20000725Brief on Reconsideration.doc

CHERI C. COPSEY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5142

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 JOINT PETITION OF ROBERT RYDER, DBA RADIO PAGING SERVICE, JOSEPH MCNEAL, DBA PAGEDATA AND INTERPAGE OF IDAHO, FOR A DECLARATORY ORDER AND RECOVERY OF OVERCHARGES FROM U S WEST COMMUNICATIONS, INC.
)
)
)
)
)
)
)
)
CASE NO. USW-T-99-24

COMMISSION STAFF BRIEF ON RECONSIDERATION

COMES NOW the Commission Staff of the Idaho Public Utilities Commission, by and through its attorney of record, Cheri C. Copsey, Deputy Attorney General, and in response to Commission Order No. 28473 dated August 9, 2000, files this brief on reconsideration.
Commission Staff urges the Commission to reaffirm its decision in Order No. 28427 issued June 25, 2000, and hold that without an express delegation from the state legislature, the Supremacy Clause does not create an obligation for this Commission to enforce federal law.
ARGUMENT
The Petitioners allege on reconsideration that the Supremacy Clause of the United States Constitution and the Federal Communications Commission (FCC) rules obligate the states -- and in this case, the Commission -- to enforce federal law. They apparently take the position that whatever the federal government enacts, states must enforce. They are wrong. They seem to believe that each state utility commission is the handmaiden of the federal government. However, Petitioners do not explain how Congress and the FCC have the authority to require the Commission to enforce federal law under these circumstances, other than to point in the general direction of the Supremacy Clause. Petitioners fundamentally misunderstand the Commission’s decision and the state of both the federal and state law.
Moreover, the Petitioners do not challenge any of the factual determinations made by the Commission.
I. State law does not permit this Commission to regulate the prices for these services.
The Commission’s decision is not controlled by the Metzger letter or federal law. The decision is constrained by state law. The simple matter is that in 1988, the state legislature decided to allow Title 61 regulated local exchange carriers (LECs) to “elect to exclude its telecommunication services, other than basic local exchange service . . . from regulation pursuant to title 61, Idaho Code . . . .” Idaho Code § 62-616.
Pursuant to that statute, U S WEST filed an election in 1989 to remove certain services, including these services, from Title 61 regulatory authority. See Case No. MTB-T-89-1; Order No. 22552. This price list (“Price List”) is part of U S WEST’s Exchange and Network Catalog (commonly called the “Title 62 Catalog”) filed with the Commission in 1993 after that election. These services are only partially regulated by the provisions of Title 62, Idaho Code and LECs are required to file tariffs or price lists which reflect the availability, price, and terms and conditions for those services for information purposes only. Idaho Code § 62-606. This particular Price List was filed with the Commission pursuant to Idaho Code § 62-606 in 1993. The Commission correctly found that the Commission has no authority to regulate the prices for these services and can only hear complaints that U S WEST failed to follow its Price List. Idaho Code § 62-616. The Commission should reaffirm this ruling.
This Commission further found that the only way the Commission may review or order change to the rates in the underlying Price List and rule that provisions in the Price List are void or illegal is if there is some other legal basis for the Commission to evaluate those terms. The Petitioners apparently believe that the legal basis is the “Supremacy Clause.” They do not explain how this clause bears on the issues presented here.
II. The Supremacy Clause does not require this Commission to enforce the FCC rules in the absence of some state authority to do so.
It is well established that state legislatures are not subject to federal direction. Printz v. United States, 521 U.S. 898, 912, 117 S.Ct. 2365, 2373 (1997); New York v. United States, 505 U.S. 144, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992). This is not a case where the state law is pre-empted because state law is inconsistent with federal law. In this case, the Petitioners essentially argue that the federal law requires the Commission to assert jurisdiction over the contents of a price list that the state legislature specifically mandated it should not regulate.
The Constitution established a system of “dual sovereignty.” Printz at 521 U.S. 918 citing Gregory v. Ashcroft, 501 U.S. 452, 457, 111 S.Ct. 2395, 2399, 115 L.Ed.2d 410 (1991); Tafflin v. Levitt, 493 U.S. 455, 458, 110 S.Ct. 792, 795, 107 L.Ed.2d 887 (1990). As the United States Supreme Court ruled in Printz, residual state sovereignty is both implicit and express. Id. at 919. State sovereignty is expressly guaranteed by the Tenth Amendment which states “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Id.
In Printz, Justice Scalia found that “[t]he Framers’ experience under the Articles of Confederation . . . persuaded them that using the States as the instruments of federal governance was both ineffectual and provocative of federal-state conflict.” Id. at 919 citing The Federalist No. 15. Moreover, “the Framers rejected the concept of a central government that would act upon and through the States, and instead designed a system in which the State and Federal Governments would exercise concurrent authority over the people--who were, in Hamilton’s words, “the only proper objects of government.” Id. at 919-920 citing The Federalist No. 15, at 109.
[E]ven where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.... [T]he Commerce Clause, for example, authorizes Congress to regulate interstate commerce directly; it does not authorize Congress to regulate state governments’ regulation of interstate commerce.

