Texas Justices Question PUC's USF Discretion

Market shifts made TUSF unsustainable as currently structured, said Texas Assistant Solicitor General Cody Rutowski. “In the absence of new legislation addressing this dilemma, the commission has exercised the considerable discretion and authority the legislature has given it to make the best out of a tough situation.”

Chief Justice Darlene Byrne interrupted, asking how the PUC squares what it did with Texas utility code requiring the agency to ensure consumers across the state can access similar telecom services at comparable prices. “What evidence in the record shows that the commission’s choices honor that balance and requirement?” she asked. Byrne said the commission chose not to assess higher fees and Gov. Greg Abbott (R) chose to veto a bill meant to make TUSF sustainable (see 2106210048). Abbott “had three other special sessions and did nothing,” she added. “Where do the citizens of Texas go to get comparable rates?" asked the judge. “Where is your discretion not to pay?”

A 75-cents increase to the TUSF surcharge could save rural customers from paying 100% more, said Byrne, sarcastically characterizing the possible surcharge increase as “whopping.” The fee could spike further, replied Rutowski. “Maybe it’s only 75 cents now, but it could go on to infinity.” The agency must ensure the fee is “just, fair and reasonable,” he said.

Justice Gisela Triana asked why the PUC didn’t open a rulemaking if it was concerned the fund was no longer solvent and the rate was no longer reasonable. “Wouldn’t that be the correct way to do it as opposed to just a change overnight?” Triana also asked about the utility code requiring “prompt and efficient disbursement” so telecom providers don’t have unnecessary cash flow disruption from government policy changes. That rule is about timing, but even if it was about amounts, the PUC determined telcos’ cash flow changes are “an unfortunate necessity.”

Discretion

Justice Chari Kelly asked if the PUC thinks it has “total discretion” to fund TUSF at any level it wants "and It doesn't matter if the fund is filled and overflowing or … there is barely anything in the pot?" Rutowski replied, “There may be some outer bound here.” If the commission stopped funding TUSF entirely and citizens lost landline service, “we would entrust the political branches to keep the PUC from doing that.”

“Kind of like a snowmageddon again in the telecommunications world,” responded Byrne, apparently referring to all three commissioners resigning amid fallout from the agency’s response to power outages during a recent winter storm (see 2103010063).

Triana asked each side if the 3rd Circuit may order rather than remand to the lower court. The court may order the PUC since there isn’t factual disagreement, said TTA counsel Craig Enoch: The court may order an agency to obey the legislature’s direction. “There is … nothing more to do than for the PUC to follow its rules, assess appropriate funding and distribute it immediately.” Rutowski agreed the court could order on the legal issue.

Commissioners merely left the surcharge at its current level, argued the PUC's attorney. “Inaction cannot lead to a regulatory taking.” TSTCI attorney Daniel Gibson disagreed: The PUC made the “most substantive change to TUSF in the last 20 years” by prioritizing different programs and prorating distribution based on the availability of funds without statutory direction.

The agency made a choice not to vote on increasing the fee, said Michael Heidler, representing Windstream and Lumen. Carriers of last resort must serve rural Texas, he said: When Texas “compels us to use our property to serve the public and then revokes the very public support they’ve already found we need to do that, that is a taking of private property without payment of just compensation." Telcos can’t make up for lost support by increasing rural rates, which are currently about $24, Heidler said. “Our customers wouldn’t be able to pay $800 a month for landline service.”

AMA; Campaign Trail

What the 3rd Circuit decides could resolve AMA TechTel’s similar complaint against the PUC, said Rutowski on another Triana question. Travis County District Judge Karin Crump granted a temporary injunction Nov. 17 against the commission, despite last summer dismissing TSTCI and TTA’s similar claims at issue in Wednesday’s argument (see 2111090073). Texas appealed Crump’s more recent decision to the 3rd Circuit the next day, getting an automatic stay on the injunction due to a state rule. The appellant’s brief is due Jan. 12 at the 3rd Circuit in case 03-21-00597-CV.

AMA TechTel will suffer irreparable harm without relief and is likely to succeed on the merits, wrote Crump in last month’s ruling. The PUC violated legislative mandate by paying less than 70% of the CLEC's proper monthly support, she said. “Because Defendants have rejected pleas for rulemaking” in violation of state utility code “and refused to fulfill the responsibilities the Legislature has mandated, the Court concludes that Plaintiff has no adequate remedy at law.”

Out campaigning to beat Abbott in 2022, ex-Rep. O’Rourke backed the TTA/TSTCI suit Tuesday in Lubbock, Texas. Abbott’s veto meant rural rates will increase $25-$100, combining phone and internet rates, O’Rourke said in recorded remarks. “It’s another example of how Greg Abbott is causing inflation, especially for rural communities.”

"The only meaningful change proposed" to TUSF was expanding fees in the state bill, "which was vetoed because it would have imposed a new fee on millions of Texans," an Abbott spokesperson emailed Wednesday: The governor signed six broadband bills, including about $500 million in spending, to expand service "especially in rural areas."