LEVEL 3 COMMUNICATIONS OF VA. v. CORP. COM'N

• Decision Date: 05 November 2004
• Docket Number: Record No. 040481.
• Citation: 604 S.E.2d 71,268 Va. 471
• Parties: LEVEL 3 COMMUNICATIONS OF VIRGINIA, INC. v. STATE CORPORATION COMMISSION, et al.
• Court: Virginia Supreme Court

604 S.E.2d 71

268 Va. 471

LEVEL 3 COMMUNICATIONS OF VIRGINIA, INC. v. STATE CORPORATION COMMISSION, et al.

Record No. 040481.

Supreme Court of Virginia.

November 5, 2004.

Eric M. Page (T. Borden Ellis, Glen Allen; William P. Hunt, III; Christopher P. Yost, Washington; LeClair Ryan, Glen Allen, on briefs), for appellant.

John F. Dudley, Counsel to the Com'n; Andrew W. Cohen (William H. Chambliss, Gen. Counsel; Don R. Mueller, Associate Gen. Counsel; Peter C. DePaolis; Koonz, McKinney, Johnson DePaolis & Lifghfoot, Fairfax, on briefs), for appellees.

Present: All the Justices.

ELIZABETH B. LACY, Justice.

Level 3 Communications of Virginia, Inc. (Level 3), appeals an order of the State Corporation Commission (Commission) denying its application for certificates of public convenience and necessity to provide local and interexchange telecommunications services throughout the Commonwealth. Level 3's primary complaint is that the Commission misinterpreted the public interest criteria contained in Code § 56-265.4:4 and that the Commission's actions violated the Telecommunications Act of 1996. 47 U.S.C. § 151, et seq.

In reviewing a decision of the Commission, we apply well-established principles. The Commission is a specialized body with broad discretion in regulating public utilities. A decision by the Commission comes to this Court with a presumption of correctness. We will not substitute our judgment in matters within the province of the Commission and will not overrule the Commission's findings of fact unless they are contrary to the evidence or without evidentiary support. Virginia Gas Distribution Corp. v. Washington Gas Light Co., 201 Va. 370, 375, 111 S.E.2d 439, 443 (1959). However, we will reverse the Commission's order if it is based upon a mistake of law. Northern Virginia Electric Co-op. v. VEPCO, 265 Va. 363, 368, 576 S.E.2d 741, 744 (2003).

Level 3 is a wholly owned subsidiary of Level 3 Communications, LLC (Level 3 LLC). In March 1998, the Commission granted Level 3 LLC's certificates of public convenience and necessity to provide local and interexchange telecommunications services in the Commonwealth. (SCC report, Case no. PUC-1997-00197, 1998 SCC Ann. Rpt. 245 (March 31, 1998)). Level 3 LLC became embroiled in controversies when it laid fiber optic cable to provide those services without the permission of the property owners. Level 3 LLC decided that the controversies could be resolved by creating Level 3 as a Virginia public service corporation with the power of eminent domain to condemn the affected properties. Level 3 LLC intended to transfer all its Virginia utility assets to Level 3 after Level 3 received its own certificates of public convenience and necessity to provide local and interexchange telecommunications service.

Level 3 was incorporated as a Virginia public service corporation on February, 11, 2003 and filed its application for certificates of public convenience and necessity to provide interexchange and local telecommunications services on February 20, 2003. Pursuant to the Commission's order, Level 3 published notice of its application. In response, Brenda L. Stewart filed comments and asked for a hearing on Level 3's application. Ms. Stewart was one of the landowners involved in the disputes with Level 3 LLC. The request for a hearing was accompanied by a petition signed by other landowners who also had claims against Level 3 LLC.

The Commission held a two-day hearing and, on November 6, 2003, entered a final order denying Level 3's application without prejudice. Noting that Level 3 agreed that its management could be measured by the practices of Level 3 LLC's management, the Commission concluded that Level 3 had "not established that it possesses sufficient managerial resources, policies, and abilities such that granting the requested certificates would be in the public interest." Specifically, the Commission found that Level 3 LLC did not obtain the necessary permission to enter the land to construct its facilities and, after learning of the problems associated with the installation of the fiber optic cable, "Level 3 LLC failed to take reasonable steps" to identify potentially affected landowners and failed to "establish reasonable means" to address the problem. The Commission concluded that Level 3 LLC's actions involving the installation of the fiber optic cable and its efforts to identify and remedy "potential wrongdoings" related to the installation were not in the public interest. The Commission denied Level 3's motion for rehearing and Level 3 filed this appeal.