New York, 505 U.S., at 166, 112 S.Ct., at 2423 cited with approval, Printz at 521 U.S. 924.

In this case, the Petitioners have not demonstrated a ground upon which the federal government has the authority to compel the state legislature, and thus the Commission, to regulate the contents of this Price List. Therefore the Commission should reject the Petition for Reconsideration.
III. The FCC Order raises significant constitutional problems.
There are other problems with the FCC Order cited by the Petitioners. TSR Wireless, LLC v. U S WEST, Memorandum Opinion And Order, (adopted May 31, 2000 and released June 21, 2000), File Nos. E-98-13, E-98-15, 98-16, E-98-17, E-98-18, (“TSR Wireless”). It potentially intrudes on state authority to set rates for intrastate services.
For example, the FCC Order’s discussion of possible takings arguments sets the stage for a serious clash between state and federal authority. While this case involves a price list for deregulated services, the potential for impact on other incumbent local exchange carriers (ILECs) in Idaho is great. If the FCC Order stands, the costs for dedicating facilities to the Petitioners’ use would be passed to ratepayers in those purely Title 61 companies. This would directly conflict with this Commission’s authority by requiring it to pass those costs to ratepayers even though the ratepayers are not the ones who required the costs be incurred.
This result is because the FCC decision clearly violates the Fifth Amendment to the United States Constitution by requiring ILECs to dedicate a portion of their property for the use of another, the paging companies, without compelling the paging companies to pay for that use. The FCC’s response to the “takings” argument is legally incorrect and, significantly intrudes on state ratemaking authority. Its somewhat cavalier response is “Defendants possess other options for recovering these costs, such as recovering these costs from the end users that originates [sic] the calls.” TSR Wireless at ¶36. In other words, the FCC is requiring those costs associated with interconnecting paging companies to the ILEC’s network be borne by the ratepayer – thus requiring the state Commission to pass those costs on.
Its constitutional argument is wrong. The United States Supreme Court has always recognized that there is a takings whenever government requires a property owner to allow his property to be occupied (i.e., dedicated to the use of another, as is required here) and does not allow the property owner to be justly compensated by the party occupying the property. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982). It has never been the law that the fact the costs can be recouped from someone else negates the fact property has been taken. Otherwise, the Supreme Court in Loretto would have ruled there was no taking because the landlords could simply recover their costs from the renters!
Moreover, the FCC naively suggests that it is the party on the ILEC network who calls the paging customer’s pager number who induces the costs. But that ignores the reality that “but for” the paging company and its customers, those lines, switches and other facilities would not be required to be built or dedicated. It is the paging company’s customers that bring about the calls – not the other way around. “But for” the paging customer’s decision to have a pager, the customer calling the pager number would not have called the number. Furthermore, while customer calls to numbers serviced by a CLEC are similar in many ways, the fact is the FCC allows the ILEC to charge the CLEC for the dedicated facilities used to transport and switch those calls to it.
This decision, places state commissions in the position of either increasing rates for all ratepayers to allow the ILEC to recover its costs or imposing a specific surcharge on any customer calling a paging number. It is unclear whether the ILECs even have the technical capability of imposing such a surcharge. In any event, the FCC decision clearly passes this problem on to the state commissions and, thus, intrudes on their ratemaking authority by requiring these costs to be borne by intrastate ratepayers.
SUMMARY
The Petitioners’ Petition for Reconsideration ultimately should be denied. While this case could be dispensed with on the basis that the FCC ruling has no effect on this Commission’s statutory authority, the potential problems for other Title 61 companies is real. Therefore, at a minimum, the Commission should set a briefing schedule and require all parties to carefully brief the issue of how the Supremacy Clause obligates this Commission to enforce federal law without an express delegation from the state legislature. This is too important an issue to be addressed with so summary an argument as made by the Petitioners.

Dated at Boise, Idaho, this day of July 2000.

________________________
Cheri C. Copsey
Deputy Attorney General

Staff: Joe Cusick

M:uswt9924_cc3
In Loretto the Supreme Court struck down a New York law requiring landlords to permit cable television providers to install cable television wires on the landlords’ property upon the payment of a modest fee. The court found the New York law constituted a taking because it caused a permanent, physical occupation of landlords’ property without just compensation.

COMMISSION STAFF OPPOSITION
TO RECONSDERATION -2-