TracFone Wireless v. NEB. PUB. SERV. COM'NTracFone Wireless v. NEB. PUB. SERV. COM'N
I. NATURE OF CASE
The Enhanced Wireless 911 Services Act (911 Act)1 requires wireless telecommunications carriers to collect a surcharge on wireless service for the purpose of implementing enhanced 911 emergency dispatch service, which can be loosely described as providing public safety agencies with identification and location information for wireless 911 callers.2 The appellаnt, TracFone Wireless, Inc. (TracFone), is in the business of selling prepaid wireless service. At issue in this appeal is the method by which TracFone should be required to collect the 911 Act surcharge from its prepaid wireless customers.
II. BACKGROUND
The 911 Act expresses
the intent of the Legislature that . . . all users of prepaid wireless services pay an amount comparable to the amount paid by users of wireless services that are not prepaid in support of statewide wireless enhanced 911 service. It is also the intent of the Legislature that whenever possible such amounts be collected from the users of such prepaid wireless services.3
Under the 911 Act, the Nebraska Public Service Commission (Commission) is to establish surcharges for prepaid wireless service comparable to the surcharge assessed on other users of wireless services and develop methods for collection and remittance of surcharges from wireless carriers offering prepaid wireless services.4 The Commission did so in a June 19, 2007, order, providing three preapproved methods that had been established by a previous version of the 911 Act:
a) The wireless carrier shall divide the total earned prepaid wireless telephone revenue received by the wireless carrier within the monthly reporting period by fifty dollars and multiply the quotient by the surcharge amount;
b) The wireless carrier shall collect on a monthly basis the surcharge from each customer‘s active, prepaid account. A customer with two or more active, prepaid accounts shall be assessed a separate surcharge for each active, prepaid account; or c) A wireless carrier shall remit the surcharge upon the activation of the active prepaid account and upоn each replenishment of additional minutes purchased by the prepaid customer.5
The June 19 order also noted that “differences between various prepaid wireless carriers may require additional methods be made available,” so it provided that “any prepaid wireless carrier wishing to utilize a method different than the three adopted herein, shall file with the Commission for approval a detailed description of the method it wishes to use.”
TracFone filed such a request. TracFone explained that its services were entirely prepaid. Therefore, it proposed to collect a surcharge from each customer to whom it directly sold prepaid wireless service, in an amount equal to 1 percent of the purchase price. TracFone estimated that the average wireless customer spends approximately $50 per month on wireless service and pays a 50-cent surcharge6; therefore, a 1-percent surcharge on TracFone customers was, according to TracFone, comparable. TracFone explained that unlike other wireless service providers, TracFone could not deduct a surcharge directly from the customer‘s account balance, because the customer‘s prepaid account balance was stored in the customer‘s telephone, in the possession of the customer. TracFone also noted that it would be unable to collect a surcharge from customers who did not have a positive balance on the collection date, and that customers would be able to evade the surcharge by waiting until after the collection date to recharge their balances.
The Commission rejected TracFone‘s proрosed alternative. The Commission noted that only 10 to 15 percent of TracFone‘s revenues are attributable to direct sales. The remaining sales of prepaid TracFone wireless service time are made by independent retail stores, such as Wal-Mart and Radio Shack. The Commission concluded that TracFone‘s proposal would not result in the remittance of surcharges comparable to those established for users of non-prepaid wireless service, because the surcharge would fall only on those users who purchased services directly from TracFone.
TracFone submitted a second proposal. This time, TracFone proposed to collect a 1-percent surcharge on every retail sale of TracFone service. TracFone would collect the surcharge on purchases made directly from it, and when service was purchased from an independent retail vendor, the vendor would collect the surcharge and give it to TracFone, which would in turn remit the surcharge to the 911 Act fund. But the Commission rejected TracFone‘s second proposal, reasoning that it did not have jurisdiction over retail vendors whо were not telecommunications carriers. TracFone was ordered to use one of the three methods approved in the June 19, 2007, order or, if it wished to submit another alternative, use one of the three approved methods in the interim.
