanyotherproceedingbeforethecommission.Inaddition,Iamunabletoindentifyanypolicyreasontosupportthefindingthattheseproceedingswouldbeessentiallyclosedunlesseitherthecommissionortheaffectedincumbenttelephonecompanytriggeredafullblown contestedevidentiaryproceedingtosettheinitialrates.Thereare,however,soundpolicyreasonsfortreatingtheearlyphasesofaTenn.CodeAnn.655209(c)proceedingasacontestedcase. DisputedfactualandlegalquestionscouldverywellariseinaTenn.CodeAnn.655209(c)proceedingbeforea contestedevidentiaryproceedingtosetanincumbenttelephonecompanysinitialratesistriggered.Questionscouldberaisedaboutthestaffsauditmethodologyandfactualconclusions.Theseissuesdirectlyaffectthecommissionsdecision,andthustheyshouldbeairedandresolvedbeforethecommissiondetermineswhetheranincumbenttelephonecompanysactualrateofreturnexceedsitscurrentlyauthorizedfairrateofreturn. Thesedisputedmatterscouldverywellbeofinterest,notjusttoanaffectedincumbentcompany,butalsotootherincumbentcompaniesapplyingforapriceregulationplan.Inadditiontoissuesconcerningauditmethodology,incumbenttelephonecompaniesmayalsohavequestionsaboutthecommissionsdecisionsconcerningtheimplementationofthisnew,dramaticallydifferentratemakingprocedure.RecognizingandfollowingtheinterventionandhearingproceduresinTenn.CodeAnn.652107,108providesthemostefficientwaytoresolvethesematters.@ IV.  HavingconcludedthatthiscourthasjurisdictiontoconsiderAT&TsappealfromthecommissionsOctober13,1995order,IconcurwiththemajoritysconclusionthatAT&TiscollaterallyestoppedfromchallengingtheconstitutionalityofTenn.CodeAnn.655209inthisproceeding.ThepartiestothechancerycourtproceedingthatresolvedtheseissuesagainstAT&Tspositionarethesame.Accordingly,thechancerycourtsdecisionontheseissuesisconclusiveonAT&Tinsubsequentproceedings. B   ̛      ____________________________      WILLIAMC.KOCH,JR.,JUDGE