Union Tel. Co. v. The Wyo. Pub. Serv. Comm'n

2022 WY 55

UNION TELEPHONE COMPANY, Appellant (Petitioner), v. THE WYOMING PUBLIC SERVICE COMMISSION AND ITS WYOMING UNIVERSAL SUPPORT FUND MANAGER, Appellee (Respondent), and ALL WEST COMMUNICATION, INC.; DUBOIS TELEPHONE EXCHANGE, INC.; RANGE TELEPHONE COOPERATIVE, INC.; RT COMMUNICATIONS, INC.; SILVER STAR TELEPHONE; TRI COUNTY TELEPHONE, INC., Appellees (Intervenors).

No. S-21-0149

Supreme Court of Wyoming

April 26, 2022

W.R.A.P. 12.09(b) Certification from the District Court of Laramie County The Honorable Steven K. Sharpe, Judge

Representing Appellant: Bruce S. Asay of Associated Legal Group, LLC, Cheyenne, Wyoming. Argument by Mr. Asay.

Representing Appellee, The Wyoming Public Service Commission Bridget L. Hill, Wyoming Attorney General; Brandi Lee Monger, Deputy Attorney General; Karl D. Anderson, Senior Assistant Attorney General; Patrick Miller, Assistant Attorney General. Argument by Mr. Miller.

Representing Intervenors All West Communication, Inc.; Dubois Telephone Exchange, Inc.; Range Telephone Exchange, Inc.; RT Communications, Inc.; Silver Star Telephone; and, Tri-Telephone Association, Inc.

Elizabeth Therese Zerga of Jubin & Zerga, LLC, Cheyenne, Wyoming. Argument by Ms. Zerga.

Before FOX, C.J., and DAVIS ^[*] , KAUTZ, BOOMGAARDEN, and GRAY, JJ.

BOOMGAARDEN, JUSTICE

[¶1] Union Telephone Company filed a petition for review of agency action with the district court, asserting the Wyoming Public Service Commission's (PSC's) order administering the Wyoming Universal Service Fund (WUSF) for the 2020-2021 fiscal year was unlawful and should be set aside. "Universal Service" refers to the availability of reasonably affordable communication services to all users, especially those in rural, high cost areas. This case involves the interplay between the Federal Universal Service Fund (FUSF) and the WUSF-complimentary funding programs collectively intended to develop voice and broadband services and promote the emergence of competition among carriers.

[¶2] The PSC's order adopted a methodology for calculating WUSF disbursements that treated a portion of the 2019 support each Wyoming telecommunications company^[1]received from the federal Alternative Connect America Cost Model (A-CAM) programs as "contributions from the [FUSF]" under Wyo. Stat. Ann. § 37-15-501 (LexisNexis 2021). Union claimed that the order "rejected existing law," violated Wyo. Stat. Ann. § 16-3-114(c), and materially prejudiced Union. On the PSC's request, the district court certified the matter to this Court pursuant to W.R.A.P. 12.09. We affirm.

ISSUES

[¶3] We reorganize and restate the parties' issues and sub-issues.^[2]

I. Did collateral estoppel prevent the PSC from adopting a WUSF calculation methodology that considered A-CAM funds to be FUSF contributions?

II. Is the PSC's 2021 order lawful under the Wyoming Administrative Procedure Act § 16-3-114(c)?

A. Is the order supported by substantial evidence?

B. Is the order arbitrary and capricious?

C. Is the order in accordance with law?

III. Did the PSC abuse its discretion when it admitted certain of the Rural Companies' exhibits and witness testimony during the contested hearing?

FACTS

[¶4] Because this appeal involves consideration of FUSF support-and more specifically, A-CAM support-in calculating WUSF disbursements, we provide an overview of the federal and state funding framework for context.

Federal Funding

[¶5] The federal government has sought to promote "a rapid efficient, Nation-wide . . . communication service with adequate facilities at reasonable charges" since it passed the Federal Communications Act of 1934 (FCA). 47 U.S.C. § 151. The FCA established the Federal Communications Commission (FCC) and "empower[ed] [it] to create programs to advance universal telecommunications services in the United States." Id.; Virgin Mobile USA, L.P. v. Keen, 447 F.Supp.3d 1071, 1086 (D. Kan. 2020) (footnote omitted). The FCC created the FUSF to provide funding to telecommunications companies to ensure that individuals, especially "those who live in rural and high-cost areas, and those who meet certain low-income criteria, [have] access to telecommunications services at affordable rates." Keen, 447 F.Supp.3d at 1083; see 47 U.S.C. § 254.

[¶6] Prior to 2011, the FCC provided "high-cost [universal service] support" "through a complicated patchwork of programs" that only supported voice services. In re FCC 11-161, 753 F.3d 1015, 1037 (10th Cir. 2014) (citation omitted). In the late 2000s, however, the FCC sought to develop a new, more efficient, funding model that would also support broadband development. Id. at 1037-38. As a result, the FCC created the Connect America Fund (CAF) to "address the broadband availability gap" and to replace the older "patchwork of programs." Id. at 1038-40.

