Comm'n On State Emergency Communications v. Tracfone Wireless Inc.

343 S.W.3d 233

COMMISSION ON STATE EMERGENCY COMMUNICATIONS, Appellant,

v.TRACFONE WIRELESS, INC. and Virgin Mobile USA, LP, Appellees.

No. 03–10–00111–CV.

Court of Appeals of Texas, Austin.

May 5, 2011.

Daniel L. Geyser, Assistant Solicitor General, Office of the Attorney General, Austin, TX, for Appellant.Christian J. Ward, Yetter Coleman, LLP, Austin, TX, for Appellee.Michael J. Tomsu, Vinson & Elkins, LLP, Austin, TX, Charles W. Schwartz, Skadden, Arps, Slate, Meagher & Flom LLP, Houston, TX, for Intervenor.Before Chief Justice JONES, Justices HENSON and GOODWIN.

OPINION

J. WOODFIN JONES, Chief Justice.

Appellees TracFone Wireless, Inc. and Virgin Mobile USA, LP (collectively, “the Prepaid Providers”) sued the Commission on State Emergency Communications (“the Commission”) for judicial review of the agency's final order concluding that the 9–1–1 emergency service fee imposed by health and safety code section 771.0711 applies to the wireless telecommunications connections the Prepaid Providers provide to their customers. See Tex. Health & Safety Code Ann. § 771.0711 (West 2010). The district court reversed the Commission's order, and this appeal followed. We will reverse the district court's judgment.

BACKGROUND

Chapter 771 of the Texas Health and Safety Code governs the administration of emergency communications in Texas and provides that the Commission is the State's authority on emergency communications. See id. § 711.051(a) (West 2010). The Commission has primary responsibility for administering the implementation of a statewide system that ensures that wireless callers can be identified and located when they dial 9–1–1 for emergency assistance. Id. §§ 771.051(a)(2)(A), .0711(a). To fund the system, section 771.0711 provides that the Commission “shall impose on each wireless telecommunications connection a 9–1–1 emergency service fee.” Id. § 771.0711(a). The statute further provides that a wireless service provider must collect the fee “in an amount equal to 50 cents a month for each wireless telecommunications connection from its subscribers” and must pay the money collected to the Comptroller “not later than the 30th day after the last day of the month during which the fees were collected.” Id. § 771.0711(b). Section 771.073 requires that the service provider “collect the fees [ ] in the same manner it collects those charges for service” and that the fee must be “stated separately on the customer's bill.” Id. § 771.073(a) (West 2010).

Customers pay for wireless telecommunications connections and services using one of two different methods: postpaid and prepaid. A customer who obtains a connection from a postpaid provider typically pays a set amount monthly for the use of up to a specified number of minutes each month and pays additional fees for any minutes used in excess of that specified number. A postpaid provider sends its customers a monthly bill assessing charges for the connection and for the services used during the preceding month, usually measured in minutes. The Prepaid Providers, on the other hand, provide their customers with the wireless telecommunications connection and services on a prepaid basis. They do not enter into extended term contracts with their customers and, because their customers pay in advance, do not send them periodic bills. The Prepaid Providers' customers pay for their wireless telecommunications connection and service in advance by purchasing a handset and a wireless card, which is denominated for either a fixed dollar amount of service or a fixed number of minutes of service. Customers typically purchase the handset and wireless card from a third-party retailer such as Wal–Mart or Target, although they may also purchase them directly from the Prepaid Providers using the internet. After purchasing the handset and wireless card, the user contacts the Prepaid Providers by telephone or over the internet to request that the handset be activated. When activated, each handset is assigned a telephone number with an area code based on a ZIP code provided by the user, thereby establishing a wireless telecommunications connection. The wireless card allows the customer to use the handset to make calls until either the number of purchased minutes or the dollar amount of service is used up. The customer may later purchase additional minutes or dollar amounts of use for a TracFone or Virgin Mobile handset by purchasing an additional wireless card and entering the code printed on that card. The connection represented by the assigned telephone number is automatically deactivated after 90 days (plus a grace period) unless it is renewed by the purchase of additional minutes.

