2000327_dh.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
TONYA CLARK
STEPHANIE MILLER
DAVE SCHUNKE
BIRDELLE BROWN
CHRIS MASCHMANN
ANGIE VELASQUEZ
ALYSON ANDERSON
WORKING FILE

FROM:

DATE: MARCH 28, 2000

RE: ORDER TO SHOW CAUSE WHY TRANSNATIONAL COMMUNICA-
TIONS, GROUP III SERVICES, WESTERN TELECOMMUNICATIONS DBA PEOPLELINK, AND CALL PLUS SHOULD NOT BE FOUND TO BE IN DEFAULT FOR NOT PAYING THEIR 1999 REGULATORY FEES; CASE NO. GNR-U-00-3

On January 28, 2000, the Commission issued an Order directing Transnational Communications, Group III Services, Western Telecommunications dba PeopleLink by TCI, and Call Plus, to show cause why they have failed, refused or neglected to pay their 1999 regulatory fee as required by Idaho Code §§ 61-1005 and 62-611. The companies were ordered to appear before the Commission’s Hearing Officer on February 22, 2000. The Commission ordered the companies to show cause why it should not seek civil penalty of $2,000 per day for each day after May 15, 1999, that the companies failed to pay their regulatory fees. The Commission also directed that the companies be prepared to show cause why the Commission should not: (1) order the companies to cease conducting business in Idaho; (2) order other Idaho LECs not to carry the four companies’ traffic; and (3) cancel their tariffs/price lists until such time as the delinquent regulatory fees have been paid.
BACKGROUND
The Commission’s Regulatory Fee
Idaho Code §§ 61-1001 and 62-611 provide that each public utility subject to the Commission’s Title 61 or Title 62 jurisdiction shall pay to the Commission a special regulatory fee “to defray the amount to be expended by the commission for expenses in supervising and regulating the public utilities.” On or before April 1st of each year, each public utility is required to report its gross operating revenue from intrastate business in Idaho for the preceding calendar year. Idaho Code § 61-1003. Based upon all the utilities’ gross intrastate revenues and the Commission’s annual appropriation from the Legislature, the Commission then calculates the proportional assessment to be paid by each utility. Thereafter, each utility pays its regulatory assessment to the Commission in two equal semi-annual installments on or before May 15th and November 15th of each year. Idaho Code § 61-1005. “Upon failure, refusal or neglect of any public utility or railroad corporation to pay such fee the attorney general shall commence an action in the name of the state to collect the same.” Id. This section further provides that installments not paid in a timely fashion shall bear interest at the rate of 6% until such time as the full amount of the installment or annual fee is paid. Idaho Code § 61-1004(3) sets the minimum annual regulatory fee at $50.00.
In this case, the Commission Staff alleged that although the four Title 62 companies reported their gross intrastate revenues and were assessed the minimum $50 regulatory fee, the companies failed to pay their 1999 regulatory fees. Order No. 28266. The Staff presented the prefile testimony of its Financial Support Technician, Christine Maschmann. She testified concerning the assessment procedures and the Staff’s efforts to collect the assessments.
THE SHOW CAUSE HEARING
A. Designating Persons to Receive Service and Mail Issued
by the Commission Secretary

