Order Denying Verizon's Motion to Dismiss

Synopsis: This order denies Verizon’s motion to dismiss, finding that Petitioners have alleged facts which, if proven, could support their request for an order directing Verizon to extend its territory to serve Petitioners’ properties.

MEMORANDUM

1 Nature of Proceeding. Docket No. UT-050778 is a petition by persons in eight households near Index, Washington requesting the Commission to direct Verizon to expand its service territory to include petitioners’ properties.

2 Appearances. Petitioners Douglas Rupp, ... appeared pro se. Judith A. Endejan, Graham & Dunn, Seattle, Washington, represents Verizon Northwest, Inc. Lisa W. Gafken, Assistant Attorney General, represents the Commission’s regulatory staff (Commission Staff or Staff).

3 Procedural History. On May 20, 2005, a group of property owners petitioned the Commission for an order extending the exchange area boundary of Verizon’s exchange near Index, Washington, to include their properties. Petitioners currently do not have wireline telephone service. On June 13, 2005, Verizon answered the petition and moved to dismiss the petition.

4 The Commission convened a prehearing conference on July 20, 2005, before Administrative Law Judge Karen M. Caillé, at which, among other things, it set a pleading schedule to address the motion to dismiss, set a schedule for filing testimony, hearing dates, and granted motions to amend the petition. Counsel for Commission Staff stated that Staff’s participation would be limited to policy issues, but volunteered to address the question of the Commission’s jurisdiction in this proceeding.

5 Motion to Dismiss Petition. Petitioners filed a Response to Verizon’s motion to dismiss on June 24, 2005. According to the schedule set forth in Order No. 01—Prehearing Conference Order, Petitioners filed a Supplemental Response to the motion on August 3, 2005, Commission Staff filed a Response to the motion to dismiss on August 17, 2005, and Verizon filed a Reply to Petitioners’ Supplemental Response.

6 Applicable Rules and Statutes. WAC 480-07-380(1) (Motion to dismiss), Washington Superior Court Civil Rule 12(b) and (c), RCW 80.36.230 (Exchange areas for telecommunications companies), RCW 80.36.240 (Exchange areas for telephone companies—Procedure to establish), and 47 U.S.C. § 214(e)(3) are set forth in Attachment A to this Order.


DISCUSSION AND DECISION

7 This Order addresses a procedural motion filed by Verizon, a Motion to Dismiss. The Order does not address the substance of the Petition.

8 Standard of Review. WAC 480-07-380 (1) (a) provides that a party may move to dismiss another party’s claim or case on the asserted basis that the opposing party’s pleading fails to state a claim on which the Commission may grant relief. In considering a motion made under WAC 480-07-380 (1) (a), the Commission will consider the standards applicable to a motion made under Civil Rule (CR) 12 (b) (6) and 12 (c) of the Civil Rules for Superior courts. No dismissal for failure to state a claim should be granted unless it appears, beyond doubt, that Petitioners can prove no set of facts in support of their claim that would entitle them to relief.[1]

9 Motion to Dismiss. Verizon contends that the Commission must dismiss the petition because (1) the Petitioners cannot prove Verizon violated any law or legal duty; (2) the Commission has no jurisdiction to change Verizon’s exchange area boundary; and (3) neither Congress nor the Commission can authorize an unconstitutional taking of Verizon’s property.

(1) Petitioners cannot prove Verizon violated any law or legal duty

10 Verizon contends that under Prescott Tel. &Tel. Co. v. UTC[2] Petitioners would have to prove that Verizon has violated the law or that its service area was unreasonable before the Commission would entertain a request to alter exchange area boundaries.[3] Verizon argues that the petition does not set forth any facts that show it has violated any legal duty or that its serving area is unreasonable, therefore, the petition should be dismissed for failure to state a claim.[4]

11 In response, Staff and Petitioners challenge Verizon’s reliance on Prescott to support a requirement that Petitioners must demonstrate that Verizon has violated the law or a legal duty for the Commission to consider Petitioners’ request to extend Verizon’s service territory. They argue that Prescott addressed the issue of whether the Commission properly declined to order the transfer of territory in one carrier’s exchange area to another carrier’s exchange area or, in the alternative, that the territory be declared open. Thus, the Prescott case is about removing area from a company’s exchange area, not adding territory.[5]

12 Staff notes that a second argument raised by Prescott complained that Pacific Northwest Bell (PNB) had not installed facilities in the area, and that PNB was in violation of RCW 80.36.080, and therefore, subject to a complaint pursuant to RCW 80.04.110, which allows complaints of any act taken by a public service company in violation of the law.[6] Staff reports that the Court held PNB did not violate RCW 80.36.080, because PNB was ready to provide service if requested. The Court determined that the Commission properly dismissed Prescott’s complaint.

