WWC Holding Co., Inc. v. Public Service Commission of Utah

Decision Date05 March 2002
Docket NumberNo. 20000835.,20000835.
PartiesWWC HOLDING CO., INC., Petitioner, v. PUBLIC SERVICE COMMISSION OF UTAH, Stephen F. Mecham, Clark D. Jones and Constance B. White, Commissioners of the Public Service Commission of Utah, Respondents.
CourtUtah Supreme Court

Matthew F. McNulty, III, Salt Lake City, and Mark J. Ayotte, Philip R. Schenkenberg, Saint Paul, MN, for petitioner.

Sander J. Mooy, Gregory B. Monson, Joni Dickson Seko, Jerry D. Fenn, Salt Lake City, for respondents. WILKINS, Justice.

¶ 1 WWC Holding Co., Inc. ("WWC") petitions us to review the Public Service Commission's order denying it rural Eligible Telecommunications Carrier status and requiring it to price its universal service offerings at or below the Affordable Base Rates. We affirm.

BACKGROUND

¶ 2 Because the party seeking review of an agency's order following a formal administrative proceeding has the burden to prove that the agency's factual findings are not supported by substantial evidence, we state the facts and all legitimate inferences to be drawn from them in the light most favorable to the agency's findings. Utah Code Ann. § 63-46b-16(4)(g)(1997); Hales Sand & Gravel v. Audit Div., 842 P.2d 887, 888 (Utah 1992).

¶ 3 Promoting universal service—that is, ensuring that all Americans have access to affordable phone service—has long been a fundamental goal of telecommunications regulation. See, e.g., 47 U.S.C. § 151 (2001)(creating the Federal Communications Commission and stating that its purpose is to make available affordable communications services to all citizens). In furtherance of this goal, federal and state subsidies ("universal service support") are available to encourage providers of telecommunications services ("common carriers") to provide service to rural areas and low-income consumers. See 47 U.S.C. § 214(e)(2001); Utah Code Ann. § 54-8b-15 (2000). These subsidized telecommunications services are known as universal service offerings. Only Eligible Telecommunications Carriers ("ETCs") are eligible to receive universal service support, 47 U.S.C. § 214(e)(1), Utah Admin. Code R746-360-6(A), and state commissions have been given the authority to designate common carriers as ETCs. 47 U.S.C. § 214(e)(2). Although there are multiple requirements for ETC designation and receipt of universal service support funds, only two are at issue in this case: (1) the federal requirement that a state commission must find that designating an additional ETC in a rural area is in the public interest, 47 U.S.C. § 214(e)(2), and (2) the state requirement that to be eligible for state universal service support, a telecommunications corporation may not charge retail rates in excess of the Affordable Base Rates for basic telecommunications service as determined by the Utah Public Service Commission ("PSC"). Utah R746-360-6(B).

¶ 4 WWC is a common carrier that provides telecommunications services using commercial mobile radio, or wireless, technology. WWC filed a petition with the PSC seeking designation as an ETC in Utah and eligibility to receive state and federal universal service support. In its petition WWC represented that it met the requirements for becoming an ETC and advocated that designation of it as an ETC in rural areas would serve the public interest. The PSC held a hearing on WWC's petition at which WWC presented one witness in favor of its petition. Six witnesses, testifying on behalf of two state organizations, the Division of Public Utilities and the Committee of Consumer Services, and two private organizations, the Utah Rural Telecom Association and U.S. West, testified against the petition.

¶ 5 After these formal proceedings, the PSC issued an order ("Order") designating WWC as an ETC in non-rural areas served by U.S. West. WWC's eligibility to receive state universal service support for service in these areas was contingent, among other things, on WWC charging no more than the Affordable Base Rates, defined by the Order as the rates previously set by the PSC for U.S. West for the areas at issue, for its universal service offerings. The PSC found that it would not be in the public interest to designate WWC as an additional ETC in rural areas served by incumbent carriers. It found that designation of WWC as an ETC in these areas would increase demands on the state universal service fund without any offsetting benefits and consequently declined to designate WWC as an ETC in these areas. We have jurisdiction to review the PSC's final order pursuant to section 78-2-2(3)(e)(i) of the Utah Code. This review followed.

ISSUES PRESENTED AND STANDARDS OF REVIEW

¶ 6 WWC disputes the PSC's finding that granting it ETC status in the applied-for rural areas would not be in the public interest. WWC also disputes the PSC's requirement that in order to receive state universal service support for the areas in which it was designated an ETC, it must price its universal service offering at or below the Affordable Base Rates.

