4. CSD's Protest

In its protest, CSD requests that the Commission consolidate this application with VarTec's CPCN application, which CSD has also protested. In the CPCN application, CSD alleged that VarTec violated Section 851 by acquiring and selling assets or controlling interests in other telecommunications carriers without obtaining prior Commission approval. CSD is concerned that VarTec may have violated Section 851 by consummating the Stock Purchase Agreement and transfer of control that is the subject of this application in advance of Commission approval and without proper customer notice.

In response, Applicants deny that they have closed this stock purchase transaction and effectuated the transfer of control in advance of Commission approval. They explain that the Stock Purchase Agreement requires that regulatory approvals be obtained prior to closing. Further, Applicants deny CSD's allegation that they violated the Commission's customer notice provisions. Applicants contend that the transaction does not involve the sale of the customer base from Excel, eMeritus, and LDWC but instead involves solely the purchase of 100% of the stock of the corporate parent of these three carriers. According to D.02-01-038:

The mere substitution of a different holding or parent company, without other impact on the underlying utility providing service or the service provided, does not appear to be the sort of change for which prior notice to the utility's customers is contemplated under Section 2889.3. (D.02-01-038, mimeo at 19.)

Thus, we agree with Applicants that customer notice is not required for stock purchase transactions.

Moreover, Applicants object to consolidation of this case with VarTec's CPCN application. They explain that CSD has no evidence of any problem with the Stock Purchase Agreement, and this matter should not be held up while the Commission adjudicates CSD's protest to the CPCN application.

On March 1, 2002, assigned Commissioner Lynch issued a scoping ruling in this matter that denied CSD's request to consolidate this matter with VarTec's CPCN application. Nevertheless, the scoping ruling determined that a final order in this matter would not be issued in advance of the Commission's resolution of the CPCN application.

On March 8, 2002, Applicants and CSD filed a joint motion for Commission adoption of a settlement between CSD and VarTec. The motion was filed in both this docket and the CPCN application, and included a request to withdraw CSD's protest. On March 12, 2002, Applicants filed a motion requesting the Commission revise the schedule announced in the scoping ruling, waive certain process rules, and place a proposed order unconditionally granting the application on the Commission's agenda for March 21, 2002. In the alternative, the motion requests an order conditionally granting the application under the same expedited time frame.