[¶7] The FCC implemented A-CAM I, the first version of CAF support relevant to this appeal, in 2016. See In the Matter of Connect Am. Fund, 31 F.C.C. Rcd. 3087 (2016); In the Matter of Connect Am. Fund, 33 FCC Rcd. 11893, 11896 (2018). A-CAM I was designed to provide support to companies over a longer period of time and obligated them to deploy broadband "to a pre-determined number of eligible locations" at one of three speeds. Connect Am. Fund, 33 FCC Rcd. at 11896. Union elected to receive A-CAM I support in 2017. In December 2018, in a continued effort to increase access to high-speed internet, the FCC created (1) a revised version of A-CAM I (Revised A-CAM I) to provide additional support to companies who had elected A-CAM I, conditioned on increased deployment obligations; and (2) a second A-CAM program (A-CAM II), that had slightly different obligations regarding deployment areas and required speeds. Id. at 11898-915. Union subsequently switched to the Revised A-CAM I program, and all but one of the Rural Companies have since elected to receive support under A-CAM II.

State Funding

[¶8] Since 1995, Wyoming has provided state level universal service support through the WUSF. 1995 Wyo. Sess. Laws ch. 181; Wyo. Stat. Ann. §§ 37-15-501 et seq. The purpose of the WUSF is to ensure that telecommunications customers located in areas of Wyoming where rates for essential telecommunications services^[3] are high-generally rural areas- "pay no more than 130 percent of the statewide average price for basic local exchange service."^[4] Pub. Serv. Comm'n of Wyo. v. Qwest Corp., 2013 WY 48, ¶ 8, 299 P.3d 1176, 1178 (Wyo. 2013) (citing Wyo. Stat. Ann. § 37-15-501(c), (d)).

[¶9] The PSC requires all telecommunications companies that provide services in Wyoming to pay an assessment, calculated by the PSC, to the WUSF each year.^[5] Id. (citing Wyo. Stat. Ann. § 37-15-501(a), (b)). Once customers in high-cost areas "have paid for services up to the 130 percent benchmark, ^[6] the WUSF distributes funds to the companies [providing services in those areas] to the extent that their basic local exchange service prices exceed the benchmark[.]" Id. Before distributing WUSF funds, however, the PSC must "tak[e] into account any contributions [a company received] from the [FUSF]" to ensure that Wyoming consumers are not assessed for costs that are already covered through a federal program. Id.; see Wyo. Stat. Ann. § 37-15-501(d), (g).^[7]

[¶10] The PSC administers the WUSF each fiscal year-July 1 through June 30- pursuant to §§ 37-15-501 et seq. and Chapter 5 of the Wyoming Public Service Commission Rules. The process begins when the Fund Manager-a PSC employee- requests certain data from Wyoming telecommunications companies, including their rates for the past year, the essential services they provided, and their FUSF receipts. Qwest Corp., ¶ 9, 299 P.3d at 1179. The Fund Manager analyzes the data, formulates recommendations on how best to administer funds for the upcoming fiscal year, and submits findings and recommendations concerning the appropriate methodology to the PSC. Id. When the PSC receives the Fund Manager's report, it must "set[] a hearing and provide[] notice to the companies that they may appear and comment on the [F]und [M]anager's findings and recommendations." Id.; see Wyo. Stat. Ann. § 37-15-501.

[¶11] The PSC must annually determine "the method by which the contributions shall be calculated, collected and distributed." Wyo. Stat. Ann. § 37-15-501(b); Wyoming Public Service Commission Rules, Chapter 5. In doing so, it may simply rely on the Fund Manager's recommendations and any comments received. See Qwest Corp., ¶ 9, 299 P.3d at 1179; Wyo. Stat. Ann. § 37-15-501. Or, if requested, the PSC must hold a contested case hearing to receive evidence and hear argument. Qwest Corp., ¶¶ 1, 29-30, 299 P.3d at 1177, 1183. The method selected must be "fair" and "promote the emergence of competition in providing local exchange service." Wyo. Stat. Ann. § 37-15-501(c).

2018 and 2020 Administrative Proceedings

[¶12] During the 2018 administrative process, the PSC considered whether A-CAM I receipts should be considered "contributions from the [FUSF]" for purposes of calculating WUSF fund distributions for the 2018-2019 fiscal year. At that time, only Union, and one other company who is not a party to this appeal, received A-CAM I funds. The Fund Manager's report recommended that the PSC should not consider A-CAM I receipts "contributions from the FUSF." At a public hearing, Union generally agreed with the Fund Manager, and the Rural Companies disagreed. No telecommunications company requested a contested case hearing. Consequently, relying on the representations of the Fund Manager in her report, public comment, and analysis and recommendations from PSC staff, the PSC issued an order summarily concluding it would not consider A-CAM I receipts as FUSF contributions when calculating WUSF distributions.

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