20030430Petition for Declaratory Ruling.pdf

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WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
ISB NO. 3283
RECEIVED IT)fiLED
2003 APR 30 AM ~l 57
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1\:\ lJ II U tJ II C
UTILITIES COMMISSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
QWEST CORPORATION FOR DEREGULATION OF BASIC LOCAL
EXCHANGE RATES IN ITS BOISE, NAMPA, )
CALDWELL, MERIDIAN, TWIN FALLS,
IDAHO FALLS, AND POCATELLO EXCHANGES.
CASE NO. QWE-O2-
STAFF'S PETITION FOR A
DECLARATORY RULING
MEMORANDUM IN
SUPPORT OF PETITION
The Commission Staff, by its counsel of record Weldon B. Stutzman, Deputy
Attorney General, files this Petition for a Declaratory Ruling pursuant to Commission Rule of
Procedure 101. The Staff is a party in this case and opposes the application filed by Qwest
Corporation for deregulation of its basic local exchange rates in seven specific local exchanges in
southern Idaho. It is clear from the prefiled testimony and exhibits that the parties substantially
disagree on the application of Idaho Code 9 62-622(3)(b). As a result, each party filed its
evidence and exhibits based on its own interpretation of the statute, leading to confusion and
inconsistency that would be resolved by the Commission providing a ruling on the interpretation
of Section 62-622(3). Accordingly, Staff requests the Commission issue a declaratory ruling on
the legal construction of Idaho Code 9 62-622(3) so that all parties will have the same
understanding of the legal standards applicable to a case filed under Section 62-622(3). As the
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
result, the evidentiary hearing will be much more efficient and useful, focusing on relevant facts
rather than on witness statements of the legal analysis of Section 62-622(3).
MEMORANDUM IN SUPPORT OF
PETITION FOR A DECLARATORY RULING
Qwest filed its application in this case on December 17, 2002, seeking price
deregulation of its basic local services in seven specific exchanges in southern Idaho. The
application was filed pursuant to Idaho Code 9 62-622(3), which provides as follows:
62-622. Regulation of basic local exchange rates, services and price lists.
(3) The commission shall cease regulating basic local exchange rates in a
local exchange calling area upon a showing by an incumbent telephone
corporation that effective competition exists for basic local exchange
service throughout the local exchange calling area. Effective competition
exists throughout a local exchange calling area when either:
(a) Actual competition from a facilities-based competitor is
present for both residential and small business basic local
exchange customers; or
(b) There are functionally equivalent, competitively priced local
services reasonably available to both residential and small
business customers from a telephone corporation unaffiliated with
the incumbent telephone corporation.
Qwest filed its application claiming it meets the legal requirement for cessation of
Commission regulation under subparagraph (b). Specifically, Qwest alleges that telecommuni-
cation services provided by wireless companies are "functionally equivalent, competitively
priced local services reasonably available to both residential and small business customers from
a telephone corporation unaffiliated with (QwestJ." Staff and Qwest fundamentally disagree on
the construction of Section 62-622(3). For the purposes of this Petition for a Declaratory Ruling,
however, Staff need not point out the factual differences identifiable in the parties ' prefiled
testimony.
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
Qwest's Interpretation of Section 62-622(3)
Drawing upon the definition of basic local exchange service stated at Idaho Code
62-603(1), Qwest contends Section 62-622(3)(b) severely limits the determination for the
Commission when an application is filed under that section. The term basic local exchange
service is defined as "the provision of access lines to residential and small business customers
with the associated transmission of two-way interactive switched voice communication within a
local exchange calling area.Idaho Code 9 62-603(1). The term basic local exchange service
is used in paragraph (3) of Section 62-622, but is not used in subparagraph (b). Instead, the
legislature used the term local services in subparagraph (b) when identifying a potential source
of competition to Qwest's basic local exchange service. The term local services is not defined
in any Idaho statute.
Qwest's interpretation of Section 62-622(3)(b) is a two-step process. First, Qwest
assumes the legislature meant something other than what it said in subparagraph (b). Second
Qwest nullifies the purpose of Section 62-622 by placing undue emphasis on the application (as
Qwest would apply it) of subparagraph (b). To accomplish the first step, Qwest inserts a new
phrase in subparagraph (b). In its prefiled testimony, Qwest contends the legislature meant to
say basic local exchange services in subparagraph (b) where it instead said local services.