13 Conclusion. This Order rejects Verizon’s argument that the Commission cannot grant the relief requested in the petition because there is no allegation that Verizon violated any statute or legal duty. The Prescott case does not stand for a rule of law that the Commission is without power to regulate public service companies except where a company is alleged to have violated a law or duty. Moreover, the public service laws do not require the Commission to find that a public service company violated the law or a legal duty before the Commission can exercise its jurisdiction to enforce the public service laws.

(2) The WUTC has no jurisdiction to change Verizon’s exchange area boundary

14 Verizon contends that no state law or federal law provides the Commission with authority to order Verizon to extend its exchange area boundaries to serve the Petitioners.[7] Verizon argues that Petitioners misconstrue RCW 80.36.230 (Exchange areas for telecommunications companies) and RCW 80.36.240 (Exchange areas for telephone companies—Procedure to establish) as granting the Commission power to prescribe telecommunication exchange areas and to expand such boundaries when warranted. According to Verizon, the language in these statutes cannot be read to give the Commission the authority to force a company to serve beyond its dedicated service area.[8]

15 Verizon interprets the act of “prescription” in RCW 80.36.230 to mean “to set up rules that allow telecommunications companies to define the limits of where they are willing to serve.”[9] Verizon cites the Prescott case as support for its position that RCW 80.36.230 does not give the Commission substantive power to impose new geographical service obligations. According to Verizon, it has complied with the appropriate tariff regulations at issue under Prescott because it has on file tariff exchange area maps according to WAC 480-80-102(5)(b); therefore, Verizon’s local exchange areas defined in its tariffs may not be changed.[10]


16 Verizon cites Electric Lightwave Inc. (ELI) v. WUTC[11] and a Commission decision concerning waiver of a service extension rule[12] in further support of its claim that RCW 80.36.230 was not intended as a grant of authority to the Commission to expand a carrier’s service obligations. Verizon also references decisions from other jurisdictions and decisions relating to other industries which do not address statutory provisions similar to RCW 80.36.230 and RCW 80.36.240.[13]

17 Verizon disputes Petitioners claim that 47 U.S.C. § 214(e)(3) requires Verizon to provide them with telecommunications service. Verizon argues that the statute only applies where services are supported by federal universal service support mechanisms under 47 U.S.C. § 254(c). According to Verizon, it has no Washington intrastate services that are supported by federal universal service support mechanisms. Therefore, the provisions of § 214(e)(3) do not come into play.[14]

18 Verizon also argues that the petition fails to establish that Petitioners constitute an “unserved community” under 47 U.S.C. § 214(e)(3). Verizon contends that twelve owners of property in a remote forest do not create a community, particularly if several of the properties contain only vacation places.[15]

19 Staff and Petitioners insist that the Commission has jurisdiction to order Verizon to alter its exchange area boundaries based on the plain language of RCW 80.36.230. They assert that the Commission’s express authority to prescribe a telecommunication company’s exchange area or territorial boundaries is further confirmed in RCW 80.36.240.[16]

20 Staff and Petitioners contend that Verizon’s reliance on Prescott as interpreting RCW 80.36.230 and 80.36.240 to mean that the Commission prescribes exchange area boundaries only by accepting tariff maps filed by telecommunications companies is misplaced. Instead, the Court in Prescott rejected the argument that a telecommunications company’s filing of an exchange map as part of its tariff filing is sufficient to prescribe the exchange area.[17] The Court held that “if the WUTC is to establish any new exchange areas, we hold it must do so by issuance of an order, not be mere acceptance of tariffs.”[18]

21 Staff and Petitioners observe that Verizon mistakenly relies on ELI v. WUTC to support its position that RCW 80.36.230 was not intended as a grant of authority to the Commission to expand a carrier’s service obligations.[19] Rather, the Court in ELI held that the Commission does not have authority to grant a telecommunications company the exclusive right to provide service in a specific geographic area.[20] Staff and Petitioners both distinguish the other cases cited by Verizon in its motion to dismiss, noting that many of the cases are old, from other jurisdictions, refer to different industries, pre-date the Telecommunications Act of 1996, and do not address statutory provisions similar to RCW 80.36.230.[21]