¶ 7 Review of administrative decisions is governed by the Utah Administrative Procedures Act ("UAPA"), Utah Code Ann. §§ 63-46b-0.5 to -23 (1997 & Supp.2001). Administrative decisions based on formal administrative proceedings are reviewed under section 63-46b-16. For a reviewing court to grant relief under UAPA, it must determine, on the basis of the agency's record, that the party has been "substantially prejudiced" by the agency action. Utah Code Ann. § 63-46b-16(4)(1997). A party has been substantially prejudiced if "the alleged error was not harmless." Mountain Fuel Supply Co. v. Pub. Serv. Comm'n, 861 P.2d 414, 423 (Utah 1993). In making this determination, the court will apply different standards of review depending on whether the issue is one of fact, law, or legal discretion. See § 63-46b-16(4).

¶ 8 We uphold an agency's factual findings if supported by substantial evidence. § 63-46b-16(4)(g). As we explained in Harken Southwest Corp. v. Bd. of Oil, Gas and Mining:

Substantial evidence is that quantum and quality of relevant evidence that is adequate to convince a reasonable mind to support a conclusion. This standard does not require or specify a quantity of evidence but requires only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Nonetheless, in evaluating the sufficiency of the evidence, we will not sustain a decision which ignores uncontradicted, competent, credible evidence to the contrary.

920 P.2d 1176, 1180 (Utah 1996) (citations and internal quotation marks omitted). When challenging factual findings, the appellant has the burden of "marshaling all of the evidence supporting the findings and then, despite the supporting facts, showing that the findings are not supported by substantial evidence." Kennecott Corp. v. Utah State Tax Comm'n, 858 P.2d 1381, 1385 (Utah 1993). Issues of legal discretion may be challenged only by showing that "the agency action is ... an abuse of the discretion delegated to the agency by statute." § 63-46b-16(h)(i); see also Morton Int'l, Inc. v. Auditing Div., 814 P.2d 581, 587-89 (Utah 1991)

(construing § 63-46b-16(h)(i)). "[A]n agency has abused its discretion when the agency's action, viewed in the context of the language and purpose of the governing statute, is unreasonable." Morton Int'l,

814 P.2d at 587. Finally, absent a grant of discretion, legal issues are reviewed under a correction-of-error standard. § 63-46b-16(4)(d); see also Morton Int'l,

814 P.2d at 588-89. This standard is especially appropriate where the agency possesses no special expertise which would place it in a better position than the court to decide the issue. See Morton Int'l,

814 P.2d at 586-87.

ANALYSIS

I. PUBLIC INTEREST ANALYSIS

¶ 9 We first address WWC's public interest arguments. As discussed above, the PSC is required by 47 U.S.C. § 214(e)(2) to make a public interest finding prior to designating an additional ETC in a rural area. After a formal administrative proceeding, the PSC found that designation of WWC as an ETC in rural areas already served would not be in the public interest. As explained in the Order, this finding appears to be based on two sub-findings: (1) that designation of an additional ETC in rural areas already served would increase burdens on the state universal service fund ("State Fund"), and (2) that this increased burden would not be offset by the corresponding public benefits of lower cost service or service in areas which are currently unserved.

¶ 10 WWC argues that the PSC should not have considered the effect of ETC designation on the State Fund as a matter of law. WWC also argues that it presented evidence to the PSC showing that designating it as an ETC would result in the public interest benefits of increased competition, choice, mobility, and a larger local calling area, that the PSC erred by "ignoring" these benefits, and that, had these benefits been considered, the public interest test would have been tipped in WWC's favor.

¶ 11 Because the challenge to the Order's public interest findings deals with several different issues, we apply two different standards of review. What, exactly, constitutes "public interest" for purposes of ETC designation is a question, the resolution of which has been granted to the discretion of the PSC. 47 U.S.C. § 214(e)(2). Because the PSC is granted authority and discretion by statute to determine what constitutes public interest, we review the question of whether or not the PSC could legally consider particular factors in determining public interest under the abuse of discretion standard. See id.; Utah Code Ann. § 63-46b-16(h)(i)(1997). How the PSC weighs these factors to arrive at its ultimate conclusion is an issue we also review for abuse of discretion. Id. The question of whether public interest factors are met is a question of fact, limiting our review to determining whether or not there is substantial evidence in the record to support the PSC's...

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