Thus, a Qwest witness states his belief that "the only logical interpretation of the term 'local
service ' as used in section 62-622(3)(b), is as a short-hand reference to 'basic local exchange
service,' defined as two-way interactive switched voice communications services provided by
non-incumbent service providers." Souba Rebuttal, p. 6-7. Because, according to Qwest, the
legislature meant to say basic local exchange services in subparagraph (b), the Commission can
only consider whether the alleged source of competition provides two-way interactive switched
voice communication services. If so, Qwest asserts the functionally equivalent standard in
subparagraph (b) is met.
To accomplish the second step in its interpretation of Section 62-622(3)(b), Qwest
assumes the legislature intended subparagraph (b) to control, and strictly limit, the showing
required for deregulation of basic local rates. By Qwest's interpretation, it need only show that
wireless service is functionally equivalent (narrowly defined) to its basic local service, and that it
is competitively priced (not defined) and reasonably available throughout the local exchange
calling area. It is not required to show, and the Commission cannot even inquire, whether
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
wireless servIce IS actually competing for customers with Qwest for basic local
telecommunication services.
Applying the Actual Language of the Statute
Qwest's assumption that the term basic local exchange services should be inserted in
place of local services in subparagraph (b) is inconsistent with rules of statutory construction
and thus is invalid. When interpreting a statute, the Commission applies the same principles
established by the courts for giving effect to statutory terms. Qwest's interpretation of Section
62-622(3)(b) fails all relevant statutory interpretation guidelines.
Statutory interpretation begins with the words of the statute, giving the language used
its plain, obvious and rational meaning. The point of statutory construction is to ascertain and
give effect to the legislative purpose and to give force and effect to every word and phrase
employed. Potlatch Corp. v. US.134 Idaho 912, 12 P.3d 1256 (2000). In interpreting the
language used
, "
the plain, obvious, and rational meaning is always preferred to any hidden
narrow, or irrational meaning.Wilson v. State 133 Idaho 874 (Ct. App. 2000), quoting State
Arrasmith 132 Idaho 33, 40, 966 P.2d 33 , 40 (Ct. App.1998). When the legislature enacts a
statute, it must be assumed the legislature means what is clearly stated unless the result is
palpably absurd. Inama v. Boise County ex rei Bd. of Commissioners Idaho -' 63 P.
450 (2003); Wilder v. Miller 135 Idaho 382, 17 P.3d 883 (2001); Marmon v. Marmon 121
Idaho 480 825 P.2d 1136 (1992). If the statute is not ambiguous, the statute is to be followed as
written, without adding to or taking away language used by the legislature. Id. Where the
legislature uses a particular term throughout a statute and then omits it in another part of the
statute, it is presumed the legislature had a different intent than if the first term had been used.
See, e., Stroud v. Dept. of Labor and Ind. Services 112 Idaho 891 , 736 P.2d 1345 (Ct. App.
1987); Kopp v. State 100 Idaho 160, 164 595 P.2d 309 (1979) ("Where a statute with respect to
one subject contains a certain provision, the omission of such provision from a similar statute
covering a related subject is significant to show that a different intention existed"
In construing Section 62-622(3), the Commission must first look at the words
selected by the legislature, assuming the language was deliberately selected and that the
legislature meant what is clearly stated. By this first, basic principle of statutory construction
Qwest's attempt to change subparagraph (b) must fail. The legislature used the term basic local
exchange service eight times in Section 62-622, both before and after its use of the term local
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
services in subparagraph (b). The only place the legislature used a short-hand reference to basic
local exchange service occurs in paragraph (2) of the statute, where the phrase such services is
used to refer to basic local exchange services appearing earlier in the same sentence. Clearly
the legislature had no problem using the complete term each time it intended a reference to basic
local exchange service and it readily could have inserted that term in subparagraph (b) if
reference to those services was intended. Since the complete term is so often recited by the
legislature in Section 62-622, there is no reasonable basis to conclude it was merely saving ink
by using the term local services in subparagraph (b). Instead, to give effect to all parts of the
statute, it must be assumed the legislature intended not to use basic local exchange service in
subparagraph (b) where it used the term local services.
Even if it is assumed the term basic local exchange service should be inserted into
subparagraph (b), it is only by also ignoring part of the term definition that Qwest
accomplishes its statutory interpretation. Qwest unduly focuses on only part of the definition to
restrict the comparison of functions between two different products in assessing whether they are
functionally equivalent. The definition of basic local exchange service is the provision of
access lines to residential and small business customers with the associated transmission of two-
way interactive switched voice communication within a local exchange area." By focusing only
on the "two-way interactive switched voice communication" part of the definition, Qwest argues
the statute prevents consideration of other uses of wireline service, such as Internet connection
and data (facsimile) transmission.