TracFone filed a petition for judicial review under the Administrative Procedure Act (APA).7 The district court agreed
III. ASSIGNMENTS OF ERROR
TracFone assigns that the district court erred in
(1) determining that TracFone failed to demonstrate that it was impossible for it to collect the surcharge from users of its wireless service who purchase its service through independent retailers;
(2) determining that the 911 Act requires TracFone to pay the surcharge established by the act even though TracFone has no means to collect the surcharge directly from users of its wireless service who purchase its service through independent retailers;
(3) determining that TracFone‘s first alternative collection method did not comply with the 911 Act;
(4) determining that TracFone‘s second alternative collection method did not comply with the 911 Act;
(5) relying upon material not found in the record of the Commission to rule that TracFone‘s second alternative collection method did not comply with the 911 Act;
(6) determining that TracFone should be required to adopt one of the three established methods approved by the Commission for the collection of the 911 Act surcharge; and
(7) determining that the Commission‘s interpretation of the 911 Act was not preempted by federal law.
IV. STANDARD OF REVIEW
A judgment or final order rendеred by a district court in a judicial review pursuant to the APA may be reversed, vacated, or modified by an appellate court for errors appearing on the record. When reviewing an order of a district court under the APA for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.8
The meaning of a statute is a question of law, and a reviewing court is obligated to reach its conclusion independently of the court below and the administrative agency.9
V. ANALYSIS
Because it underlies many of the parties’ more specific arguments, we begin with a more complete examination of
(1) Each wireless carrier shall collect:
(a) A surcharge of up to seventy cents, except as provided in subdivision (1)(b) of this subsection and as otherwise provided in this section with respect to prepaid wireless service, on all active telephone numbers or functional еquivalents every month from users of wireless service and shall remit the surcharge in accordance with section 86-459; or
(b) A surcharge of up to fifty cents, except as otherwise provided in this section with respect to prepaid wireless service, on all active telephone numbers or functional equivalents every month from users of wireless service whose primary place of use is in a county containing a city of the metropolitan class and shall remit the surcharge in accordance with section 86-459. The wireless carrier is not liable for any surcharge not paid by a custоmer.
(2) Except as otherwise provided in this section, the wireless carrier shall add the surcharge to each user‘s billing statement. The surcharge shall appear as a separate line-item charge on the user‘s billing statement and shall be labeled as “Enhanced Wireless 911 Surcharge” or a reasonable abbreviation of such phrase.
(3) If a wireless carrier, except as otherwise provided in this section, resells its service through other entities, each reseller shall collect the surcharge from its customers and shall remit the surcharge in accordance with section 86-459.
(4) It is thе intent of the Legislature that, effective July 1, 2007, all users of prepaid wireless services pay an amount comparable to the amount paid by users of wireless services that are not prepaid in support of statewide wireless enhanced 911 service. It is also the intent of the Legislature that whenever possible such amounts be collected from the users of such prepaid wireless services.
(5) The [C]ommission shall establish surcharges comparable to the surcharge assessed on other users of wireless services and shall develop methods for collection and remittаnce of such surcharges from wireless carriers offering prepaid wireless services.
(6) The duty to remit any surcharges established pursuant to subsection (5) of this section is the responsibility of the wireless carrier.
As will become evident, the interpretation of
1. TRACFONE IS REQUIRED TO REMIT SURCHARGES REGARDLESS OF WHETHER THEY ARE DIRECTLY COLLECTED FROM CUSTOMERS
TracFone‘s first two assignments of error are related. First, TracFone contends that it is impossible for it to collect surcharges directly from its customers. And second, TracFone contends that if it cannot collect a surcharge directly from its customers, it is not required to remit the surcharge. In that regard, TracFone relies on
But
When this statute is read as a whole, it is apparent that
Instead,
TracFone counters with an attempt to distinguish a duty to “pay” the surcharges with the duty to “remit” the surcharges. TracFone cites no authority for its rather novel interpretation of the word “remit,” nor are we aware of any. To “remit” money is simply to transmit or send it as payment.13 The Legislature‘s use of the word “remit” to describe a wireless carrier‘s duty to ensure that the Commission receive the surcharges provides no basis for distinguishing between surcharges collected directly from postpaid wireless customers and surcharges assessed for prepaid wireless service.