22 Staff and Petitioners contend that the Commission has jurisdiction to investigate whether the petition raises an issue for resolution pursuant to 47 U.S.C. § 214(e)(3). They claim that Verizon’s motion is premature at best. They observe that if the Commission were to consider this petition pursuant to 47 U.S.C. § 214(e)(3), then the issue of whether the petitioners constitute an “unserved community” would be a factual determination for the Commission.[22]

23 Conclusion. The Commission has jurisdiction under RCW 80.36.230 and RCW 80.36.240 to consider Petitioners request that the Commission order Verizon to expend its service territory to include Petitioners’ properties. RCW 80.36.230 provides:

The commission is hereby granted the power to prescribe exchange area boundaries and/or territorial boundaries for telecommunications companies.

24 This express authority to prescribe a telecommunication company’s exchange area or territorial boundaries is further confirmed in RCW 80.36.240. Likewise, the Commission is authorized by 47 U.S.C. § 214(e)(3) to :

determine which carrier or carriers are best able to provide [the services supported by federal universal service support mechanisms] to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof.

Thus, under the state and federal authority referenced above, the Commission has the authority to consider the issue raised by the petition.

(3) Neither Congress nor the Commission can authorize an unconstitutional taking of Verizon’s property.

25 Verizon claims that the Commission is precluded from exercising its jurisdiction to alter Verizon’s exchange area boundary because doing so would result in an “unconstitutional taking.” Verizon alleges that since there is no mechanism for recovery of the significant cost that would be incurred to provide the service, forcing Verizon to build facilities and maintain service in this area would be an unconstitutional uncompensated taking.[23]

26 Staff argues that there is no constitutional barrier to the Commission’s exercise of its authority to alter exchange area boundaries pursuant to RCW 80.36.230 and 80.36.240. Staff observes that Verizon provides no analysis in support of its constitutional claims. Staff explains that in the context of regulated utilities, the relevant inquiry under the takings clause is whether regulatory action results in rates that are “so unjust as to be confiscatory.”[24] Confiscatory rates are “’so unjust as to destroy the value of [the] property for all purposes for which it was acquired,’ and in so doing ‘practically deprive[s] the owner of property without due process of law’[.]”[25] Staff and Petitioners point out that Verizon has alleged no facts in this case that would support a conclusion that if the Commission were to alter its exchange area boundary, Verizon’s revenues would fall below a constitutionally sufficient amount.[26] Staff notes that the Commission has not yet made a determination of whether Verizon must extend its facilities, and if so, whether it would be compensated for doing so. Accordingly, Verizon’s confiscation arguments are not a barrier to the Commission’s jurisdiction to alter Verizon’s exchange area boundaries pursuant to RCW 80.36.230 and RCW 80.36.240.

27 Conclusion. This Order finds Staff’s and Petitioners’ arguments persuasive and determines that there is no constitutional barrier to the Commission’s exercise of its authority to alter exchange area boundaries pursuant to RCW 80.36.230 and RCW 80.36.240.

28 Decision. Based on the pleadings and the discussion above, it appears that Petitioners have alleged facts which, if proven, could support their request under RCW 80.36.230, RCW 80. 36.240, and 47 U.S.C. § 214(e)(3) for an order directing Verizon to expand its territory to service Petitioners’ properties. Accordingly, Verizon’s motion to dismiss the petition is denied.

Dated at Olympia, Washington, and effective this 13th day of September, 2005.

WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION



KAREN M. CAILLÉ
Administrative Law Judge


NOTICE TO PARTIES: This is an Interlocutory Order of the Commission. Administrative review may be available through a petition for review, filed within 10 days of the service of this Order pursuant to WAC 480-07-810.

Attachment A

APPLICABLE RULES

WAC 480-07-380(1) Motion to dismiss. (a) General. A party may move to dismiss another party’s claim or case on the asserted basis that the opposing party’s pleading fails to state a claim on which the commission may grant relief. The commission will consider the standards applicable to a motion made under CR 12 (b)(6) and 12(c) of the Washington superior court’s civil rules in ruling on a motion made under this subsection. If a party presents an affidavit or other material in support of its motion to dismiss, and the material is not excluded by the commission, the commission will treat the motion as one for summary determination as provided in subsections (2) and (3) of this section.