The definition of basic local exchange service is primarily "the provision of access
lines.It is the access lines themselves that make the switched voice communication possible
just as it is the access lines that make data transmission and Internet connection possible. A
comparison of the functionality of basic local exchange service, then, must consider all that is
available by "the provision of access lines " not merely that switched voice communication is
provided over the access lines. The legislature recognized by enacting Section 62-622(3)(b) that
a service technically distinct from wireline service nonetheless might provide all the same
services available through the provision of access lines. Nothing in the language selected by the
legislature, however, restricts the functionally equivalent review to determine only whether the
allegedly competitive product provides two-way interactive switched voice communication.
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
Staff requests that the Commission issue a declaratory ruling that the language used
by the legislature in Section 62-622(3)(b) does not limit the "functionally equivalent"
comparison to determine only that the allegedly competitive product provides two-way
interactive switched voice communication. By the first principle of statutory construction
requiring that the language selected by the legislature be given its plain, ordinary meaning, the
Commission should enter a declaratory ruling that the term local services in subparagraph (b) is
not really a reference to basic local exchange services. In addition, the Commission should
issue a declaratory ruling that the functionally equivalent review is not solely to determine
whether another product provides two-way interactive switched voice communication. It is only
by first inserting the definition of basic local exchange service into subparagraph (b) and then
by ignoring a significant part of the definition that Qwest achieves the statutory interpretation it
seeks.
Ascertaining and Giving Effect to the Legislative Intent
Qwest's construction of Section 62-622(3) also fails by all other applicable rules of
statutory interpretation, as the Commission already concluded in a previous case filed by
Qwest's predecessor. Application of statutory construction principles leads to the conclusion
that the legislature intended a serious showing of effective competition before basic local rates
are deregulated. Section 62-622(3) requires the Commission to cease regulating basic local
exchange rates when an incumbent telephone company establishes "that effective competition
exists for basic local exchange service throughout the local exchange calling area." There can be
no dispute that the legislature intends regulatory oversight by the Commission to end only when
and no sooner than, an effective, competitive market is strong enough to replace the customer
protection traditionally provided by regulation. Subparagraph (b) identifies one of the means by
which that "effective competition" may appear, that is, through "functionally equivalent
competitively priced local services reasonably available to both residential and small business
customers from (an unaffiliated telephone company)." Qwest focuses on the means by which
competition might appear, set forth in subparagraph (b), to the exclusion of the requirement that
effective competition must actually exist.Bearing in mind that the goal of statutory
interpretation is to ascertain and give effect to the purpose intended by the legislature, Qwest's
interpretation of Section 62-622(3) must fail as inconsistent with the intent of the legislature.
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
Qwest's interpretation of Section 62-622(3) ignores the language as well as the
purpose of that section. The language deliberately chosen by the legislature requires a showing
that effective competition exists" for basic local service before prices are deregulated. This is
not an idle requirement or standard, since the purpose is to determine whether marketplace
attributes will adequately protect customers historically protected by the Commission
regulatory oversight. To emphasize the high standard required for price deregulation under
Section 62-622, the legislature added a statement of its intent in a separate section Idaho Code
62-602(2). That paragraph provides:
It is the intent of this legislature that effective competition throughout a local
exchange calling area will involve a significant number of customers having
both service provider and service option choices and that actual competition
means more than the mere presence of a competitor. Instead for there to be
actual and effective competition there needs to be substantive and meaningful
competition throughout the incumbent telephone corporation s local exchange
calling area.
Idaho Code 9 62-602(2) (italics added).
By Qwest's interpretation of Section 62-622(3), subparagraph (b) subsumes the
language of paragraph (3). By focusing exclusively on subparagraph (b), coupled with a very
narrow interpretation of that subparagraph, Qwest contends it is necessary only to show that
strictly limited, technical requirements of subparagraph (b) are met. Qwest's construction of
Section 62-622(3)(b) thus prevents any meaningful evaluation of whether "effective
competition" actually exists to replace the consumer protection historically provided through
regulation.
