In re Bretton Woods Tel. Co.

• Decision Date: 28 November 2012
• Docket Number: No. 2011–892.,2011–892.
• Citation: 164 N.H. 379,56 A.3d 1266
• Parties: Appeal of BRETTON WOODS TELEPHONE COMPANY, INC. and another (New Hampshire Public Utilities Commission).
• Court: New Hampshire Supreme Court

164 N.H. 379

56 A.3d 1266

Appeal of BRETTON WOODS TELEPHONE COMPANY, INC. and another (New Hampshire Public Utilities Commission).

No. 2011–892.

Supreme Court of New Hampshire.

Argued: Sept. 12, 2012.

Opinion Issued: Nov. 28, 2012.

Devine, Millimet & Branch, P.A., of Manchester (Harry N. Malone & another on the brief, and Mr. Malone orally), for the petitioners.

Carolyn Cole, of Lebanon, by brief and orally, for intervenor segTEL, Inc.

Murtha Cullina LLP, of Boston, Massachusetts (Olga L. Gordon and Robert J. Munnelly, Jr. on the brief, and Mr. Munnelly orally), for intervenor New England Cable and Telecommunications Association, Inc.

LYNN, J.

The petitioners, Bretton Woods Telephone Company, Inc., Dixville Telephone Company, Dunbarton Telephone Company, Inc., and Granite State Telephone, Inc., four exempt incumbent rural local exchange carriers (RLECs), appeal an order of the New Hampshire Public Utilities Commission (PUC) denying their motion to rescind or declare null and void registrations of competitive local exchange carriers (CLECs) authorized by the PUC to engage in business as telephone utilities in the service territories of RLECs. We affirm.

This appeal follows our decision in Appeal of Union Telephone Co., 160 N.H. 309, 999 A.2d 336 (2010). In that case, we held that an incumbent RLEC is entitled to prior notice and a hearing under RSA 374:26 (2009) before the PUC grants authority to a CLEC to enter the service territory of the RLEC. Appeal of Union Tel. Co., 160 N.H. at 319, 999 A.2d 336.

As a matter of statutory interpretation, we rejected the argument that RSA 374:22–g (2009), enacted after RSA 374:26, supplanted this requirement of prior notice and a hearing. Id. RSA 374:22–g provides:

I. To the extent consistent with federal law and notwithstanding any other provision of law to the contrary, all telephone franchise areas served by a telephone utility that provides local exchange service, subject to the jurisdiction of the commission, shall be nonexclusive. The commission, upon petition or on its own motion, shall have the authority to authorize the providing of telecommunications services, including local exchange services, and any other telecommunications services, by more than one provider, in any service territory, when the commission finds and determines that it is consistent with the public good unless prohibited by federal law.

II. In determining the public good, the commission shall consider the interests of competition with other factors including, but not limited to, fairness; economic efficiency; universal service; carrier of last resort obligations; the incumbent utility's opportunity to realize a reasonable return on its investment; and the recovery from competitive providers of expenses incurred by the incumbent utility to benefit competitive providers, taking into account the proportionate benefit or savings, if any, derived by the incumbent as a result of incurring such expenses.

III. The commission shall adopt rules, pursuant to RSA 541–A, relative to the enforcement of this section.

We reasoned that "the legislative intent underlying RSA 374:22–g ... is to require the PUC to conduct a searching inquiry before determining whether it is consistent with the public good to allow more than one provider to provide telecommunications services in a single area." Appeal of Union Tel. Co., 160 N.H. at 319, 999 A.2d 336. We noted, however, that § 253(a) of the federal Telecommunications Act of 1996, 47 U.S.C. § 253(a) (2006), may preempt the requirement of notice and a hearing, and remanded this issue to "the PUC to determine in the first instance whether federal law preempts this state statutory requirement."¹ Appeal of Union Tel. Co., 160 N.H. at 323, 999 A.2d 336. On remand, the parties settled before the PUC could resolve this issue.

The petitioners here then instituted the underlying proceeding and requested that the PUC rescind or declare null and void the registrations of CLECs authorized by the PUC to operate as telephone utilities in the service territories of RLECs. Citing RSA 374:26 and RSA 374:22–g, among other statutes, the petitioners alleged that the PUC, before issuing the registrations, had failed to provide notice, hold hearings, and determine whether allowing such competition would be consistent with the public good. In light of our decision in Appeal of Union Tel. Co., the petitioners specifically argued that federal law does not preempt these requirements.

