TW TELECOM OF N.M., L.L.C. V. NM PUB. REG. COMM'N, 2011-NMSC-029, 150 N.M. 12, 256 P.3d
24
TW TELECOM OF NEW MEXICO, L.L.C.,
Appellant,
v.
NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee,
and
QWEST CORPORATION and OFFICE OF THE ATTORNEY GENERAL, Intervenors.
SUPREME COURT OF NEW MEXICO
2011-NMSC-029, 150 N.M. 12, 256 P.3d 24
APPEAL FROM THE NEW MEXICO PUBLIC REGULATION COMMISSION.
Released for Publication July 19, 2011.
Jones, Snead, Wertheim & Wentworth,
P.A., Carol A. Clifford, Santa Fe, NM, for Appellant.
Margaret Kendall Caffey-Moquin, Santa Fe,
NM, for Appellee.
Montgomery & Andrews, P.A., Jaime R.
Kennedy, Thomas W. Olson, Santa Fe, NM, Gary K. King, Attorney General, Brian
Edward Harris, Assistant Attorney General, Santa Fe, NM, for Intervenors.
PETRA JIMENEZ MAES, Justice. WE CONCUR:
CHARLES W. DANIELS, Chief Justice, PATRICIO M. SERNA, Justice, RICHARD C.
BOSSON, Justice, EDWARD L. CHÁVEZ, Justice.
AUTHOR: PETRA JIMENEZ MAES.
{1} Appellant, tw
telecom of new mexico, llc (tw telecom), appeals from the final order issued by
the New Mexico Public Regulation Commission (the PRC) in
In the Matter of
the Development of an Alternative Form of Regulation Plan for Qwest Corporation
(AFOR III), No. 09-00094-UT (AFOR III Final Order). tw telecom claims that the
PRC (1) adopted certain conclusions from a previous final order, lacking
justification in the AFOR III record; (2) deregulated Qwest Corporation’s (Qwest)
rates in violation of the New Mexico Telecommunications Act, NMSA 1978,
Sections
63-9A-1 to -20 (1985) (as amended through 2004), and the separation of
powers doctrine in
Article III, Section 1 of the New Mexico Constitution; and
(3) deprived tw telecom of proper due process. We annul and vacate the AFOR III
Final Order and remand to the PRC for further proceedings affording the parties
an opportunity to present evidence. Because we remand this case based on the
PRC’s due process violation, resulting from the adoption of conclusions from a
previous proceeding without affording the parties an opportunity to be heard,
we do not address tw telecom’s second claim.
FACTS AND PROCEDURAL HISTORY
{2} The claims
raised in this appeal involve three cases before the PRC that concerned the
development of various alternative form of regulation plans issued by the PRC,
and Qwest’s compliance with the terms and conditions therein. The cases
addressed various issues, including pricing provisions and detailed requirements
for the filing of tariff changes, tariffs for new services, promotional
offerings, packaged services, and individual contracts for services. Those
facts relevant to the development of the final orders issued in those cases are
introduced in this section; additional facts are set forth as needed.
{3} In the first
case, the AFOR II final order on pricing and quality of service (AFOR II Final
Order), was issued in
In the Matter of the Development of an Alternative
Form of Regulation Plan for Qwest Corporation (AFOR II), No. 05-00466-UT,
on November 28, 2006. The AFOR II Final Order specifically addressed Qwest’s
pricing and quality of service provisions. The effective dates of the AFOR II
Final Order were January 1, 2007 through December 31, 2009.
{4} Pursuant to the
procedures enumerated in the AFOR II Final Order, Qwest filed a series of
promotions and tariff changes with the PRC in which Qwest offered waivers or
reductions of recurring monthly charges and of nonrecurring charges. Cyber Mesa
Computer Systems, Inc. (CyberMesa) and the PRC staff (Staff) filed objections
to the promotional and tariff programs, and claimed that Qwest had engaged in
anti-competitive behavior by pricing its services below cost. The objections
resulted in two separate cases, later consolidated:
In the Matter of
Objections to Qwest Corporation’s Proposed “Residence and Business Competitive
Response Program” Tariff Changes in its Transmittal 2008-022,
No.