For the time period between January 1, 2001 and September 30, 2003, TracFone paid the Comptroller $767,515.26 as 9–1–1 emergency service fees pursuant to health and safety code section 771.0711. For the time period between November 1, 2002 and May 1, 2005, Virgin Mobile paid the Comptroller $1,525,484.07 as 9–1–1 emergency service fees. In 2005, TracFone and Virgin Mobile filed refund requests with both the Commission and the Comptroller, seeking a refund of the entire amounts paid. The refund requests were based on their contention that section 771.0711 does not apply to the prepaid wireless products they provide and therefore the wireless telecommunications connections obtained by their customers are not subject to the 9–1–1 emergency service fee imposed by that statute.

On receiving the refund requests, the Commission sought an opinion from the Texas Attorney General as to which agency—the Commission or the Comptroller—had primary jurisdiction to determine, in the context of a claim for a refund, “whether a 9–1–1 emergency service fee imposed on wireless telecommunications connections by Texas Health and Safety Code section 771.0711(a) applies to a service provider's specific service.” The Attorney General issued an opinion stating that the Commission had the authority to determine whether section 711.0711(a) applies to a wireless service provider's particular service, while the Comptroller had the authority to order a refund of fees collected pursuant to that section. See Op. Tex. Att'y Gen. No. GA–0401 (2006). The Attorney General further stated:

A claim for a refund of the fee imposed under that section must be filed with the Comptroller, but if the claim presents issues particularly within the Commission's expertise, the Comptroller should abate the administrative proceeding to allow the Commission to make the initial determination of those issues.

Id. Following the issuance of this opinion by the Attorney General, the Commission initiated a contested case against the Prepaid Providers and referred the case to the State Office of Administrative Hearings (SOAH) to determine whether section 771.0711 applies to the prepaid wireless telecommunications connections they provide. The Comptroller abated the refund proceedings pending resolution of the contested case by SOAH.

After a hearing before a SOAH administrative law judge (ALJ), the ALJ issued a proposal for decision (PFD) in which she concluded that section 771.0711's provision imposing a 9–1–1 emergency service fee on “each wireless telecommunications connection” applied to the wireless telecommunications connections used by the Prepaid Providers' customers. In a final order issued in June 2008, the Commission adopted the PFD, including the proposed findings of fact and conclusions of law.

In August 2008, the Prepaid Providers filed in Travis County district court a petition for judicial review of the Commission's order. After full briefing and a hearing before the court, the district court rendered judgment reversing the Commission's order. In its judgment, the court stated that the Commission “erroneously concluded that Texas Health & Safety Code §§ 771.0711 and 771.073 apply to TracFone Wireless, Inc. and Virgin Mobile, L.P. and their end users during the periods at issue.” This appeal followed. In two issues, the Commission contends that: (1) the fee imposed on wireless telecommunications connections by health and safety code section 771.0711(a) applies equally to all users of those connections regardless of whether they were purchased on a postpaid or prepaid basis, and (2) the Commission's final order did not violate the Prepaid Providers' constitutional rights, including their rights to due process and equal protection.

STANDARD OF REVIEW

The primary issue before this Court involves construction of a statute: whether the Commission correctly concluded that health and safety code section 771.0711 applies to the wireless telecommunications connections obtained by the Prepaid Providers' customers. Statutory construction presents a question of law that we review de novo. See State v. Shumake, 199 S.W.3d 279, 284 (Tex.2006). Our primary objective in construing statutes is to give effect to the legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009). The plain meaning of the text is the best expression of legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or unless the plain meaning leads to absurd or nonsensical results. City of Rockwall v. Hughes, 246 S.W.3d 621, 625–26 (Tex.2008); see Tex. Gov't Code Ann. § 311.011 (West 2005) (“Words and phrases shall be read in context and construed according to the rules of grammar and common usage.”). We look to the entire act in determining the legislature's intent with respect to a specific provision. Upjohn Co. v. Rylander, 38 S.W.3d 600, 607 (Tex.App.-Austin 2000, pet. denied). We are required to give “serious consideration” to the construction of a statute by the administrative agency charged with its enforcement, Railroad Comm'n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 625 (Tex.2011), and will generally uphold the agency's interpretation “so long as...