HARRISONVILLE TEL. v. ILL. COMMERCE COM'N

• Decision Date: 23 September 2004
• Docket Number: No. 97172.,97172.
• Citation: 212 Ill.2d 237,288 Ill.Dec. 121,817 N.E.2d 479
• Parties: HARRISONVILLE TELEPHONE COMPANY et al., Appellees, v. The ILLINOIS COMMERCE COMMISSION, Appellant.
• Court: Illinois Supreme Court

817 N.E.2d 479

212 Ill.2d 237

288 Ill.Dec. 121

HARRISONVILLE TELEPHONE COMPANY et al., Appellees, v. The ILLINOIS COMMERCE COMMISSION, Appellant.

No. 97172.

Supreme Court of Illinois.

September 23, 2004.

James E. Weging, Special Assistant Attorney General, Chicago, for appellant.

Dennis K. Muncy, Joseph D. Murphy, Rebecca E.P. Wade, of Meyer Capel, Champaign, for appellee Illinois Independent Telephone Association.

Gary L. Smith, of Loewenstein, Hagen & Smith, P.C., Springfield, for appellees Leaf River Telephone Company et al.

Justice FITZGERALD delivered the opinion of the court:

The Illinois Commerce Commission (ICC) appeals the decision of the appellate court in favor of the Illinois Independent Telephone Association and six rural telephone companies or local exchange carriers (LECs).¹ The central issue here is what the Illinois General Assembly meant when it ordered the ICC to establish a "universal service support fund" (USF) in section 13-301(d) of the Public Utilities Act (220 ILCS 5/13-301(d) (West 2002)). Did the legislature intend for the fund to support all rural telephone lines, or only a single line for each residence or business? We agree with the appellate court that universal means universal and that the legislature intended the fund to support all lines. We affirm.

BACKGROUND

In 1997, the Federal Communications Commission (FCC) established a federal universal service fund (USF) to help rural telephone companies defray the high costs of providing public telephone service to sparsely populated areas. Because the federal USF covered only part of these costs, the General Assembly amended section 13-301(d) of the Public Utilities Act in 1999, ordering the ICC to investigate and, if need be, establish a state USF. 220 ILCS 5/13-301(d) (West 2002). The source of the state USF would be "all local exchange and interexchange telecommunications carriers certificated in Illinois on a competitively neutral and nondiscriminatory basis." 220 ILCS 5/13-301(d) (West 2002). In short, the fund would be repaid by telephone customers throughout Illinois in surcharges tacked onto their telephone bills. The General Assembly further instructed the ICC to define which telecommunications services constitute "universal service," noting that the state definition should be at least as broad as the federal definition promulgated by the FCC. 220 ILCS 5/13-301(e)(1) (West 2002). The FCC has listed nine "services designated for support," including "voice grade access to the public switched network." 47 C.F.R. § 54.101(a)(1) (1998).

In 2001, the ICC decided to establish a state USF and concluded that the Illinois list of supported services should mirror the FCC list of supported services. Contrary to the position advocated by its staff, however, the ICC found:

"With respect to the element of the `voice grade access to the network,' * * * it shall be limited to a primary residence line and a single business line. The basis for this conclusion is that discretionary services would not be supported by the section 13-301(d) fund. As Ameritech Illinois appropriately argues, to do otherwise might create the unintended result of low-income end user customers in one area of the state subsidizing discretionary services of high-income end user customers in another area of the state whose service is supported by the fund."

The LECs petitioned for, and the ICC granted, rehearing on four issues: two issues concerning alleged mathematical errors in determining the size of the USF and the monthly affordable rate for each rural telephone customer, one issue concerning a transition plan to reach the affordable rate, and one issue concerning the services supported by the USF. In its order on rehearing, the ICC corrected its mathematical errors and approved a transition plan. But, again contrary to the position advocated by its staff, the ICC refused to alter its decision that the state USF would support only primary or single residential and business lines:

"At the time we reached the single line determination * * *, we were cognizant of the fact that basing the size of the USF fund on support for a single line would reduce the fund size. We were also cognizant of the fact that the qualifying companies would, in all likelihood, seek to recoup the reduction in the fund size from their customers.

