WITA v. WUTC, 26832-9-II.

• Decision Date: 08 March 2002
• Docket Number: No. 26832-9-II.,26832-9-II.
• Citation: 41 P.3d 1212,110 Wash.App. 498
• Court: Washington Court of Appeals
• Parties: WASHINGTON INDEPENDENT TELEPHONE ASSOCIATION on behalf of itself and its member companies, and CenturyTel of Washington, Inc., a Washington corporation, CenturyTel of Cowiche, Inc., a Washington corporation, McDaniel Telephone Company, a Washington corporation, Lewis River Telephone Company, a Washington corporation, Inland Telephone Company, a Washington corporation, Ellensburg Telephone Company, a Washington corporation, Kalama Telephone Company, a Washington corporation, Western Wahkiakum County Telephone Company, a Washington corporation, and The Toledo Telephone Co., Ind., a Washington corporation, Appellant, v. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION, Respondent, United States Cellular Corporation, Intervenor.

41 P.3d 1212

110 Wash.App. 498

WASHINGTON INDEPENDENT TELEPHONE ASSOCIATION on behalf of itself and its member companies, and CenturyTel of Washington, Inc., a Washington corporation, CenturyTel of Cowiche, Inc., a Washington corporation, McDaniel Telephone Company, a Washington corporation, Lewis River Telephone Company, a Washington corporation, Inland Telephone Company, a Washington corporation, Ellensburg Telephone Company, a Washington corporation, Kalama Telephone Company, a Washington corporation, Western Wahkiakum County Telephone Company, a Washington corporation, and The Toledo Telephone Co., Ind., a Washington corporation, Appellant, v. WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION, Respondent, United States Cellular Corporation, Intervenor.

No. 26832-9-II.

Court of Appeals of Washington, Division 2.

March 8, 2002.

Richard Allan Finnigan, Olympia, for Appellants.

Judith A. Endejan, Graham & Dunn Pc, Seattle, Shannon E. Smith, Olympia, for Respondent.

HUNT, J.

Washington Independent Telephone Association (WITA) appeals the superior court's denial of its petition for review of Washington Utilities and Transportation Commission's (WUTC) designation of U.S. Cellular Corporation (USCC) as an additional "eligible telecommunications carrier" (ETC) in several rural service areas already served by WITA members. We hold that (1) the WITA members have no constitutionally protected status as exclusive providers for their present service areas, and (2) WUTC's designation of USCC as an ETC meets the requisite legal criteria. We affirm.

FACTS

I. HISTORICAL BACKGROUND

Since Congress enacted the Communications Act of 1934 § 1, a basic goal of federal telecommunications regulation has been "universal service"—"world-wide wire and radio communication service with adequate facilities at reasonable charges." 47 U.S.C. § 151 (as amended).

Congress enacted the Telecommunications Act of 1996 to prohibit states from hindering competitive entry into local telecommunications markets. 47 U.S.C. § 253. One of the purposes of this Act was to promote universal service so that low-income and rural consumers can have available telecommunications and information services comparable to those of urban consumers at comparable rates. See 47 U.S.C. § 254(b)(3). The Act mandated that telecommunications providers contribute to a federal universal service fund on an equitable and nondiscriminatory basis. 47 U.S.C. § 254(b)(4). This fund provides federal universal service support¹ to eligible providers in rural and other high-cost areas.

II. ETC DESIGNATIONS

Competitive, licensed, telecommunications providers may offer telecommunication services in any given geographic area. But state commissions designate which of those providers qualify as ETCs, eligible to receive money from the federal universal service fund. 47 U.S.C. § 214(e). Any carrier that receives such ETC support must provide services specified by the Federal State Board on Universal Service.² In addition, before designating more than one ETC in a rural area, the commission must find that such an addition is "in the public interest." 47 U.S.C. § 214(e)(2).

During October 1997, many Washington telecommunications companies, including the WITA companies³ here and USCC,⁴ petitioned WUTC for designation as ETCs under 47 U.S.C. § 214(e). WUTC considered each of these petitions at open public meetings on November 26 and December 10, 1997.⁵

On December 23, 1997, WUTC designated companies as ETCs⁶ for their respective service areas.⁷ In this initial ETC Order, WUTC designated USCC as an ETC in ten exchanges.⁸ WUTC designated the non-rural companies as ETCs for the exchange areas in which they provided service. WUTC designated rural companies serving multiple exchanges as ETCs for their respective study areas.⁹

On August 14, 1998, WUTC and many rural companies, including the petitioner companies here, asked the Federal Communications Commission (FCC) to concur in WUTC's establishment of the ETC service areas, rather than their study areas, as the companies' respective exchange areas.¹⁰ On September 9, 1999, the FCC granted WUTC's and rural companies' petition to designate the individual exchanges of the rural companies as their service areas for purposes of their ETC status.

