BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In Re Application of U S WEST, Inc. and QWEST COMMUNICATIONS INTERNATIONAL, INC. For an Order Disclaiming Jurisdiction, or in the Alternative, Approving the U S WEST, INC. -- QWEST COMMUNICATIONS INTERNATIONAL, INC. Merger ................................................................ ) ) ) ) ) ) ) ) ) ) ) DOCKET NO. UT-991358 PREHEARING CONFERENCE ORDER PREHEARING CONFERENCE: The Commission convened a prehearing conference in this matter in Olympia, Washington, on September 23, 1999, before Chairwoman Marilyn Showalter, Commissioner William R. Gillis, and Administrative Law Judge Dennis J. Moss. PARTIES: Lisa A. Anderl, Senior Attorney, U S WEST, Inc. Seattle, Washington represents U S WEST, Inc. Gina Spade, Hogan & Hartson L.L.P., Washington, D.C., represents Qwest Communications International, Inc. Dan Waggoner, Davis Wright Tremaine, Seattle, Washington, represents AT&T Communications of the Pacific Northwest, Inc. Andrew O. Isar, Director--State Affairs, Telecommunications Resellers Association, represents that industry organization. Angela Wu, Ater Wynne LLP, Seattle, Washington, represents Rhythms Links, Inc. Gregory J. Kopta, Davis Wright Tremaine, Seattle, Washington, represents Advanced Telecom Group, Inc., Nextlink Washington, Inc., and Northpoint Communications, Inc. Richard A. Finnigan, Attorney, Olympia, Washington, represents the Washington Independent Telephone Association. Mark P. Trinchero, Davis Wright Tremaine, Portland, Oregon, represents McLeodUSA Telecommunications Services, Inc. Brooks E. Harlow, Miller, Nash, Wiener, Hager & Carlson LLP, Seattle, Washington, represents Covad Communications Company, Northwest Payphone Association, and Metronet Services Corporation. Robert Nichols, Nichols and Associates, Boulder, Colorado, represents Level 3 Communications, Inc. Arthur A. Butler, Ater Wynne LLP, Seattle, Washington, represents SBC National, Inc. Gary M. White, Secretary/Treasurer, Pension Equity Council, Tacoma, Washington, represents that organization. Simon ffitch, Assistant Attorney General, Seattle, Washington, represents the Public Counsel Section, Office of Attorney General. Sally G. Johnston, Assistant Attorney General, Olympia, Washington, represents the Commission’s regulatory staff (Staff). MOTIONS TO INTERVENE: The following companies and industry organizations filed petitions to intervene: AT&T Communications of the Pacific Northwest, Inc.; Rhythms Links, Inc.; Advanced Telcom Group, Inc.; Nextlink Washington, Inc.; Northpoint Communications, Inc.; McLeodUSA Telecommunications Services, Inc.; Covad Communications Company; Metronet Services Corporation; Level 3 Communications, Inc.; SBC National, Inc.; Telecommunications Resellers Association; Northwest Payphone Association; and Washington Independent Telephone Association. The companies all are present or future customers and competitors of U S WEST and/or Qwest. The industry organizations’ members also include present or future customers and competitors of Applicants. Although the Commission intends to address in a separate order the range of issues to be considered in this proceeding, it is appropriate to observe here that protecting customer interests is a matter of paramount concern. In addition, emerging competition in the telecommunications industry is a subject of considerable significance to the Commission and appears to be a relevant concern in the context of this proceeding. Accordingly, the Commission determines that these petitioners all have demonstrated a substantial interest in this proceeding and that participation by these petitioners is in the public interest. The petitions listed above are granted. Another organization, the Pension Equity Council (PEC), also petitioned to intervene. According to the petition, the PEC is an organization of current and retired employees and beneficiaries of deceased retired employees of U S WEST and predecessor corporations. This organization would raise the following issue: approval of the proposed [transaction] should be conditioned upon an enforceable[,] irrevocable guarantee binding on all parties to the proposed merger that all assets in the U S WEST Pension Trust Fund, virtually all of which we believe were derived from rates charged for regulated monopoly services, will not be used for any purpose other than the pensions of those employees who were engaged in provision of those regulated monopoly services. PEC Petition at 2. Applicants and Staff object to the PEC’s petition. Staff argued at prehearing that the issue this organization would raise is not an appropriate subject for consideration in this proceeding, and may not be a proper subject for the Commission to consider in any proceeding. Staff questioned whether the Commission has the authority to grant the relief requested by the PEC. Applicants concurred with Staff’s arguments. The issue the PEC would raise essentially is one of labor/management relations. The Commission has declined to consider such issues in several prior and pending merger