Qwest's erroneous interpretation of Section 62-622(3) might be understandable if it
were being presented for the first time to the Commission. It is not. In July 1999, Qwest (then
U S WEST) filed an application under Section 62-622(3) seeking deregulation of its basic local
rates in the Burley, Idaho exchange. Qwest filed its application pursuant to subparagraph (a),
rather than subparagraph (b), but the Company argued for the same interpretation of Section 62-
622(3) it argues in this case.
The Commission in the earlier case unequivocally, convincingly rejected Qwest'
interpretation of Section 62-622(3), stating Qwest's application of the statute "would lead to
absurd results." Order No. 28369, p. 6. The Commission noted that, by the Company s analysis
the only operative language in Section 62-622(3) is that contained in subparagraph (a)." By
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
that interpretation, according to the Commission
, "
the legislature s express requirement that
competition be effective, actual, substantive, meaningful. . . is all rendered meaningless.Id.
The Commission also stated that "(Qwest'sJ construction has the legislature using language to
create a certain standard and then reversing that standard by redefining the same words in a
subparagraph." In the Commission s view
, "
(tJhat would be an absurd result, and is contrary to
what the legislature intended.Id.In reviewing the legislature s intent, the Commission
reviewed the expressed intent in Section 62-602(2) and the Commission s role "to ensure that
high-quality basic service remains available at just and reasonable rates for all classes of
customers." Order No. 28369, p. 8. The Commission concluded
, "
it is entirely logical that the
legislature required a high level of competition before all regulatory pricing control of basic
service rates is removed.Id.
Qwest demands the same interpretation of Section 62-622(3) in this case it attempted
in the Burley case. By Qwest's interpretation, the only operative part of Section 62-622(3) is
contained in subparagraph (b). There would be no requirement to show that competition is
effective, actual, substantive, and meaningful. Qwest's interpretation has the legislature creating
a certain standard in paragraph (3) (that effective competition actually exist), and then reversing
that standard by redefining the same words in subparagraph (b) (requiring only that something
functionally equivalent and competitively priced exist).
Qwest's interpretation derogates the language and purpose of Section 62-622(3). By
strictly limiting the review on the "functionally equivalent" requirement, and then focusing only
on the provisions of subparagraph (b), Qwest contends it need only show that another product
may be available to provide two-way interactive switched voice communication at prices
competitive with Qwest's rates. By Qwest's interpretation, it does not matter whether real
effective competition for basic local exchange service actually exists. So, for example, it would
not matter that not a single customer is replacing Qwest's basic local exchange service with the
other product, or that the other product is entirely being purchased in addition to Qwest's basic
local exchange service. If strictly limited standards of subparagraph (b) are met, Qwest asserts
all requirements to show that effective competition actually exists are also met.That
interpretation is at odds with the legislature s intent regarding the removal of regulatory controls
only where an actual competitive market exists.
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
Because the intent of Section 62-622(3) is to ascertain whether effective competition
for basic local exchange service exists - that is, whether an effective, actual, substantive
meaningful competitive marketplace exists - it is necessary to consider the extent to which the
product alleged to be functionally equivalent is actually competing with Qwest's basic local
exchange service. It is not possible to make that evaluation without looking at the reasons
customers may be choosing to purchase the other product. If the product alleged to be
equivalent offers features or functions different from those available from Qwest's basic local
exchange service, customers may be purchasing the other product for those different features
rather than to replace Qwest's basic local exchange service. Similarly, if basic local exchange
service offers features important to customers that are not available from the other product
customers may be compelled to retain their wireline service for the features it provides. If so
the conclusion must be that the other product in fact is not functionally equivalent to basic local
exchange service, or that the other product is not actually competing for customers so that
effective competition" does not really exist.
The absurd result of Qwest's interpretation is readily observed by applying it to
another utility experiencing the same type of "competition" Qwest encounters with wireless
providers. Just like with cellular service, there has been an explosion in the amount of bottled
water purchased by consumers over the last five years. Numerous bottled water companies
compete for customers, and make their product readily available in almost every type of retail
store.Advertisements for bottled water regularly appear on television, in newspapers and
magazines, and bottled water prices have declined as more companies enter the market.
Certainly consumption of tap water has declined as more and more bottled water is purchased.
Bottled water and tap water no doubt meet a narrow standard as being functionally equivalent:
both quench your thirst, both are potable and can be used for cooking and watering plants. It
would even be possible to disconnect your tap water service and replace it entirely with bottled
water, although few choose to do it. No doubt some inconvenience would result, but bottled
water provides advantages of mobility and convenience that tap water cannot provide.