TracFone also relies on
In sum, TracFone‘s argument is that if a wireless carrier is unable to collect a surcharge directly from a customer, the Legislature intended for neither the carrier nor the customer to pay it. This is сontrary to the stated intent of the 911 Act, and to a commonsense reading of the statutory language. TracFone‘s choice of business model does not give it license to throw up its hands and pay nothing. Instead, the surcharge should be collected from a wireless carrier‘s prepaid customers
2. COMMISSION DID NOT ERR IN REJECTING TRACFONE‘S PROPOSED ALTERNATIVE METHODS OF COLLECTION
TracFone‘s next two assignments of error are directed at the Commission‘s rejection of its two proposed alternative methods of collecting the surcharge. We address each proposed alternative in turn.
(a) TracFone‘s First Proposed Alternative Collection Method Was Inconsistent With § 86-457
TracFone‘s first proposed alternative collection method was to collect a 1-percent surcharge on the purchase price of each sale of prepaid wireless service purchased directly from TracFone. The Commission rejected this alternative. In arguing that the Commission erred, TracFone relies on
But only 10 to 15 percent of TracFone‘s sales are direct. TracFone‘s remaining sales are made through independent retailers, and under TracFone‘s first proposed alternative collection method, no surcharge would be collected from, or paid for, those sales. This would be contrаry to the expressed intent of the Legislature that “all users of prepaid wireless services pay an amount comparable to the amount paid” by other wireless customers.16 As discussed above, TracFone is not relieved of the responsibility for remitting the surcharge, regardless of whether it is “possible” to collect the surcharge directly from its customers. Therefore, the Commission did not err in rejecting this proposed alternative, and TracFone‘s assignment of error to the contrary is without merit.
(b) TracFone‘s Second Proposed Alternative Collection Method Was Outside Commission‘s Jurisdiсtion
TracFone‘s second proposed alternative collection method was essentially a supplemented version of the first. TracFone proposed to collect a 1-percent surcharge on the purchase price of each sale of prepaid wireless service purchased directly from TracFone and require its third-party vendors to collect a 1-percent surcharge from users at the point of sale, which would be remitted to TracFone for remittance to the Commission. The Commission rejected this alternative as being outside its regulаtory authority.
The Commission‘s jurisdiction extends to a wide variety of commercial activities: common carriers; grain dealing and storage; manufactured homes, modular housing units, and recreational vehicles; motor carrier registration and safety; pipeline carriers and rights-of-way; railroad carrier safety; telecommunications carriers; transmission lines and rights-of-way; water service; and certain natural gas public utilities.17 Nothing in
Instead, TracFone‘s argument rests entirely upon
But as explained above,
And the legislative history of the 911 Act buttresses this conclusion, indicating that the Legislature intentionally “omit[ted] any reference to collection of the surcharge by the retail industry who resells this prepaid wireless service,” because it “did not believe that the ... Commission should have the authority over the retail industry to collect a telecommunications surcharge.”18 The legislative history explains that under
Because TracFone‘s second proposed alternative was beyond the Commission‘s authority to adopt or enforce, the Commission did not err in rejecting it. We find no merit to TracFone‘s fourth assignment of error.
3. DISTRICT COURT DID NOT ERR IN CONSIDERING LEGISLATIVE HISTORY
The district court, like this court, found the legislative history of the 911 Act to support its construction of the statute. TracFone argues that because under the APA, “the agency record shall constitute the exclusive basis for agency action in contested cases under the act and for judicial review thereof,”21 the district court could not consult materials outside the record. And TracFone argues that the legislative history was an “adjudicative fact,”22 which we have said a district court cannot judicially notice in reviewing an administrative order.23 TracFone also contends that the district court erred in referring to Federal Communications
But we have never construed the APA to preclude a district court from researching the law, for obvious reasons. And the legislative history of a statute is not an adjudicative fact within the meaning of Neb. Evid. R. 201. “Adjudicative facts” within the meaning of rule 201 are simply the facts developed in a particular case, as distinguished from “legislative facts,” which are established truths, facts, or pronouncements that do not change from case to case but apply universally.24 The adjudicative facts are those to which the law is applied in the process of adjudication.25 Legislative histоry is among the most literally “legislative” of facts, and it is well established that it is judicially noticeable by this court and by the district court in an administrative proceeding.26
TracFone also argues that the court should not have considered legislative history, because
In short, the district court did not err in conducting legal research or consulting legislative history. We find no merit to TracFone‘s fifth assignment of error.
