4. Payments Subject to Refund

Parties' Positions

Pacific also seeks a Commission order declaring that payments tracked by the memorandum account shall be subject to refund with interest should the reciprocal compensation requirement of the previously approved interconnection agreements subsequently be found invalid. In support, Pacific says it expects a court to eventually rule that such payments cannot be mandated under the Act.

Pacific acknowledges that the ALJ's ruling in the Pac-West Arbitration (A.98-11-024) denied a similar request considering that a subsequent order may or may not be applied retroactively. In that ruling, the ALJ noted that even if Pacific succeeds in obtaining a court order that the reciprocal compensation requirement is invalid, that order may or may not be applied retroactively. A subsequent court order may address whether or not any adjustments, if ordered, should or should not be retroactive, if the issue is properly raised and argued in the appropriate proceeding. Pacific's motion for a Commission order that payments to be made subject to refund was thus denied in that arbitration proceeding.

Pacific asks in this proceeding that the "subject-to-refund" order of this Commission only apply in the event that it were clear that the court's decision is not "prospective only." Pacific believes that this condition addresses the concern raised by ALJ Mattson in A.98-11-024 that the Commission not prejudge the outcome of the subsequent litigation concerning Pacific's claims. Pacific expresses concern that if this condition is not adopted, some parties may argue that the Commission's orders operate only prospectively and that they are not required to reimburse Pacific even if a court rules that reciprocal compensation for ISP-bound traffic is not authorized.

The Coalition argues that there is no need for the Commission to address the refund issue at this time because Pacific is already directly seeking such refunds in two federal district court actions. Pacific has filed two complaints in federal district court (one challenging the decision in the Pac-West arbitration (C 99 4480 CW), the other challenging D.98-10-057 and D.99-07-047 in the local competition docket (C 99 479 MMC). In each case, Pacific prays for an order that would require the defendant Commissioners to order CLECs to pay refunds to Pacific. The Complaint in the Pac-West case seeks an order that would require the CPUC "to order Pac-West to refund all amounts owed to Pacific for reciprocal compensation for interstate-bound and ISP traffic." The Complaint against the Commission alone seeks an order that would require the Commission "to require CLECs to refund to Pacific any amounts of reciprocal compensation Pacific has paid to CLECs for ISP traffic."

The Coalition argues that it would be a complicated undertaking and a waste of the Commission's time and valuable resources to undertake the analysis here of whether refunds are appropriate when the issue is already before reviewing courts in existing appeals and may be reviewed by the courts in future cases.

Discussion

Notwithstanding Pacific's proposed stipulation that the "subject-to-refund" order be granted only if it were clear that the court's decision is not "prospective only," we still decline to grant such an order here. We cannot speculate as to how the reviewing courts may decide the issue of retroactivity or what language may be used to characterize the court's disposition on this issue. Any "subject-to-refund" conditions we might adopt in response to Pacific's motion, however, would unduly and prematurely run the risk of second-guessing the outcome the reviewing court may adopt, and the language it might use to characterize and dispose of the question of retroactivity. If Pacific were to prevail in its arguments before the reviewing court, and felt that the court's order was unclear concerning any rights of retroactive refund, Pacific could file a new motion in this docket, citing the pertinent court findings and why it believes those findings warrant a refund. At that time, this Commission could issue an order, if necessary, directing that such refunds be made assuming the reviewing court's findings so warranted. At this point, however, such an order from this Commission is not appropriate, and Pacific's request for such an order is denied.