08-00326-UT; and
In the Matter of a Protest of a 90 Day “Residence and
Business Competitive Response Programs” Promotion by Qwest Corporation for
“Potential New” Qwest Residence Local Exchange Customers and Existing Qwest
Business Customers “in Retention Situations,” No. 08-00197-UT (collectively
the “Competitive Response Case”).
{5} The focus of
the Competitive Response Case was to decide the relevant costs used to
determine a price floor for a promotional offering or a tariff reduction. tw
telecom made a business decision not to intervene in the Competitive Response
Case because tw telecom did not actively market the Qwest business services
that were the subject of the promotions or tariffs.
{6} The final
order issued by the PRC in the Competitive Response Case on August 25, 2009
(Competitive Response Case Final Order), was sent via email by the AFOR III
hearing examiner to the AFOR III parties, which included tw telecom. The PRC
urged the AFOR III hearing examiner and parties to “take note of [the] ruling
and to see whether, if adopted [in AFOR III], it might forestall similar confusion
in the implementation of AFOR III.”
{7} The third
case resulted in the AFOR III Final Order which is the subject of this appeal.
The AFOR III case was initiated by the PRC to develop the third alternative
form of regulation, specifically addressing how Qwest was to calculate its
rates and charges. The PRC provided that “[t]he scope of this proceeding shall
extend to all issues necessary and convenient to the development of a new AFOR
plan concerning Qwest Corporation, including but not limited to, pricing,
quality of service, infrastructure investment, and deployment of advanced
services.” The PRC determined that the AFOR III case would be conducted as an
adjudicated case and all interested parties would be given an opportunity to
participate in developing the next alternative form of regulation plan. Notice
was served to all entities listed on the PRC’s Telecommunications Service List,
and a copy of the notice was placed on the PRC’s website.
{8} A time line
of critical dates relating to the development of AFOR III follows.
July
7-10, 2009: AFOR III public hearing.
August
28, 2009: AFOR III briefs-in-chief were due; AFOR III parties received
notice of the Competitive Response Case Final Order.
October
22, 2009: The hearing examiner filed the AFOR III recommended decision.
November
2009: Certain AFOR III parties, including tw telecom, Qwest, CyberMesa,
Level 3, the New Mexico Attorney General, and the Department of Defense/Federal
Executive Agencies, filed exceptions to the AFOR III recommended decision.
November
6, 2009: Qwest filed a request for oral argument on exceptions to the AFOR
III recommended decision.
December
8, 2009: Oral argument was held at which tw telecom, Qwest, CyberMesa,
Level 3, the New Mexico Attorney General, and the Department of Defense/Federal
Executive Agencies, presented their exceptions to the AFOR III recommended
decision.
December
31, 2009: AFOR II expired. The PRC issued its AFOR III Final Order,
adopting the AFOR III recommended decision, as modified, and it became
effective.
{9} The PRC imported
findings from the Competitive Response Case Final Order into the AFOR III Final
Order to establish the correct price floor for AFOR III. The PRC also adopted
the finding from the Competitive Response case that “ Qwest does not need to
file imputation studies in support of its rates” test because the analysis
should “focus on Qwest’s costs and revenues, rather than on those incurred by
[Competitive Local Exchange Carriers],” such as tw telecom.
{10} The PRC
recognized in the AFOR III Final Order that several parties had raised due
process concerns regarding the inclusion of the Competitive Response Case Final
Order provisions in the AFOR III Final Order. Specifically, tw telecom claimed
that since it was not a party to the Competitive Response Case, its
procedural and substantive rights
[were] implicated by the Commission’s decision in this [c]ase; it has relied in
good faith on the scope of [the] case as defined by the Commission’s notice
here; and [it] should not be deprived of its right to be heard on the merits of
the testimony and evidence presented here.
Quoting from the AFOR III recommended decision filed by the
hearing examiner, the PRC concluded that,
based on the evidence in this case,
no reason has been shown for reversing the Commission’s prior finding that
Qwest does not need to file imputation studies in support of its rates.
However, any final decision on these issues should be deferred pending the
outcome of the motions for rehearing that have been filed in the Competitive
Response Case.