Despite the fact that our decision here may bring rate increases to the customers of the qualifying companies, the policy issue is more far reaching. The policy issue facing the Commission is whether the families and agencies, and, in the case of public agencies, the taxing agencies that support them, should bear the brunt of increased rates relating to second lines, or whether the burden should be shifted to all citizens of the state, including low income citizens in our inner cities that cannot afford a single line. On balance, reasoned public policy supports imposing the burden on the parties who use the services and the localities where they are used rather than allowing parties to purchase second lines on the backs of the poor."

According to the ICC, section 13-301(d) did not indicate that the General Assembly intended the ICC to "walk in lock step with the FCC in determining whether or not to support all access lines in the USF." The ICC asserted that the statute simply indicated that the Illinois list of supported services should be no smaller than the federal list of supported services. The ICC insisted that it had done just that:

"The fact that the FCC computes the level of support based upon support for all access lines does not change the fact that our order supports the same services. There is no indication anywhere in section 13-301 that the number of lines entitled to support may not be limited, as long as individuals and businesses are guaranteed access to the network and that the fund recognize that access is at an affordable rate."

The ICC ordered that "[t]he services defined by the FCC as supported services shall be the state supported universal services for purposes of the Fund, with the exception that the fund shall be based upon support for a single residential or business line." (Emphasis added.) The LECs appealed.

On May 23, 2003, the appellate court filed an opinion, and the LECs filed a petition for clarification under Supreme Court Rule 367. See 155 Ill.2d R. 367. On September 11, 2003, the appellate court denied that petition, but vacated its earlier opinion and filed a new one. The appellate court affirmed the ICC on several issues, but reversed the ICC on the primary lines issue. The appellate court stated:

"In reaching its decision that it would only include residential primary telephone lines in counting the number of access lines eligible for support, the Commission essentially expressed its belief that the federal government had not intended for business or secondary residential lines to be included. We do not find the federal government's list of services eligible for support to be so restrictive.

Simply stated, universal support means universal support. More specifically, the FCC identified `voice grade access to the public switched network' as a service eligible for support. The Commission determined that the Illinois-supported access line list should mirror that of the FCC. We agree." 343 Ill.App.3d 517, 530, 277 Ill.Dec. 836, 797 N.E.2d 183.

The appellate court noted that the FCC's definition of "voice grade access" refers to a "basic telephone line" that allows a person to place and accept calls; this definition contains no primary lines limitation. 343 Ill.App.3d at 530-31, 277 Ill.Dec. 836, 797 N.E.2d 183.

The appellate court continued:

"To the extent that the Commission was concerned that urban residents should not be required to pay for `discretionary services' enjoyed by their rural counterparts, we ask, Why should access to phone lines — even `discretionary' phone lines — cost much more in a rural setting than in an urban setting? Furthermore, the assumption that all `secondary' lines are `discretionary' lines dismisses entities like schools and public libraries, which require affordable access on all their lines. The point of providing universal fund support service is to level the playing field. Theoretically, lower prices, competitive with what is offered in urban settings, will allow greater access to telephonic services. Our state and federal governments have established this greater access as a worthy goal. These extra access lines, whether or not they can be labeled `discretionary,' should not be inordinately more expensive than identical services in an urban setting. We find no legal justification for limiting the number of access lines eligible for this support." 343 Ill.App.3d at 531, 277 Ill.Dec. 836, 797 N.E.2d 183.

The appellate court also reversed the ICC's order reducing the amount of the state USF by the percentage of multiple lines and made its decision retroactive to March 13, 2002, the date of the ICC's order on rehearing. 343 Ill.App.3d at 531, 277 Ill.Dec. 836, 797 N.E.2d 183. We granted the ICC's petition for leave to appeal. 177 Ill.2d R. 315(a).

ANALYSIS

In this appeal, the ICC raises four issues: (1) whether the appellate court erred in deciding that the LECs need not file second rehearing petitions after the ICC granted in part and denied in part their first rehearing petitions; (2) whether the appellate court erred in reviewing de novo the ICC's decision to limit the state USF to primary residential and business lines; (3) whether the appellate court erred in rejecting the ICC's primary lines limitation and instead deciding the legislature intended the USF to support all lines; and (4) whether the appellate court erred in making its decision retroactive. We address these issues in turn.

The Second Rehearing Petition Requirement

The ICC argues that the appellate court undermined case law from this court requiring a putative appellant to file a second ...