Level 3 maintains that the Commission denied its application for certificates of public convenience and necessity to provide local and interexchange telecommunications service in this Commonwealth because of the actions its parent company, Level 3 LLC, took in creating and failing to resolve controversies with landowners over the laying of fiber optic cable. Level 3 argues that denying its application on this basis violates the statutory standards of public interest required for granting such applications, the Commission's own rules for granting such applications, and the provisions of the Telecommunications Act of 1996. For the following reasons, we conclude that the Commission did not apply improper statutory standards, did not violate its rules, and did not violate the Telecommunications Act of 1996.

1. Statutory Standards of Public Interest

By statute, the Commission is required to make a finding that granting a certificate to provide local or interexchange telecommunications service is in the public interest. Code § 56-265.4:4(A), relating to interexchange service, provides in pertinent part:

The Commission may grant certificates to competing telephone companies ... for interexchange service where it finds that such action is justified by public interest, and is in accordance with such terms, conditions, limitations, and restrictions as may be prescribed by the Commission for competitive telecommunications services.

(emphasis added). Subsection (B)(1) of that section governs certificates for the provision of local exchange service and provides in pertinent part:

In determining whether to grant a certificate ... the Commission may require that the applicant show that it possesses sufficient technical, financial, and managerial resources. Before granting any such certificate, the Commission shall: (i) consider whether such action reasonably protects the affordability of basic local exchange telephone service ... and reasonably assures the continuation of quality local exchange telephone service; and (ii) find that such action will not unreasonably prejudice or disadvantage any class of telephone company customers or telephone service providers, including the new entrant and any incumbent local exchange telephone company, and is in the public interest.

(emphasis added). The parties agree that both provisions are unambiguous and, accordingly, the language is to be given its ordinary meaning and intent. Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87 (1985).

Level 3 asserts that the phrase "such terms, conditions, limitations, and restrictions as may be prescribed by the Commission" in subsection (A) modifies the public interest finding required by that subsection. According to Level 3, the Commission adopted a rule, 20 VAC 5-411-30, to implement this section. Therefore, Level 3 contends, the "terms, conditions, limitations, and restrictions" contained in the Commission's rule define the statutory public interest standard. We disagree.

The language of the statute does not support Level 3's position. The statute identifies two findings the Commission must make when granting an interexchange certificate. These findings are stated in the conjunctive. Under the plain language of the subsection, the requisite finding of "public interest" is an independent finding and not limited by other portions of the subsection. Accordingly, we reject Level 3's construction of Code § 56-265.4:4(A).

The public interest inquiry contained in subsection (B)(1), according to Level 3, is limited to consideration of whether the grant of the certificate will "unreasonably prejudice or disadvantage" telephone customers or other telephone service providers. Level 3 contends that subsection (B)(1) allows the Commission to require information about an applicant's management resources, but does not allow the Commission to consider that information as part of the public interest analysis when considering applications for provision of local exchange service. Again, we disagree.

The proper construction of the subsection requires that the Commission make two findings before a certificate can be granted. It must find that "such action," the granting of the certificate, (1) does not unreasonably prejudice or disadvantage other telephone customers and companies; and (2) is in the public interest. The language of the subsection does not limit the public interest inquiry to the impact of the certificate on other telephone customers and companies. Furthermore, in construing a statute, all the words used are presumed to have an effect. Raven Red Ash Coal Corp. v. Absher, 153 Va. 332, 335, 149 S.E. 541, 542 (1929). The subsection unequivocally requires the Commission make a finding regarding the impact of the certificate on other customers and companies. Requiring a second finding on the same basis as part of the public interest inquiry, as Level 3 asserts, would be superfluous and would render the language referring to a finding of public interest meaningless.

Accordingly, we conclude that the public interest determination required by subsection (B)(1) of Code § 56-265.4:4 is an independent finding, not limited by other portions of the subsection.

2. Commission Rules

Level 3 also argues that the Commission failed to follow its own rules. Level 3 maintains that, in considering management resources necessary for a local...