4. COMMISSION DID NOT ERR IN REQUIRING TRACFONE TO USE COLLECTION METHOD PROVIDED IN JUNE 19, 2007, ORDER
In its order rejecting TracFone‘s second proposed alternative collection method, the Commission ordered TracFone to “immediately adopt and utilize one of the three established methods set forth in the June 19, 2007 order.” The Commission ordered TracFone, if it wished to propose another alternative method, to “continue to utilize one of the three previously adopted methods ... pending Commission approval of any alternative method it may propose.”
TracFone asserts that the Commission‘s order runs contrary to the Legislature‘s purported intent to permit collection methods other than the three adopted by the Commission, which three had previously been required by statute, then repealed in favor of the Commission‘s regulatory process.28 But, to begin with, we see nothing in the statute that requires the Commission to permit wireless carriers to suggest their own methods of collecting surcharges. Instead, the statute simply requires the Commission to establish surcharges and develop methods for collection and remittance.29 The plain language of
And more to the point,
In short, nothing in
5. COMMISSION‘S DETERMINATION IS NOT PREEMPTED BY FEDERAL LAW
Finally, TracFone argues that the Commission‘s determination is preempted by federal law. The federal Telecommunications Act of 1996 provides in part:
(a) In general
No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrаstate telecommunications service.
(b) State regulatory authority
Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this title, requirements 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.
(c) State and local government authority
Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.
(d) Preemption
If, after notice and an opportunity for public comment, the [Federal Communications] Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal requirement that violates subsection (a) or (b) of this section, the [Federal Communications] Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency.30
TracFone argues that the Commission‘s order has the effect of prohibiting its ability to provide telecommunications service, and is not competitively neutral, so the order is expressly preempted by Congress’ explicit declaration.31
We explained in In re Application of Lincoln Electric System that § 253(a) imposes a substantive limitation on state and local governments, while § 253(b) and (c) are “safe harbors” or exceptions to the general prohibition stated in § 253(a).32 This means that the “safe harbor” provisions of subsections (b) and (c) are affirmative defenses to preemption of state and local exercises of authority that would otherwise violate subsection (a), and are not
And TracFone has not demonstrated that the 911 Act, or the Commission‘s implementation of it, is prohibitive. Although TracFone claims that it is only required to demonstrate “a possible prohibition on the provision of services,”34 more recent federal authority recognizes that under the plain language of § 253(a), to demonstrate preemption, a party must show actual or effective prohibition, rather than the mere possibility of prohibition.35 No such showing was made here. Section 253(a) has been held to be violated by circumstances such as outright prohibition of telecommunications service,36 a significantly burdensome application process,37 an extensively delayed application process,38 or the imposition of costs and fees that would reduce the carrier‘s profit by 86 percent.39 This case presents nothing comparable.
TracFone argues that it suffers from an “inequitable competitive marketplace” because it is required “to pay the Surcharge `out of pocket’ when its competitors collect the Surcharge from their customers through billed line items which are clearly identified as being government-imposed charges, thеreby suffering no adverse economic consequence.”40 But nothing prevents TracFone from recouping the surcharge from its customers or retailers, or explaining its prices to them. We are not entirely convinced that consumers are persuaded by such line items to overlook the bottom-line price that they have to pay for wireless service. A potential customer‘s choice to purchase from TracFone‘s competition is not a prohibition of TracFone‘s ability to provide telecommunications service.41
We find nothing in the record to suggest that TrаcFone was prohibited from providing telecommunications service within the meaning of § 253(a). Having reached that conclusion, we need not consider other complicated questions implicated by TracFone‘s argument, such as whether the 911 Act is competitively neutral within the meaning of § 253(c), whether private parties have a right to enforce § 253, and whether the doctrine of primary jurisdiction should apply.42 We find no merit to TracFone‘s final assignment of error.
The Commission did not err in its construction of the 911 Act, in its rejection of TracFone‘s proposed alternative collection methods, or in requiring TracFone to comply with its аpproved collection methods pending approval of any other proposal. The district court did not err in affirming those conclusions, nor did the court err in relying on legal research and legislative history in doing so. And neither the 911 Act nor the Commission‘s application of it is preempted by federal law. Therefore, we affirm the judgment of the district court.
AFFIRMED.