CR 12 (b) How presented. Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross claim, or third party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, (3) improper venue, (4) insufficiency of process, (5) insufficiency of service of process, (6)failure to state a claim upon which relief can be granted, (7) failure to join a party under rule 19. A motion making any of these defenses shall be made before pleading if a further pleading is permitted. No defense or objection is waived by being jointed with one or more other defenses or objections in a responsive pleading or motion. If a pleading sets forth a claim for relief to which the adverse party is not required to serve a responsive pleading, he may assert at the trial any defense in law or fact to that claim for relief. If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by rule 56.



CR 12(c) Motion for Judgment of the Pleadings. After the pleadings are closed by within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by rule 56.


APPLICABLE STATUTES

RCW 80.36.230 Exchange Areas for telecommunications companies.
The Commission is hereby granted the power to prescribe exchange area boundaries and/or territorial boundaries for telecommunications companies.

RCW 80.36.240 Exchange areas for telephone companies—Procedure to establish. The commission in conducting hearings, promulgating rules, and otherwise proceeding to make effective the provisions of RCW 80.36.230 and 80.36.240, shall be governed by, and shall have the powers provided in this title, as amended; all provisions as to review of the commission’s orders and appeals to the supreme court or the court of appeals contained in said title, as amended shall be available to all companies and parties affected by the commission’s orders issued under authority of RCW 80.36.230 and 80.36.240.

47 USC 214 (e) (3) Designation of eligible telecommunications carriers for unserved areas. If no common carrier will provide the services that are supported by Federal universal service support mechanisms under section 254(c) of this title to an unserved community or any portion thereof that requests such service, the Commission, with respect to interstate services or an area served by a common carrier to which paragraph (6) applies, or a State commission, with respect to intrastate services, shall determine which common carrier or carriers are best able to provide such service to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof. Any carrier or carriers ordered to provide such service under this paragraph shall meet the requirements of paragraph (1) and shall be designated as an eligible telecommunications carrier for that community or portion thereof.

[1] Berge v. Gorton, 88 Wn.2d 756, 759 (1977).
[2] 30 Wn. App. 413 (1981).
[3] Verizon Motion to Dismiss at 2.
[4] Id.
[5] Staff Resp.at 3; Petitioners’ Supp. Resp. at 3-4.
[6] Staff Resp. at 4.
[7] Verizon Reply at 1-5.
[8] Id.
[9] Verizon Reply at 2.
[10] Id.
[11] 123 Wn.2d 530 (1994)
[12] In the Matter of the Petition of Verizon Northwest, Inc. for Waiver of WAC 480-120-071(2)(a), Docket No. UT-011439 (April 23, 2003).
[13] Verizon Motion to Dismiss at 3-4.
[14] Verizon Motion to Dismiss at 4; Verizon Reply at 4-5.
[15] Verizon Motion to dismiss at 4.
[16] Staff Resp. at 4-5; Petitioners’ Supp. Resp. at 7-8.
[17] Staff Resp. at 5; Petitioners’ Supp. Resp. at 7-8.
[18] Prescott, 30 Wn. App. at 417.
[19] Staff Resp. at 6, fn 14; Petitioners’ Supp. Resp. at 8.
[20] 123 Wn 2d at 536-37.
[21] Staff Resp. at 6-10; Petitioners’ Supp. Resp. at 4-7.
[22] Staff Resp. at 11-12; Petitioners’ Supp. Resp. at 8-9.
[23] Verizon Motion to Dismiss at 4-5.
[24] Duquesne Light Co. v. Barash, 488 U.S. 299, 307, 109 S. Ct. 609, 102 L. Ed. 2d 646 (1989)(citations omitted).
[25] Id. at 307-308 (quoting Covington & Lexington Turnpike Road Co. v. Sanford, 164 U.S. 578,597, 17 S. Ct. 198, 41 L.Ed 560 (1896)
[26] Staff Resp. at 11; Petitioners’ Supp. Resp. at 13.

Petitioner's Supplemental Response

I. INTRODUCTION

The original filing for this proceeding was a Petition not, a Complaint. A Petition is defined by the Merriam-Webster dictionary as an "earnest request". A Complaint is defined as "a formal allegation against a party". This Petition is called a Complaint on the Washington Utilities and Transportation Commission (WUTC or the Commission) website and in various documents. It is not a Complaint, but Petitioners are being treated as Complainants which apparently burdens them with proving Respondent broke the law and involving them as parties in a process which requires formal legal training to navigate successfully. This is manifestly unfair because citizens who are without telephone service are also most likely those least able to afford legal representation to navigate the WUTC formal complaint process. Regardless of how the pleadings in this matter are characterized, the Petitioners only seek to have telephone service extended to their community.