The PRC further concluded that the AFOR III Final Order was
decided on the merits, and the decision not to require an imputation test was
made independent of prior orders, namely the AFOR II Final Order and the
Competitive Response Case Final Order.
{11} The PRC provided
notice to tw telecom and the other AFOR III parties that the Competitive Response
Case Final Order could be adopted into the AFOR III when the Competitive
Response Case Final Order was issued. Specifically, the PRC advised “the
parties and the Hearing Examiner in the AFOR III case to take note of this
ruling and see whether, if adopted there, it might forestall similar confusion
in the implementation of AFOR III.” The AFOR III parties received notice of the
Competitive Response Final Order the same day the parties’ post-hearing AFOR
III briefs-in-chief were due and over a month after the AFOR III public
hearing.
{12} PRC
Commissioner Jason Marks issued a dissent to the AFOR III Final Order in which
he reiterated concerns previously set forth in his dissent to the Competitive
Response Case Final Order. Commissioner Marks expressed his due process
concerns that, “[w]hen decisions are based on information not brought forward
in testimony or otherwise put into the record, parties that might be opposed to
these provisions are denied the opportunity to cross examine the information or
offer alternative testimony.”
{13} tw telecom
filed a motion for rehearing, but it was deemed denied by the PRC’s inaction.
1.2.2.37(F)(6)(a) NMAC (“If the commission does not act on a motion for
rehearing within twenty (20) days after the final order has been issued, the
motion shall be deemed denied.”). Thereafter, tw telecom filed its direct
appeal to this Court.
See NMSA 1978, §
62-11-1 (1993) (providing a right
of direct appeal from a final order of the PRC).
{14} tw telecom
claims that the conclusions in the Competitive Response Case Final Order
adopted by the PRC in the AFOR III Final Order are not supported by substantial
evidence, are arbitrary and capricious, represent an abuse of discretion, and
are unlawful. NMSA 1978, §
63-7-1.1(G) (1998); NMSA 1978, §
63-9A-16(B) (1998).
tw telecom raises three issues on appeal: (1) whether “the [PRC] adopted the
new pricing plan derived from the Competitive Response Case [Final Order]
without justification in the AFOR III Case record and without explanation”; (2)
whether “the new pricing plan effectively deregulate[d] Qwest’s rates in
violation of the New Mexico Telecommunications Act . . . and the separation of
powers doctrine,
Article III, Section 1 of the New Mexico Constitution”; and
(3) whether “the [PRC] . . . deprived [tw telecom] and other parties of their
right to procedural due process by denying them the right to confront the
evidence supporting the new pricing plan.”
{15} When reviewing a PRC
decision, the challenging party bears the burden of proving that the decision
“is arbitrary and capricious, not supported by substantial evidence, outside
the scope of the agency’s authority, or otherwise inconsistent with law.”
Albuquerque
Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Regulation Comm’n and Pub.
Serv. Co. of N.M. (
ABCWUA),
2010-NMSC-013, ¶ 17,
148 N.M. 21,
229
P.3d 494 (internal quotation marks and citations omitted);
see §
63-9A-16(B). The due process claims raised by tw telecom are constitutional
issues of law that we review de novo.
ABCWUA,
2010-NMSC-013, ¶ 19.
{16} tw telecom
conceded during oral argument that if this Court found a violation of tw
telecom’s due process rights, there would be no need to address the other
issues raised in their brief-in-chief. tw telecom claims that the PRC “deprived
the parties of essential elements of due process including adequate notice, an
opportunity to present witnesses or evidence, the chance to cross-examine
witnesses, and, perhaps most important, the right to have a decision based on
the record with a statement of reasons for the decision.” The PRC argues that
tw telecom had actual notice and an opportunity to be heard in both the
Competitive Response Case and AFOR III, in which they referred to and relied
upon the Competitive Response Case record in the AFOR III proceedings.
{17} Due process is not a
concrete concept, but rather “is flexible in nature and may adhere to such
requisite procedural protections as the particular situation demands.”