Ms. Maschmann first testified that Idaho Code § 62-619 provides that the Commission’s Rules of Procedure apply to the processing of Title 62 matters. She also noted that the Commission’s Procedural Rule 16 provides that the Commission Secretary shall serve all Orders by mail. IDAPA 31.01.01.16.01. Tr. at 11. This Rule requires that all “utilities must maintain on file with the Commission Secretary a designation of such a person. Summonses and complaints directed to regulated utilities . . . may be served by registered or certified mail.” Tr. at 11-12 citing IDAPA 31.01.01.16.02.
Staff witness Maschmann also testified that Title 62 Rule 202 requires that each Title 62 corporation provide the Commission with “address of the principal place of business of the telephone corporation, and, if there is a principal place of business in Idaho, the address of the principal place of business in Idaho; [and an] agent in Idaho for service to process by the Commission in the state of Idaho.” IDAPA 31.42.01.202.02(b) and (c). Tr. at 10-11. She also noted that Rule 202.03 provides that “Orders and other documents issued by the Commission may be served by mail on the agent for service of process listed pursuant to Rule 202.01.(c) of this Rule. This service constitutes due and timely notice to the telephone corporation, and no further service is necessary to bind the corporation.” Tr. at 11 citing IDAPA 31.42.01.202.03. Idaho Code § 61-615 allows complaints against utilities to be served by registered mail. All the Orders and correspondence sent to the four companies in this case were sent to the addresses on file with the Commission.
B. The Staff’s Efforts to Collect the Regulatory Fees
On April 23, 1999, each of the four companies was mailed a statement of their 1999 annual assessment fees. Exhibit Nos. 3, 4, 5, 6 (Schedule A’s). This statement mentioned that the fee may be paid in two equal installments, the first due no later than May 15, 1999, and the second due no later than November 15, 1999. Tr. at 7, 15, 17, 19. When the May 1999 payments were not received, the Commission’s attorney forwarded a letter on September 9, 1999, to each company advising them that the Commission had not receive the May installment of the regulatory fee and that each company owed $25.50. The letter further stated that each company “may remit the entire 1999 fee of $50.50 (including the calculated interest).” Exh. Nos. 3 (Sch. C); Exh. 4 (Sch. C); Exh. 5 (Sch. B); and Exh. 6 (Sch. B). Id. Each company was further advised that failure to remit this amount may result in legal action including the assessment of a civil penalty up to $2,000 each day that the violation continued. Id.
After not receiving any response to the September 9 letter, a subsequent letter was sent by certified mail from the Commission’s Attorney advising each company that the Commission had not received the first or second installment payment of the 1999 regulatory fee. The December letter advised each company that its 1999 regulatory fee (plus interest) was [then] $51.03 and must be paid no later than December 23, 1999 to avoid legal action for failure to pay the regulatory fee. In addition, each letter included a “tear-off” reply section so that the companies could advise the Commission if they were no longer in business and could request that their tariffs/price lists be removed from the Commission’s files. Tr. at 13, 16, 17-18, 19-20; Exh. Nos. 3 (Sch. D), Exh. 4 (Sch. D); Exh. 5 (Sch. C); Exh. 6 (Sch. C).
Staff witness Maschmann testified that the returned certified mail receipts for Transnational Communications and Western Telecommunications showed that the December letter was delivered to each company and signed for on December 16 & 15, 1999, respectively. Tr. at 14, 18. The mail receipts for the other two companies were returned by the post office as “unclaimed.” Tr. at 16, 20.
Ms. Maschmann also stated that each company was served a copy of Show Cause Order No. 28266 by certified mail. The post office’s mail receipts show that Transnational and Western Telecommunications did receive copies of the Commission’s Show Cause Order. Tr. at 14, 18. The mail receipt for the other two companies show that the Order was returned as unclaimed. Tr. at 16, 20.
None of the four companies appeared at the Show Cause hearing. Tr. at 83. Ms. Maschmann recommended that the hearing officer enter a default against these companies if they failed to pay their regulatory fee or appear at the Show Cause hearing. She further recommended that the Commission issue an Order finding that the companies are in default for failure to pay their regulatory fees and that the companies be ordered to cease operating in Idaho until they have come into compliance. In addition, she suggested that local exchange companies should be ordered to deny or prohibit the carriage of traffic for these companies. Finally, she recommended that if the companies failed to pay their delinquent regulatory fee, that their price lists be cancelled and returned. Tr. at 20-21.
At the hearing, the Staff Attorney assured the hearing examiner that the Staff had cross-checked the addresses on file at the Commission with those addresses maintained by the Secretary of State for the registration of corporations. Tr. at 82. He also noted that the December 10 letters sent by certified mail were also served on the agent for service at addresses both maintained by the Commission and the Secretary of State. Id.
C. The Hearing Examiner’s Recommendations
Having reviewed the testimony filed by Staff witness Maschmann and her Exhibits, the Hearing Examiner found that appropriate service had been attempted on all four companies and that service of the fee statement, collection letters, and the Show Cause Order were valid. Tr. at 83. He found that during the Show Cause hearing, no parties had appeared. Id. He also noted that it was appropriate to enter default judgments against Transnational Communications, Group III Services, Western Communications dba PeopleLink, and Call Plus for failure to pay their respective 1999 regulatory fees. Tr. at 84. He observed that all of the companies had failed to pay their minimum regulatory fee including interest to the time of the Show Cause hearing of $51.03.
The Hearing Examiner recommended and the Staff agreed that between the time of the hearing and the Commission taking this matter up at its decision meeting, that the Staff should consider entering into a consent agreement with any of the four companies if they offered to pay their fees. Tr. at 78-79, 88, 89. As of the date that this decision memorandum was prepared, none of the four companies had contacted the Staff regarding payment of their 1999 regulatory fees.
Commission Decision
1. Does the Commission find that the assessment letters and collection letters were properly served upon the companies’ designees and upon the agent of service in accordance with the Commission’s Procedural Rules and its Title 62 Rules?
2. Given the failure of any party to appear at the Show Cause hearing, does the Commission believe that it is appropriate to enter a default judgment against these parties as provided for in Procedural Rule 301?
3. Does the Commission find that these companies have failed to pay their regulatory fee for 1999 pursuant to Idaho Code §§ 61-1001 and 62-611?
4. Does the Commission order these companies to cease operating in business and direct LECs and CLECs to not transmit any traffic for these companies?
5. Does the Commission wish to cancel these companies’ price lists and return them as cancelled for failure to pay the regulatory fees?
6. Does the Commission wish to take any other action?

vld/M:GNR-U-00-03_dh

DECISION MEMORANDUM 1