In Re PSC

• Decision Date: 08 December 2000
• Docket Number: No. S-99-582.,S-99-582.
• Citation: 619 N.W.2d 809,260 Neb. 780
• Parties: In re Application of NEBRASKA PUBLIC SERVICE COMMISSION. Nebraska Public Service Commission, Appellee, v. Aliant Midwest et al., Appellees, and U S West Communications, Inc., Appellant.
• Court: Nebraska Supreme Court

619 N.W.2d 809

260 Neb. 780

In re Application of NEBRASKA PUBLIC SERVICE COMMISSION.

Nebraska Public Service Commission, Appellee, v. Aliant Midwest et al., Appellees, and U S West Communications, Inc., Appellant.

No. S-99-582.

Supreme Court of Nebraska.

December 8, 2000.

Tory M. Bishop and Jill Vinjamuri, of Kutak Rock, Omaha, for appellant.

Jon C. Bruning, of Bruning Law Office, Lincoln, for appellee Cox Nebraska Telcom II, L.L.C.

HENDRY, C.J., WRIGHT, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

WRIGHT, J.

NATURE OF CASE

U S West Communications, Inc. (U S West), seeks review of an order entered by the Nebraska Public Service Commission (PSC) which directed incumbent local exchange carriers (ILECs) to comply with an order establishing multidwelling unit (MDU) regulations and a statewide policy for access to MDUs by competitive local exchange carriers (CLECs).

SCOPE OF REVIEW

The appropriate standard of review for appeals from the PSC is a review for errors appearing on the record. Nebraska Pub. Serv. Comm. v. Nebraska Pub. Power Dist., 256 Neb. 479, 590 N.W.2d 840 (1999).

When reviewing an order for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Id.

The meaning of a statute is a question of law, and a reviewing court is obligated to reach its conclusions independent of the determination made by the administrative agency. Id.

Whether a decision conforms to law is by definition a question of law, in connection with which an appellate court reaches a conclusion independent of that reached by the lower court. American Employers Group v. Department of Labor, 260 Neb. 405, 617 N.W.2d 808 (2000).

FACTS

Cox Nebraska Telcom II, L.L.C. (Cox), filed a formal complaint with the PSC, seeking to require U S West to give Cox access to U S West's facilities so that Cox could provide telephone service to residents of MDUs. On its own motion, the PSC entered an order on August 25, 1998, entitled "Order Opening Investigation and Requesting Comments." The order stated that it was the intention of the PSC to determine a policy regarding access to residents of MDUs in Nebraska by CLECs. After the PSC opened its investigation, Cox withdrew its complaint against U S West.

The PSC requested that all interested persons submit comments by September 8, 1998, on the following issues: (1) Who is entitled to choose a local telephone carrier, the resident of an MDU or the building owner? Why? (2) At what point should a CLEC be given access to customers (e.g., individual apartment location, building site, property line, et cetera)? What is the appropriate point of demarcation? (3) What are the rights and responsibilities of CLECs and ILECs when the cable facilities serving an MDU are not currently wired for competition? (4) If it is necessary for an ILEC to sell a portion of the existing wiring to accommodate competitive access, how should a fair price be determined? and (5) Who should pay for the rewiring of facilities, and in what amount, if rewiring is necessary? In response, Cox, U S West, and others filed comments. The PSC held a hearing on the matter on September 14, at which hearing appearances were made on behalf of Cox, U S West, and the Community Associations Institute. After testimony was given, interested parties were given until October 14 to submit additional comments. Following the hearing, Cox and U S West filed posthearing comments. Cox also submitted a proposal to the PSC which other parties, including U S West, commented on.

On March 2, 1999, the PSC entered an order entitled "Order Establishing Statewide Policy for MDU Access." The intent of the order was to foster competition while simultaneously providing residents of MDUs with a realistic opportunity to select their preferred telecommunications provider. The stated purpose of the order was to create a uniform framework which ILECs and CLECs alike would utilize to serve residents of MDUs.

In summary, the PSC ordered ILECs to provide CLECs with unlimited access to the portion of the wire loop between a demarcation point and the newly moved minimum point of entry (MPOE), as well as any existing campus wire. The MPOE is where the campus wire begins and is generally located at the edge of the property line. The demarcation point is the point where the telephone company's facilities end and the property owner's facilities begin. It is generally where the individual customer's inside wire connects to the campus wire. Campus wire in an MDU setting runs between the property line and each building. It includes the portion of an exchange access line circuit that commences at the MPOE and extends up to and includes the demarcation point.