U S
West Commc’ns, Inc. v. N.M. State Corp. Comm’n (
U S West),
1999-NMSC-016, ¶ 25,
127 N.M. 254,
980 P.2d 37 (internal quotation marks and
citations omitted);
see also Morrissey v. Brewer, 408 U.S. 471, 481
(1972) (“It has been said so often by this Court and others as not to require
citation of authority that due process is flexible and calls for such
procedural protections as the particular situation demands.”). Although the
specific procedural requirements of due process vary depending on the
situation, “‘[i]t is well settled that the fundamental requirements of due
process in an administrative context are reasonable notice and
opportunity
to be heard and present any claim or defense.’”
ABCWUA,
2010-NMSC-013, ¶ 21 (emphasis added) (quoting
Jones v. N.M. State Racing
Comm’n,
100 N.M. 434, 436,
671 P.2d 1145, 1147 (1983)). The opportunity to
be heard should be “at a meaningful time and in a meaningful manner.”
N.M.
Indus. Energy Consumers v. N.M. Pub. Serv. Comm'n,
104 N.M. 565, 568,
725
P.2d 244, 247 (1986);
see Fuentes v. Shevin, 407 U.S. 67, 80 (1972)
(holding that for procedural due process to be met, “the right to notice and an
opportunity to be heard must be granted at a meaningful time and in a
meaningful manner” (internal quotations marks and citation omitted)).
{18} The PRC claims that
in AFOR III, tw telecom “had, and took advantage of, ample opportunity to
present its own price floor proposal, to present evidence, and to advocate for
its position.” The PRC cites tw telecom’s testimony in AFOR III, which
referenced evidence from the Competitive Response Case, to show that tw telecom
had knowledge that the PRC was considering adoption of certain pricing
methodologies in the Competitive Response Case into the AFOR III Final Order.
{19} tw telecom
admits to citing to “the procedural history of the Competitive Response Case to
demonstrate that the Commission needed to streamline its procedures for tariff
filings so as to avoid the delay and expense necessitated by that case.” However,
tw telecom claims to have responded only to those portions of the Competitive
Response Case that were placed in the AFOR III record, and argues that “[i]f
the entire Competitive Response Case record had been taken notice of, [then] tw
telecom would have responded accordingly.”
{20} “The [PRC] is
authorized only to make its decision [based] upon the evidence adduced at the
hearing and made a part of the record.”
Transcon. Bus Sys. v. State Corp.
Comm’n,
56 N.M. 158, 177,
241 P.2d 829, 841 (1952). The AFOR III Final
Order was not based solely on the evidence presented and made part of the
record; rather, certain conclusions were based on evidence heard at the
Competitive Response Case hearing a month earlier and later incorporated into
the AFOR III recommended decision. Although tw telecom referenced Competitive
Response Case evidence in its AFOR III testimony, such reference does not
negate the fact that tw telecom was denied the opportunity to present evidence
and to examine and cross-examine witnesses regarding PRC’s decision in the
Competitive Response Case. Furthermore, tw telecom’s motion for a rehearing,
requesting that the AFOR III parties be given the opportunity to present
evidence regarding the implementation of the Competitive Response Case to AFOR
III, was deemed denied by the PRC’s inaction.
1.2.2.37(F) NMAC.
{21} Due to the timing of
the Competitive Response Case Final Order, the parties were denied the
opportunity to substantively address the impact of the Competitive Response
Case Final Order on the pending AFOR III proceeding through the presentation of
evidence or the examination and cross-examination of witnesses. Because tw
telecom was precluded from making a record in AFOR III regarding the
Competitive Response Case Final Order, an essential element of due process, the
opportunity to be heard, was violated.
{22} We annul and vacate
the AFOR III Final Order and remand to the PRC for further proceedings so that
the parties are afforded the opportunity to present evidence.
See NMSA
1978, §
62-11-5 (1982) (“The supreme court shall have no power to modify the
action or order appealed from, but shall either affirm or annul and vacate the
same.”). Because we remand this case based on the due process violation, we do
not address tw telecom’s second claim.
PETRA JIMENEZ MAES, Justice
CHARLES W. DANIELS, Chief Justice
PATRICIO M. SERNA, Justice
RICHARD C. BOSSON, Justice
EDWARD L. CHÁVEZ, Justice
Topic Index for tw telecom v. NMPRC, Docket No.
32,193
AL ADMINISTRATIVE
LAW AND PROCEDURE
PU PUBLIC UTILITIES
AND COMMUNICATIONS