Qwest's application of Section 62-622(3)(b) to a water utility would require the
Commission to cease regulating water rates by virtue of the competition presented by bottled
water companies. As with its application of Section 62-622(3) to telephone service, Qwest
would have us believe the legislature intended, if competition exists for drinking water that
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
effective competition" exists for utility provided water, ignoring that customers use their
domestic water for showering, laundry and irrigation. Tap water and bottled water are
functionally equivalent, narrowly defined, and bottled water is available at competitive prices to
tap water. That is enough, according to Qwest's interpretation of Section 62-622(3)(b). It is not
enough, according to the language of Section 62-622(3) and the expressly stated intent of the
legislature, as the Commission previously concluded in Order No. 28369.
CONCLUSION
Qwest and the Commission Staff have significantly different interpretations of
Section 62-622(3), and each approached the case consistent with its own interpretation of the
statute. As the result, the pre filed evidence does not focus on the same factual issues and also
contains arguments regarding the interpretation of Section 62-622(3). The interpretation of a
relevant statute presents a legal issue solely for the Commission s resolution. Because the issues
for hearing would be greatly clarified, resulting in a meaningful, efficient hearing, the
Commission should issue a declaratory ruling establishing the legal interpretation of Section 62-
622(3). In that way, only differences of relevant fact on which the parties disagree will be
presented during the evidentiary hearing.
Staff requests that the Commission issue a declaratory ruling stating that:
(1) The legislature did not intend the term basic local exchange service to
be inserted into subparagraph (b) in place of the term local services;
(2) A review of the features of a product alleged to be "functionally
equivalent" under Section 62-622(3)(b) is not limited to a determination
that the product provides two-way interactive switched voice
communications;
(3) An applicant filing under Section 62-622(3) must show that effective
competition for the applicant's basic local exchange service actually
exists. The applicant must show the competition is "actual, effective
substantive and meaningful." Order No. 28369, p. 3.
Unless Qwest states a willingness to have the Commission rule on Staffs Petition for
Declaratory Ruling without oral argument, Staff requests the Commission set this matter for oral
argument on Thursday, May 22, 2003 at 9:30 a.m. or on Wednesday, May 28, 2003 at 2:30 p.
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
Respectfully submitted this ,OfA-ay of April 2003.
Weldon B. Stutzman
Deputy Attorney General
for the Commission Staff
Vld/N: QWETO225 ws6
STAFF'S PETITION FOR A DECLARATORY RULING
MEMORANDUM IN SUPPORT OF PETITION
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 30th DAY OF APRIL 2003
SERVED THE FOREGOING STAFF'S PETITION FOR A DECLARATORY RULING
AND MEMORANDUM IN SUPPORT OF PETITION, IN CASE NO. QWE-02-, BY
MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
MARY S HOBSON
STOEL RNES LLP
SUITE 1900
101 S CAPITOL BLVD
BOISE, ID 83702
ADAM L SHERR
QWEST
1600 7TH AVE, ROOM 3206
SEATTLE, WA 98191
CONLEY WARD
GIVENS PURSLEY LLP
277 N 6TH ST, SUITE 200
PO BOX 2720
BOISE, ID 83701-2720
CLAY R STURGIS
MOSS ADAMS LLP
601 WRNERSIDE, SUITE 1800
SPOKANE, WA 99201-0663
DEAN J MILLER
McDEVITT & MILLER LLP
PO BOX 2564
BOISE, ID 83701
BRIAN THOMAS
TIME WARNER TELECOM
223 TAYLOR AVE NORTH
SEATTLE, WA 98109
SUSAN TRAVIS
WORLDCOM INC.
707 17TH STREET, SUITE 4200
DENVER, CO 80202
MARY JANE RASHER
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES INC.
10005 S GWENDEL YN LANE
HIGHLANDS RANCH, CO 80129-6217
MARLIN D ARD
WILLARD L FORSYTH
HERSHNER, HUNTER, ET AL
180E 11TH AVE POBOX 1475
EUGENE, OR 97440-1475
DEAN RANDALL
VERIZON NORTHWEST INC.
17933 NW EVERGREEN PKWY
BEAVERTON, OR 97006-7438
JOHN GANNON
ATTORNEY AT LAW
1101 W RNER SUITE 110
BOISE, ID 83702
BEN JOHNSON
BEN JOHNSON ASSOCIATES INC.
2252 KILLEARN CENTER BLVD
TALLAHASSEE, FL 32308
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SECRETARY
CERTIFICATE OF SERVICE