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MEMORANDUM
TO:COMMISSIONER DENNIS HANSEN
FROM:DON HOWELL, DEPUTY ATTORNEY GENERAL
DATE:DECEMBER 10, 1997
RE:COMMISSION AUTHORITY OVER U S WEST COMMUNICATIONS’ ACCESS CHARGES
Earlier this week you asked me to review provisions of Idaho law to determine specifically whether the Commission has the statutory authority to order U S WEST Communications to reduce access charges in southern Idaho.(footnote: 1) After reviewing statutory provisions of Title 61 and Title 62, it is my opinion that the present Idaho law does not give a clear answer to this question.
THE IDAHO TELECOMMUNICATIONS OF 1988
As competition began to emerge in the intrastate long-distance market in the late 1980s, our Legislature enacted the Telecommunications Act of 1988. The Act was intended to maintain universal telecommunication service and to encourage innovation within the industry by instituting a “balanced program of regulation and competition.” Idaho Code § 61-602 (July 1, 1988) now codified at Idaho Code § 62-602(1) (July 1, 1997). Under the regulatory structure created by the Act, a telephone company holding a Certificate of Public Convenience and Necessity was given a choice. The company can continue to have all of its services regulated by the Commission under its traditional price regulation contained in Title 61. Alternatively, the company may elect to remove all its services other than basic local exchange service from Title 61 regulation and have those services regulated under the Telecommunications Act contained in Title 62. Idaho Code §§ 62-601 et seq. Thirty days after a company makes such an election, the services that are removed from Title 61 regulation are no longer subject to price or rate regulation by the Commission. Idaho Code § 62-605(2).(footnote: 2) Most telephone corporations not holding a Certificate of Public Convenience and Necessity are automatically subject to the Act’s Title 62 provisions, i.e., their services are not price regulated. Idaho Code § 62-604(1)(a).
In 1988, only AT&T Communications among all the intrastate long-distance companies possessed a Certificate of Public Convenience and Necessity. In July 1988, AT&T filed the requisite notice that it was removing all of its long-distance services from the Commission’s Title 61 ratesetting authority. Idaho Code § 62-604(2). By operation of law, all other long-distance companies (MCI, Sprint, etc.) at that time and since that time have been free to set their own rates for long-distance services. Idaho Code § 62-604(1)(a).
Of the more than 20 local exchange companies, only U S WEST for its southern Idaho operations has elected to remove its non-basic local services from the Commission’s Title 61 ratesetting authority. In essence, U S WEST is a hybrid company—the rates for its basic services continue to be set by the Commission pursuant to Title 61 while the Company is free to establish its own rates for non-basic services under Title 62.
THE 1997 AMENDMENTS TO THE IDAHO TELECOMMUNICATIONS ACT
Last year, Congress enacted the Telecommunications Act of 1996 intending to foster competition in all telecommunication markets, including the local service market. In particular, Section 253(a) of the Act provides that no state may prohibit “the ability of any entity to provide any interstate or intrastate telecommunications service.” In response to the federal Act, our Legislature earlier this year amended and repealed various provisions of the Idaho Telecommunications Act. In House Bill No. 313, the Legislature specifically found that “the telecommunications industry is in a state of transition from a regulated public utility industry to a competitive industry. The legislature encourages the development of open competition in the telecommunications industry in accordance with provisions of Idaho law and consistent with the federal telecommunications act of 1996.” Idaho Code § 62-603(4).
Among other provisions, House Bill 313 provides that the Commission “shall have full power and authority to implement the federal Telecommunications Act of 1996.” Idaho Code § 62-615(1). As you know, the Bill also provides in Idaho Code § 62-623 that the Commission examine the issue of implicit subsidies that may exist within the rates (e.g., access charges) of incumbent telephone corporations, determine “a mechanism for removal of the subsidies from the rates of incumbent telephone corporations[, and create] explicit subsidy mechanisms.” Idaho Code § 62-623(2).(footnote: 3)
ANALYSIS
Turning to your specific question, the Commission is a creature of statute with limited powers delegated to it by the Legislature. Idaho Power Co. v. Idaho PUC, 102 Idaho 744, 639 P.2d 442 (1981); Washington Water Power Co. v. Kootenai Environmental Allliance, 99 Idaho 875, 591 P.2d 1122 (1979). While the Commission’s jurisdiction or authority is to be strictly construed, once jurisdiction is clear, the Commission is allowed to exercise all power either expressly or fairly implied which is necessary to perform its duties. Idaho State Homebuildersv. Washington Water Power Co., 107 Idaho 415, 690 P.2d 350 (1984). Determining whether the Commission has the authority to reduce U S WEST’s access charges, begins by examining the Commission’s statutory authority.
The starting point for determining statutory authority is the literal language or wording of the statutes. When intrepreting statutes, courts will normally give the language of statutes its ordinary, plain and rationale meaning in order to determine the intent of the Legislature. City of Boise v. Industrial Commission, 129 Idaho 906, 935 P.2d 169 (1997). Where the language of statutes is clear and unambiguous, there is no need to resort to rules of statutory construction. Freemont-Madison Irrigation Dist. v. Ground Water Appropriators, 129 Idaho 454, 926 P.2d 1301 (1996). The Idaho Supreme Court has held that statutes dealing with the same subject matter are to be construed together in determining legislative intent. City of Sandpoint v. Sandpoint Independent Highway Dist., 126 Idaho 145, 879 P.2d 1078 (1994).