cases. See, e.g., In the Matter of the Application of PacifiCorp and ScottishPower PLC, Docket No. UE-981627, Third Supplemental Order (April 2, 1999) at 4; Puget Sound Power & Light Company and Washington Natural Gas Company, Docket Nos. UE-951270 and UE-960195, Second Supplemental Order (May 23,1996) at 3. The Commission agrees with Staff that the PEC’s issue is not one that should be considered in this proceeding. Since this is the only issue the PEC would pursue, there is no basis upon which to find the organization has a substantial interest in this proceeding. Nor does it appear that participation by the PEC would be in the public interest. Accordingly, the Pension Equity Council’s petition to intervene is denied. DISCOVERY: This proceeding is the type described in WAC 480-09-480(2)(b) and the parties request the opportunity for discovery. The discovery rule, WAC 480-09-480, is invoked. Discovery may commence immediately. Parties are required to limit discovery to that necessary to their respective cases, and parties should cooperate to facilitate discovery and resolve informally any disputes. Any discovery dispute referred to the Commission by motion must state what steps the parties have taken to resolve the dispute. Responses to data requests are required to be provided in-hand no more than seven (7) business days after receipt. Parties are required to use electronic media to the extent feasible to expedite the exchange of discovery materials. PROTECTIVE ORDER: The parties anticipate that certain confidential information will be required and request a protective order. A protective order consistent in substance with the form typically used in Commission proceedings will be entered to protect the parties’ interests in insulating confidential information from public disclosure. SCHEDULE: The following procedural schedule is established: Responses to Applicants’ Memorandum November 1, 1999 * * * Applicants’ direct evidence September 23, 1999 Commission Staff’s, Public Counsel’s, and Intervenors’ direct evidence November 22, 1999 Applicants’ rebuttal evidence December 13, 1999 Evidentiary Hearings January 18-21, 24, 25, 2000 Public Hearings To be determined Briefs March 10, 2000 Additional procedural dates may be established by subsequent notice or order. WITNESS AND EXHIBITS LISTS: Three business days before the first hearing date, each party must provide the presiding Administrative Law Judge and each other party a list of witnesses in the order they will appear along with a list of exhibits sponsored by each witness. Parties also must identify exhibits expected to be used in cross-examination and provide copies to other parties and the bench (2 copies) three business days before the first hearing date. These requirements facilitate case management and expedite the hearing. Lists and cross-examination exhibits need not be filed and may be served by facsimile or other electronic transmission; the presiding Administrative Law Judges’ facsimile number is 360-664-2654. Copies may instead be furnished by mail or hand-delivery with the ALJ’s courtesy copies addressed to him directly. The original of each exhibit must be provided at hearing for the Commission’s permanent record. Parties will be responsible for marking their own exhibit copies at hearing as the bench designates numbers. The bench will mark all originals and bench copies. FILING; COPIES OF MATERIALS: Filing can be accomplished only by mail delivery to the Commission Secretary, Washington Utilities and Transportation Commission, P.O. Box 47250, 1300 S. Evergreen Park Drive, S.W. Olympia, Washington 98504-7250, or by hand delivery to the Commission Secretary at the Commission’s records center at the Washington Utilities and Transportation Commission, 1300 S. Evergreen Park Drive, S.W., Olympia, Washington, 98504. Both the post office box and street address are required to expedite deliveries by U.S. Postal Service. An original plus fourteen (14) copies of all pleadings, motions, briefs, and other prefiled materials must be filed with the Commission. Parties must furnish separately a 3.5 inch diskette including the filed document(s) in WordPerfect 5.0 (or later) format, or may supplement their filing by sending an electronic copy via e-mail attachment to: . ALTERNATIVE DISPUTE RESOLUTION; SETTLEMENT: The parties’ attention is directed to WAC 480-09-465, “Alternative dispute resolution,” and WAC 480-09-466, “Settlement conferences.” The Commission urges all parties to formal adjudications to include alternative methods to bring resolution to contested issues. NOTICE TO PARTIES: Any objection to the provisions of this Order must be filed within ten (10) days after the date of mailing of this statement, pursuant to WAC 480-09-460(2). Absent such objections, this prehearing conference order will control further proceedings in this matter, subject to Commission review. DATED at Olympia, Washington, and effective this 29th day of September, 1999. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION DENNIS J. MOSS, Administrative Law Judge