To develop a factual record upon which to base its decision, the PUC granted petitions to intervene of segTEL, Inc. (segTEL), a CLEC authorized by the PUC to operate in service territories of RLECs, and New England Cable and Telecommunications Association (NECTA), a regional trade association representing private telecommunications providers. As part of the factual record, the PUC accepted briefing, testimony, and data requests and responses from the parties. Assuming no preemption, the parties and PUC staff stipulated to a multi-step adjudicative process that they understood New Hampshire law to require for "CLEC registration requests in a telephone utility service territory." According to the petitioners, the stipulation

describ[es] the procedures to be followed in proceedings related to CLEC entry into RLEC territories should the [PUC] find RSA 374:26 and RSA 374:22–g not preempted ... [and] provide[s] a baseline for the [PUC] to determine whether these CLEC entry proceedings would be so unduly burdensome so as to "prohibit or have the effect of prohibiting" telecommunications services in violation of Section 253(a) [of the Telecommunications Act].

The stipulation provides:

a. Except as provided in Puc Rules Part 431, regarding registration in the service territory of a non-exempt [incumbent local exchange carrier], the CLEC will request entry into a telephone utility service territory via petition, application or other form of request.

b. Public notice, commonly in the form of a Commission Order of Notice, will be published relative to the CLEC request and the nature of applicable Commission review. This Notice will be served on the affected RLECs serving the service territories for which entry is requested.

c. The affected RLEC will be a mandatory party and other interested parties can petition to intervene in the proceeding.

d. An initial Commission pre-hearing conference and technical session will be held to decide interventions and determine a schedule for procedural steps. e. The RLEC and other parties will be afforded an opportunity to file testimony (initial and, in certain cases, rebuttal) on any relevant factor listed in RSA 374:22–g and other facts material to the CLEC request.

f. The parties will have the opportunity to propound discovery on testimony and other evidence offered prior to a public evidentiary hearing.

g. The parties will have the opportunity for a public evidentiary hearing to review and address evidence submitted for possible inclusion in the record.

h. The parties can file briefs and/or requests for findings of fact or law.

i. The Commission will issue an Order pursuant to RSA 363:17–b.

j. Parties can petition for reconsideration or appeal of an adverse Commission ruling pursuant to RSA 541:1, RSA 541:6 or other applicable appeal statutes.

The PUC ultimately denied the petitioners' request and ruled that § 253(a) of the Telecommunications Act preempts RSA 374:26 and RSA 374:22–g, II. Section 253(a) preempts state and local laws, regulations, and requirements that "prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." 47 U.S.C. § 253(a) (2006). With respect to the notice and hearing requirement of RSA 374:26, the PUC found that in enacting § 253(a), "Congress determined that it is for the public good to allow more than one carrier to operate in any territory," and that "[b]ecause the public good determination has already been made by Congress ... no hearing is ‘due’." The PUC also found preempted each of the factors enumerated in RSA 374:22–g, II for determining whether allowing a telecommunications provider to enter the service territory of another provider would be consistent with the public good. Addressing specifically the factors requiring consideration of the incumbent provider's opportunity to earn a reasonable return and ability to recover net expenses incurred because of competition, the PUC concluded that the "threat of financial harm cannot serve to deny entry to competitors." With regard to the factor of fairness, the PUC expressed concern that the state statute does not make clear how to evaluate fairness, or "how to assess ‘fairness' to subsequent competitors after one has been granted authority to enter." The PUC also found that it was not well-positioned to address the factor of economic efficiency because "[t]he marketplace will be the ultimate determinant whether a competitor is operating in an economically efficient manner, and it is not for the Commission to make that determination in the context of [a] competitor's petition for entry." Finally, with regard to the factors of universal service and carrier of last resort obligations, the PUC reasoned the Telecommunications Act does not allow the states to prohibit competitive entry because of these factors.

The PUC next determined that RSA 374:26 and RSA 374:22–g, II are not saved by § 253(b) of the Telecommunications Act, which allows states to impose requirements on a competitively neutral basis that are consistent with the Telecommunications Act's universal service provisions and "necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers." 47 U.S.C. § 253(b) (2006). The PUC found that § 253(b) did not save RSA 374:26 because competitively neutral requirements are necessarily of general applicability and cannot be...