Telcos Urge Court to Make Texas PUC Fully Fund USF
The Texas Public Utility Commission can't decline to fully fund state USF when it disagrees with state policy, rural telco groups argued at Monday's livestreamed argument at the 250th District Court in Travis County. The Texas Statewide Telephone Cooperative Inc. (TSTCI) and Texas Telephone Association (TTA) sued the PUC in January because members face reductions in Texas USF (TUSF) support due to the PUC refusing to raise the contribution rate (see 2101260046).
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Suing is "the last thing we or our clients want," but there's "not a lot of choice left," with reduced payments having “incredibly dire consequences,” said Naman Howell attorney Dennis Donley for TTA. It’s illegal for the PUC to not entirely pay TUSF distributions, he said. The commission has discretion on how TUSF is funded but can't refuse to pay TUSF obligations in the meantime, he said. The PUC alone is responsible for setting the TUSF budget, collecting enough revenue to meet that budget and making prompt payments, Donley said. Telcos aren’t asking the court to set a contribution rate but to require the commission to fully fund state USF, noted Richards Elder attorney Daniel Gibson for TSTCI.
Judge Karin Crump asked about Texas claiming sovereign immunity from the suit. Commissioners aren’t immune because their decision to do nothing and let TUSF run out was “outside the law,” said Naman Howell attorney Stephanie Potter. It’s a “red herring” for the state to argue that telco groups must exhaust all administrative remedies before making Texas Administrative Procedure Act claims, she said: That’s only for appealing a commission order, when here, TTA and TSTCI seek to “enforce” existing agency orders. Plaintiffs exhausted administrative remedies, she added. Potter disagreed with the state that telcos should have filed rate cases before seeking relief.
Crump asked the state's lawyers what parties should have done procedurally to complain about reduced payments, since the telcos seek to enforce PUC orders. It’s problematic for parties to challenge inaction, responded Texas Assistant Attorney General Kellie Billings-Ray. "The rub is there is no order to challenge," she said. “They're asking for you to be the fact finder, and that is simply inappropriate in administrative law.”
Texas disagrees that state law or PUC regulations require the commission to "immediately impose whatever assessment rate would fully finance the fund, no matter how great the increase," said Texas Assistant AG Carl Myers. The hearing continued into the late afternoon, even as the judge said parties should consider wrapping it up.
Legislators are weighing bills meant to stabilize TUSF in the long term. HB-2667 by Rep. John Smithee (R) and SB-1246 by Sen. Charles Perry (R) would expand the contribution base to include VoIP. The surcharge must be technology neutral and “may be in the form of a fee or an assessment on revenues,” say HB-2667 and SB-1246. Texas lawmakers are weighing at least five other bills on state USF this session.
“The bills before the legislature are not going to solve the immediate problem," TTA Executive Director Mark Seale emailed us. The proposals "will help more fully fund USF," he said, "after they are implemented, which will take at least a year after their effective date.”
PUC membership is in flux. Gov. Greg Abbott (R) must appoint three new commissioners after all members resigned amid fallout from the agency’s response to power outages during the recent winter storm (see 2103180071). Abbott's office said it had no update, when we asked for comment now. Sen. Judith Zaffirini (D) has SB-857 to elect rather than appoint those commissioners.
Crump asked if the PUC plans a hearing on the TUSF problems. No, said Myers, but the PUC has been exchanging information with the legislature, which has had hearings. Most state lawmakers want companies to get fully paid, he said. Legislative talks don’t affect the court’s jurisdiction but show that courts aren’t the appropriate branch to find an answer, he said: Three new commissioners means “new eyes and perhaps a new approach.”