Radio Communications, Inc. v. Public Service Commission

Liss, J., delivered the opinion of the Court. In 1971 the General Assembly of Maryland adopted an act designated as Chapter 543 of the Laws of Maryland which amended the Public Service Commission (hereinafter PSC) law to bring within the PSC’s jurisdiction all radio common carriers. Maryland Code (1957, 1980 Repl. Vol.) Art. 78, § 55A subsection (b) of the Act contains a "grandfather” clause which provides for the certification of all radio common carriers operating and licensed by the Federal Communications Commission (FCC) on July 1, 1971.

Radio common carriers which provided mobile radio communication by either verbal radio contact or signal had previously been licensed only by the FCC. Upon qualification as a public service carrier, and upon application within ninety days of the effective date of the statute, all then operating carriers were authorized under the "grandfather” clause of the Act to continue their operation in the territory "professed to be served” on July 1, 1971. Distinguished from the position of the "grandfather” operators, any "proposed” radio common carrier which sought to operate in any of the "grandfather” territories or to extend its service into the established area of an existing certificated carrier was prohibited absent a ⁴²⁴ showing and determination that the existing service was "inadequate to meet the reasonable needs of the public.” See Maryland Code, Art. 78, § 55A (d). At the time of the enactment of § 55A there were six radio common carriers operating in Maryland, namely: Carl G. Smith d/b/a Smith Communications Service (SCS), predecessor in interest to one of the appellees herein, Hawkins Communications, Inc. (HCI); the appellant herein, Radio Communications, Inc. (RCI); American Radio-Telephone Services, Inc.; Contact, Inc.; Betty Bowen, d/b/a Salisbury Answering Service; and Modern Communications.

All of the above named carriers duly filed applications for "grandfather” status pursuant to subsection (b) of the Act. In its application filed on September 30,1971, SCS stated that it was "engaged in the operation of a radio common carrier system in the City of Baltimore and the counties of Baltimore, Anne Arundel, Howard, Harford and Carroll.” In an amended application filed beyond the statutory deadline of ninety days, SCS included a map indicating service to Baltimore City, the five original counties above mentioned, and four additional counties. RCI filed for a certificate in Baltimore City and twenty counties. The PSC elected to conduct individual hearings on each of the six "grandfather” applications.

In the course of the hearing on SCS’s application, the PSC received testimony from several witnesses, including one John E. Dettra, Jr., a radio engineer. He stated that the "reliable service area” of a radio common carrier was the area in which service is expected to have not less than a 90% reliability as plotted by a contour line known as 37 dbu (decibel units). RCI, in opposition to the testimony of Dettra, took the position that the 37 dbu contour was too restrictive and not supported by the language of the statute. The Commission ultimately adopted the "reliable service area” test advanced by Mr. Dettra in awarding all six "grandfather” certificates of necessity and convenience.

SCS was awarded a certificate to serve Baltimore City and portions of Baltimore County, Anne Arundel County and Howard County. ⁴²⁵ RCI took exception to the PSC’s ruling and noted an appeal. The dispute between RCI and its four principal competitors was eventually resolved by the Court of Appeals in Radio Communications, Inc. v. Public Service Commission of Maryland, 271 Md. 82 , 314 A.2d 118 (1974). In weighing the respective contentions of RCI and SCS as to the test to be applied in determining "grandfather” rights under the statute, the Court of Appeals concluded: We read subsection (b) to say that those who assert "grandfather” status cannot obtain certification by merely "professing to serve” a given area or county. Subsection (b) provides for certification of a radio common carrier "engaged in the operation of any radio common carrier system . . . .” By obtaining certification, a carrier is expected ". . .to continue the operation ... in the territory professed to be served. . . .” (emphasis added).

Thus, when the application of a subsection (b) radio common carrier professing to have served an area is challenged, that carrier must then prove that, in fact, it did serve that area, i.e., that on July 1, 1971, it was "engaged in the operation” of a radio common carrier system in each subdivision for which certification is sought. [Emphasis in original.] 271 Md. at 95-96 . As the territory claimed by RCI was arguably greater than had been allowed by the PSC, the intermediate standard adopted by the Court of Appeals, the case was remanded to the Commission for further proceedings in order for the PSC to determine the area actually being served by RCI at the time of the adoption of the grandfather clause. The events following remand were detailed in this Court’s opinion in American Radio-Telephone Service, Inc. v. Public Service Commission of Maryland, 33 Md. App. 423 , 365 A.2d 314 (1976). Suffice it to say that this Court ultimately affirmed that RCI’s actual service area consisted of an area bounded by RCI’s interference contours, which included Baltimore City and all or portions of twenty of Maryland’s counties. ⁴²⁶ Prior to the decisions in American Radio, supra, but subsequent to the original decision in RCI v. PSC, supra, SCS transferred substantially all of its assets, including its certificate of convenience and necessity, to HCI.