At the request of a CLEC or an MDU owner, ILECs were directed to provide an MPOE at the MDU property line or at a location mutually agreeable to all parties to allow the CLEC to connect to the campus wire and serve residents. The ILEC or a mutually agreed upon third-party contractor must move the MPOE in the most expeditious and cost-effective manner possible. The CLEC or requesting property owner was directed to pay the full cost of the move of the MPOE. ILECs were to retain ownership of any portion of the loop between the demarcation point and the newly moved MPOE as well as any existing campus wire.

CLECs that connected to the MPOE were permitted to use the ILEC's campus wire for a one-time fee of 25 percent of "current" construction charges of the campus wire based on an average cost-per-foot calculation. This calculation was to be derived from a sample of recently completed ILEC construction work orders for MDUs. For 3 years after the move's completion, connecting CLECs were to contribute on an equitable and nondiscriminatory pro rata basis to the one-time 25-percent charge. Maintenance expenses were to be shared by the parties on a pro rata basis based on the percentage of customers each party serves within the affected area at the time of the maintenance and were to be completed in the most expeditious and cost-effective manner possible. Finally, the PSC ordered that exclusionary contracts and marketing agreements between telephone companies and MDU owners be prohibited except with regard to condominiums, cooperatives, and homeowners' associations.

On April 20, 1999, the PSC clarified and amended its order of March 2. The PSC stated:

While it is true that the Commission is requiring the ILEC to "share" a portion of its existing facilities, the ILEC retains complete ownership and in our opinion is adequately compensated.

The Commission's authorizing the property to be used for competitive telephone service in accordance with its deregulatory policies, when the property was already dedicated to the public use of providing telephone service, does not constitute an unconstitutional taking or physical invasion of private property.

The PSC also incorporated a "Charges and Remission Schedule" for the first 3 years from the date when the first CLEC begins serving the property. This schedule was to be administered by the ILEC.

The PSC further ordered ILECs to respond to requests for reengineering of MPOEs with a formal price quote and construction schedule within 15 business days of the request. The PSC required ILECs and CLECs to meet within 30 days of a request to determine a mutually agreeable third party for maintenance or repair. Maintenance was required to be performed within 24 hours and repairs within 4 hours of the request for service by any party.

The PSC also ordered ILECs to provide samples of recently completed MDU construction jobs or work orders to find both an average distance calculation as well as an average cost-per-foot calculation. Once both numbers were derived, the two were to be multiplied to determine the overall average cost for the MDU properties that were to be used as the "current" construction charges for MDU properties. U S West timely appeals from the order of the PSC.

ASSIGNMENTS OF ERROR

U S West makes the following assignments of error, which we have summarized and restated: (1) The PSC erred in promulgating an order which conflicts with the requirements of 47 U.S.C. § 252 (Supp. IV 1998) and is preempted by a subsequent dispositive Federal Communications Commission (FCC) order; (2) the PSC erred in promulgating a regulation inconsistent with the specific terms of the Telecommunications Act of 1996 (1996 Act); (3) the PSC erred in failing to recognize that its order constituted a taking for purposes of the Fifth Amendment and Neb. Const. art. I, § 21; (4) the PSC erred in its interpretation of Neb.Rev.Stat. § 75-109(2) (Cum.Supp.1998); (5) the PSC erred in failing to provide ILECs just compensation for the taking of campus wire; and (6) the PSC erred in establishing an arbitrary and capricious one-time 25-percent charge for the use of an ILEC's campus wire.

ANALYSIS

We begin with a brief factual background of the 1996 Act and a summary of the positions of the parties as to the PSC's order of March 2, 1999. The 1996 Act fundamentally restructured local telephone markets. States were no longer permitted to enforce laws that impede competition, and ILECs were subject to a variety of duties intended to facilitate market entry. Foremost among these duties was the ILEC's obligation under 47 U.S.C. § 251(c) (Supp. IV 1998) to share its network with competitors. Under this provision, a CLEC could obtain access to an ILEC's network in three ways: (1) The CLEC could purchase local telephone services at wholesale rates for resale to end users, (2) the CLEC could lease elements of the ILEC's network " `on an unbundled basis,' " or (3) the CLEC could interconnect its own facilities with the ILEC's network. See AT&T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). It is possible for an ILEC to negotiate an agreement...