Reassessing "Confiscation" Under Section 305 of Maine's Public Utility Law

On March 11, 1975, the Maine Public Utilities Commission (PUC) denied a petition by the New England Telephone and Telegraph Co. (the company) for an "interim" rate increase. The company had sought to increase its revenues by $6,582,987 per year, pending the outcome of its petition before the PUC of October 1974 for a permanent rate increase of $21 million annually. After the PUC refused the company a rehearing on its denial of the interim rate increase, the company appealed to the Maine Supreme Judicial Court, alleging that the PUC had acted so as to leave in effect rates which were unreasonable, unlawful, and confiscatory. New England Telephone and Telegraph Co. v. Public Utilities Commission is an example of what has become a common challenge to rate-making decisions of the PUC: that the rates allowed by the Commission under its statutory powers are unconstitutional in causing a confiscation of the utility's property. By alleging confiscation, the utility is able to invoke, in addition to the traditional appeal of questions of law under Maine Revised Statutes, title 35, section 303, the special appeal provisions of Maine Revised Statutes, title 35, section 305. Under section 305, when confiscation or "other violation of constitutional right" is alleged, the Law Court is required to "exercise its own independent judgment as to both law and facts" and may order the taking of additional evidence beyond the record on appeal from the PUC. Thus, raising the issue of confiscation has significant advantages for the utilities by allowing them essentially to relitigate the entire rate case before the Law Court. The Law Court itself has recognized the problems raised by an increased reliance on section 305. It has consistently pursued a path of limiting the availability of the special relief provided under that section. If the Law Court is to continue to avoid functioning as a rate-making tribunal in utility law, it is necessary to find a uniform solution to the problems raised by the special appeal provisions of section 305. In order to restore perspective to Maine's utility scheme and to avoid the problems noted above, the grounds for invoking the special appeal provisions of section 305 should be more narrowly defined. A reassessment of confiscation in utility law suggests that the special provisions of section 305 properly should be limited to the rare instances when a PUC rate-making decision results in confiscation in the traditional sense of a taking of property or in a "violation of constitutional right."