VIII. Jurisdiction Dispute

Applicants are unclear as to whether the Commission is required or has jurisdiction to approve the merger under § 854 based on the structure of the merger transaction. Hence, Applicants reserved their right to withdraw this application at any time or to challenge the Commission's jurisdiction to approve the merger under § 854.

Although Applicants raised the § 854 jurisdictional issue, they offered no reason for us consider or conclude that we lack § 854 jurisdiction over the proposed merger. As identified in our prior Jurisdiction discussion, § 854 precludes any person or corporation from transferring the control of any public utility organized and doing business in the state without first securing authorization to do so from this Commission.

The application before us involves a proposed transfer of US West, Inc.'s subsidiaries that possess California CPCNs to provide competitive telecommunications services and local exchange service in California from U S West, Inc. to Qwest Inc. Hence, § 854 provides us with the necessary authority over the proposed merger as it relates to those subsidiaries offering certificated telecommunications services within California.

Applicants also represented that the additional criterion needed for authority to transfer control of a utility set forth in §§ 854(b) and (c) is not applicable in this proceeding because none of the subsidiaries that are parties to the proposed merger has gross annual California revenues exceeding $500 million.

ORA took exception to applicants' representation that the additional criterion is not applicable because applicants' filing did not substantiate their claim that none of the parties to the proposed merger met the threshold amount. A substantiation of this threshold amount is important because §§ 854 (b) and (c) would apply in those instances where an applicant has gross California revenues above the $500 million threshold amount. Although ORA appropriately took exception to applicants' representation that the additional criteria was not applicable, we have subsequently confirmed through a review of applicants' data response to ORA that applicants annual California gross revenues are substantially below the threshold amount. Hence, §§ 854 (b) and (c) are not applicable in this proceeding.