III. CHALLENGE TO ETC DESIGNATIONS

On December 7, 1999, USCC petitioned WUTC to amend its ETC status designation (Petition to Amend) to add 72 exchanges, seeking ETC designation for most USCC service areas in Washington State.¹¹ This petition was the first effort by a Washington carrier to seek status as an additional ETC in many rural areas already served by exclusive rural telephone companies, previously designated as ETCs.

WUTC included USCC's Petition to Amend in its publicly available Report of Filings Received, but WUTC did not serve the WITA companies with a copy of the petition. WUTC placed USCC's Petition to Amend on its publicly available agenda for consideration at its December 29, 1999, regularly scheduled, open, public meeting. Counsel for the WITA companies learned of the filing from WUTC's report of filings; he received a copy of the petition around December 14, 1999.¹²

On December 20, 1999, USCC asked WUTC to take action on its Petition to Amend by December 31, 1999, so that USCC would not lose federal universal service funding for the new areas for which it sought ETC designation.¹³ On December 28, 1999, the WITA companies moved to dismiss USCC's petition, arguing that (1) USCC is not a common carrier; (2) rather, it is the holding company that owns common carriers; and (3) therefore, USCC was not eligible for ETC designation. The WITA companies also protested USCC's petition on grounds that it did not meet the statutory requirements for ETC designation set forth in 47 U.S.C. § 214(e). USCC responded to the WITA companies' motion to dismiss and the protest.

WUTC staff recommended granting USCC's petition. Specifically, a four-page report by Mr. Bob Shirley, Regulatory Consultant, (1) stated the requirement that such a designation must be found to be "in the public interest," (2) considered the pros and cons of granting the designation, (3) concluded that the designation would be "in the public interest," and (4) recommended that USCC be designated as an ETC.

Both USCC and the WITA companies appeared at WUTC's December 29, 1999 open public meeting. WUTC first addressed the issue of whether it should dismiss USCC's petition because USCC was not the formal license holder. WUTC allowed USCC to amend its petition¹⁴ orally to add its affiliates, which technically hold the FCC licenses.¹⁵ The WITA companies objected because they were denied the opportunity to present sworn witnesses or to cross-examine USCC's witness. WUTC denied the WITA companies' motion to dismiss.

WUTC granted USCC's petition for ETC designation, with one commissioner dissenting.¹⁶ Thereafter, WUTC issued a Second Supplemental Order Granting Petition for Designation as ETC; WUTC explained that it was granting the Petition to Amend to implement its decision before year end and reserved for later entry an order containing formal statements of reasons. On January 27, 2000, WUTC issued its Third Supplemental Order, providing a detailed explanation and citations for its previous decision.

WITA filed an administrative appeal in Thurston County Superior Court. WITA tried to commence discovery in this action by serving notices of depositions and subpoenas on USCC, which moved to quash them. The superior court issued an Order Quashing Subpoenas and for Protective Order on July 7, 2000. (Br. of Intervenor at 11). WITA filed an interlocutory appeal on the discovery issue, which our Commissioner denied.¹⁷ WITA requested an Order to Supplement the Agency Record, which the superior court denied. The superior court also denied WITA's Petition for Review. WITA appealed.

ANALYSIS

I. STANDARD OF REVIEW

Although we review errors of law de novo, we accord substantial weight to an agency's view of the law that it administers. See Alpine Lakes Prot. Soc'y of Washington v. Washington State Dep't of Natural Resources, 102 Wash.App. 1, 14, 979 P.2d 929, (1999)

; Seattle Bldg. & Const. Trades Council v. The Apprenticeship and Training Council, 129 Wash.2d 787, 801, 920 P.2d 581 (1996) (deference to agency's interpretation of statute where the agency is charged with its administration and enforcement). When the agency has expertise in a specialized field of law and has quasi-judicial functions in that field, we accord substantial weight to its construction of statutory words, phrases, and legislative intent. Peacock v. Pub. Disclosure Comm'n, 84 Wash.App. 282, 286, 928 P.2d 427 (1996) (citations omitted).

"The burden of demonstrating the invalidity of agency action is on the party asserting invalidity." RCW 34.05.570(1)(a). We grant relief by altering the agency's action only if we determine that "a person seeking judicial relief has been substantially prejudiced by the action complained of." RCW 34.05.570(1)(d).

II. DUE PROCESS

WITA claims that WUTC erred as a matter of law and violated WITA's due process rights in failing to conduct an adjudicative hearing to consider the WITA companies' protest against USCC's petition for ETC designation in rural areas where WITA companies were already operating as ETCs.

To determine whether a procedure has violated due process, we engage in a two-step analysis. First, we must determine whether a liberty or property interest exists entitling an individual to due process protections. Board of Regents v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 2705, 33 L.Ed.2d 548 (1972). Second, if there exists such a constitutionally protected interest, we employ a balancing test to determine what process is due. Mathews v. Eldridge, 424 U.S. 319, 334-35, 96 S.Ct. 893, 902-03, 47 L.Ed.2d 18 (1976).

A. FEDERAL LAW

47 U.S.C. § 214(e)(2) authorizes state commissions to designate ETC's:

A State commission

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