Upon joint petition by SCS and HCI, the PSC, on July 9,1975, approved and authorized the transfer. On March 11, 1976, HCI, as successor in interest to SCS, filed a petition with the PSC requesting the Commission (pursuant to the authority granted it by Section 85 (d) of Article 78), to correct the error of law incorporated in its order in the original case, i.e., the adoption of the erroneous standard for determining "grandfather rights” as determined by the Court of Appeals in Radio Communications, Inc., supra. HCI also requested the PSC to grant it a certificate of convenience and necessity for the continued operation of its radio common carrier system in the territory which Smith Communications professed to serve in its amended application filed on September 20, 1971. Over the objection of RCI, the hearing examiner of the PSC ruled preliminarily that the prior testimony in the case established an actual service area as of 1971, bounded by Sherwood Forest on the south, Gaither on the west, Hampstead on the northwest and Bel Air on the northeast.

The examiner also concluded that HCI succeeded to all of SCS’s "grandfather rights” and was entitled to exercise "whatever rights SCS have asserted under its certificate of convenience and necessity.” Proof of the alleged actual service in 1971 was offered by way of prefiled written testimony of the witnesses who testified at the original hearing. In addition, HCI produced several witnesses, primarily employees and the accountant of Mr. Hoffberger, SCS’s principal customer in 1971. The witnesses were permitted to testify that Hoffberger received service to the outer boundaries of his customer service area which included Street, New Windsor, Cooksville, Millersville and Arnold. Smith testified to radio carrier contact with businesses in Northeast, Georgetown, Kent Island, Deale and Annapolis.

SCS logs of radio usage, which ⁴²⁷ were required to be maintained under FCC regulation, had been destroyed by Smith after the transfer to HCI. On the basis of this testimony, the examiner concluded that Smith’s testimony with regard to additional areas was not corroborated and denied these territories to HCI. The examiner issued a proposed order containing the following findings and rulings: (1) a transferee under a grandfather clause may exercise his predecessor’s right to seek modification of a grandfather certificate; (2) § 85 (d) authorizes the Commission to modify its orders at any time; (3) HCI’s delay in filing its petition was neither unreasonable nor barred by the doctrine of laches; (4) SCS was engaged in rendering public communication service as of July 1, 1971; (5) Smith’s testimony did not sufficiently prove radio service to the additional areas claimed; and (6) the testimony of the other witnesses was sufficiently corroborated to prove service to the new area claimed. The examiner ordered that HCI be granted a certificate of convenience and necessity for the continued operation of a radio common carrier system in all of Baltimore City and portions of Anne Arundel, Baltimore, Carroll, Harford and Howard Counties as delineated by a contour connecting Street, Freeland, New Windsor, Cooksville, and Arnold.

The area awarded coincided with the testimony of Sweeney, one of Hoffberger’s employees, and extended well beyond the 1971 testimony of Smith. We have included, for the purpose of clarification, Exhibit A which compares the 1972 award of territory, the actual service area testified to in 1971, and the 1979 award as modified by the additional testimony received into evidence by the examiner. The proposed rulings by the examiner were appealed to the PSC which affirmed the examiner by appropriate order. Thereafter, both RCI and HCI appealed the Commission’s ⁴²⁸ order to the Circuit Court for Anne Arundel County.

HCI sought certification in the greater area delineated by Smith’s additional testimony. The Circuit Court for Anne Arundel County affirmed the Commission’s order in all respects. Both RCI and HCI appealed. HCI subsequently dismissed its appeal and was designated the appellee in this case.

RCI, as appellant, appeals the order of the Circuit Court affirming the order of the PSC. It raises three issues to be decided by this appeal: I. Does Article 78, § 85 (d) authorize the reopening of a validly issued certificate of convenience and necessity?

II

May a transferee of "grandfather” rights seek a modification of the certificate of convenience and necessity of its transferor?

III

Was SCS’s certificate of convenience and necessity properly modifiable under the circumstances of this case? I. The basic question presented in this case is whether the PSC may, under the broad powers granted it by the Maryland Legislature, modify a legally erroneous decision, absent a timely appeal by a party or a request for a rehearing. Section 85 (d) of Article 78 expressly vests the PSC with the power to modify its orders. It states: All orders of the Commission shall take effect within such reasonable time as the Commission may prescribe, and shall continue in force according to their terms, or until vacated, suspended, modiñed, or superseded by further order of the Commission or by a court of competent jurisdiction. [Emphasis added].

As the Circuit Court noted in its memorandum and order "[u]nder Article 78, Section 85 (d) the Commission is ⁴²⁹ empowered to modify any order, and no time limit is imposed upon which this modification may occur.” It is clear to us that after this case had filtered its way through the lengthy and involved appellate process which culminated in American Radio-Telephone Service, Inc., supra, the Commission had before it the dual responsibility of correcting its error of law in its original order and determining the territory actually served when the "grandfather” clause became effective under the statute. Appellant contends that the Commission erred when it permitted the introduction of additional testimony by the appellee to substantiate the actual area of service by SCS beyond that of Mr. Smith and his witnesses