Idaho Code § 62-605(2) provides that once U S WEST elected to remove access charges from the Commission’s Title 61 authority, then such services are exempt from the Commission’s ratesetting authority. Conversely, Idaho Code § 62-623(2) requires that the Commission “determine a mechanism for removal of the subsidies from the rates of incumbent telephone corporations and the creation of explicit subsidy mechanisms.” Section 62-615(a) also provides the Commission with the “full power and authority to implement the federal telecommunications act of 1996.” These later statutes (enacted this year) are consistent with the federal Act and the Federal Communication Commission’s intent to eliminate “implicit subsidies from access charges over time.” First Report and Order, CC Docket No. 96-262, FCC 97-158 ¶ 9 (May 7, 1997).(footnote: 4) On the one hand, Section 62-605(2) precludes the Commission from setting the rates for U S WEST’s access charges, while Section 62-623(2) requires the Commission to “develop a mechanism” for the removal of implicit subsidies. Does developing a mechanism to remove implicit subsidies grant the Commission the authority to lower access rates? The lack of clarity between the two statutes creates an ambiguity which courts normally resolve by applying rules of statutory construction.
One rule of statutory construction provides that the Legislature knew of all statutes in effect at the time of a statute’s enactment and that the more recently enacted statute should prevail over previously enacted statutes. State v. Betterton, 127 Idaho 562, 903 P.2d 151 (Ct. App. 1995). However, where two statutes address the same subject matter, the more specific statute previous. Id. Although Idaho Code § 62-623 is the most recently enacted statute, section 62-605 appears to be the more explicit in prohibiting Commission rate setting. Moreover, there is a colorable argument that “developing a mechanism”does not necessarily empower the Commission to lower access rates. Although one can construct arguments regarding which rule of statutory construction should prevail, there appears nonetheless an ambiguity between the two statutes.
Apparently, the Commission itself recognized this conflict or ambiguity in the statutes. More specifically, the Commission noted in its Legislative Report that it does “not believe that it currently have the statutory authority to set access rates for Title 62 companies such as U S WEST.” Telecommunications Report at 2. Indeed, several parties to the Commission’s implicit subsidy proceeding (Case No. GNR-T-97-12) made the same observation. For example, U S WEST stated in its comments that the Commission “exercises jurisdiction over all regulated incumbent company access charges except U S WEST’s southern Idaho operations.” U S WEST Comments at 8.(footnote: 5)
Even AT&T Communications acknowledged that there may be some question regarding the Commission’s authority to reduce U S WEST’s access charges. In its comments, AT&T declared that lowering U S WEST’s access charges “may require the Commission to obtain the necessary legal authority. If the Commission so determines, then the request should be included in the Report to the Legislature.” AT&T Comments at 5-6.
CONCLUSION
As outlined above, it is less than clear whether the Commission has explicit authority to order U S WEST to reduce its Title 62 access charges in southern Idaho. Given this uncertainty, a desire to avoid unnecessary litigation and the opportunity to address this issue in the upcoming legislative session, it is reasonable for the Commission to bring this issue to the attention of the Governor and Legislature in the Telecommunications Report. The Legislature may then decide whether the Commission should have the authority to reduce Title 62 access rates if it is determined that such rates contain implicit subsidies.
This memo is provided to assist you. It is an informal and unofficial expression of the views of this Office based upon the research and analysis of the author.
Don Howell
bls/M:hansen.dh
FOOTNOTES
1:
U S WEST operates two distinct and separate service territories in Idaho. In northern Idaho, U S WEST serves eight exchanges generally located between Lewiston and Grangeville. These exchanges, formerly served by Pacific Northwest Bell, are subject to the Commission’s traditional rate setting authority found in Title 61 of the Idaho Code. U S WEST’s southern Idaho basic services are subject to the Commission’s rate setting authority found in Title 61 but its non-basic services (e.g., access charges) are subject to the Commission’s non-economic authority found in Title 62.
2:
This section provides that 30 “days from the filing of such notice of election, said telephone corporation shall, as to telecommunication services other than basic local exchange service, be exempt from the provision of Title 61, Idaho Code, and such telecommunication services shall thereafter be subject to the provisions of [Title 62].”
3:
The Commission was also required to file a report with the Governor and the Legislature recommending necessary or desirable legislation concerning universal support mechanisms, the removal of explicit subsidies, and other telecommunication matters.
4:
Interestingly, the FCC found that the Act did “not require, nor did Congress intend, that we immediately institute a vast set of wide-ranging pricing rules applicable to interstate and intrastate services provided by incumbent LECs that would have enormously disruptive effect on both ratepayers as well as the effected LECs.” First Report and Order, FCC 97-158 ¶ 10. Although the FCC recognized that implicit intrastate universal service support is substantial, it noted that it could not “remove universal service costs from interstate access charges until we can identify those costs, which we will not be able to do even for non-rural LECS before January 1, 1999. Id. at ¶ 11, n.16.
5:
U S WEST insisted that the Legislature “did not instruct the Commission to reduce access charges as it could easily have done. Nor did the Legislature take the step which would be required if the Commission were to be persuaded to modify U S WEST’s access rates, i.e, re-regulate Title 62 access services.” U S WEST Comments at 8. In U S WEST’s view, the Legislature “intended that the Commission use its judgment and expertise to identify subsidies and to simultaneously consider creating an explicit subsidy mechanism as it determined how subsidy was to be removed” from the rates of incumbent telephone corporations. Id. at 9.
However, MCI argued that the “full authority” language of section 62-615(1) provides the Commission with “all the legal authority to proceed in this direction.” MCI Comments at 6.