The plain meaning of 47 U.S.C. §214 (e) (3) is for a community to make a request (e.g. petition) for telephone service and for the Commission to order that service be provided (assuming the requestor meets the community prerequisite). There's nothing in the statute about having to prove that a service provider broke the law. There's also nothing in the statute requiring the requestor to do anything more than make the request. In fact there's nothing in the statute that requires the petitioners to even be a "party" to the proceeding. The Commission, Commission Staff, and Office of the Attorney General, and ultimately the telephone company most suited to provide service, in this case arguably Verizon, should be the only "parties" to a Petition made under 47 U.S.C. §214 (e) (3).

That being said, Petitioners will attempt to continue in the proceeding as it is now constituted and rebut Respondents arguments as best they can. Petitioners hope that the Commission sees the truth of the above argument and characterizes this proceeding in the appropriate manner in order to grant the relief sought by the Petitioners.

II. ARGUMENT

A. The Petition States a Claim Upon Which Relief Can Be Granted

1. In support of its assertion that the Petition fails to state a claim upon which relief can be granted, Respondent cites Berge v. Gorton, 88 Wn.2d 756, 567 P.2d 187 (1977) and says "Petitioner can prove “no set of facts in support of [their] claim, which would entitle [them] to relief.”" Respondent Motion to Dismiss, p. 2.

Rebuttal:
Respondent has taken that quotation from the Berge case out of context. The full quote is from another cite which shows that the standard for dismissal is extremely high: "No dismissal for failure to state a claim should be granted unless it appears, beyond doubt, that the plaintiff can prove no set of facts in support of [their] claim which would entitle [them] to relief." Sherwood v. Moxee School Dist. 90, 58 Wn.2d 351, 363 P.2d 138 (1961). While Respondent disputes the facts, as may well be expected, they are certainly not on their face unprovable beyond doubt. Petitioners are confident that the stated facts can and will be proven when they are given the opportunity.

2. Respondent cites Prescott Tel & Tel Co. v. UTC, 30 Wn. App. 413, 634 P.2d 897 (1981) in support of its argument ". . . that Petitioners would have to prove that Verizon has violated the law or that its service area was unreasonable before the Commission would entertain a request to alter exchange area boundaries." Respondent Motion to Dismiss, p. 2.

Rebuttal:
The Prescott Tel case cited by Respondent was a dispute between two telephone companies. Pacific Northwest Bell (PNB) had a certain area within its boundaries that Prescott wanted. Prescott asked the UTC to reassign it. The court held that the area could not be taken away over PNB's objection and awarded to Prescott unless PNB could be shown to have been deficient in its service or equipment (which they were not).
It seems clear that the UTC can't take an area away from Verizon without cause. However, that is not the case here, since Petitioners are seeking to give an area to Verizon, and there is cause, as stated in the Petition under several statutes, for ordering Verizon to extend service to an unserved community.

B. The Commission Has Jurisdiction to Expand Verizon's Exchange Area.

1. In arguing that the Commission should not order an expansion of its exchange area, Respondent cites Pacific Telephone & Telegraph Co. v. Eshleman, 166 Cal 640, 137 P. 1119 (1913) for the proposition that "In dealing with public utilities, regulation of use within the dedicated use is as far as the police power may be extended and . . . When the regulation exceeds this, it is always void for unreasonableness . . . ". Id. at 680.

Rebuttal:
Respondent seems to be implying that the Commission has no authority to expand Verizon’s exchange area, that its "dedicated use" is its exchange area as currently bounded, and that it is immutable. Pacific Telephone & Telegraph Co. v. Eshleman is interesting California law, but it is clearly inapplicable to this proceeding in light of RCW 80.36.230, .240, which grants the WUTC sweeping power to prescribe telecommunication exchange area and/or territorial boundaries, and to expand such boundaries when warranted. The holding in Pacific Telephone & Telegraph Co. v. Eshleman is simply inapposite.

2. Respondent cites California Water & Telephone Co. v. Public Utilities Commission, 51 Cal 2d 478, 334 P.2d 887 (1959) , and argues ". . . that the California Supreme Court annulled an order of the California Public Utilities Commission that directed a water utility to extend its mains to a new proposed residential division . . .". Respondent Motion to Dismiss, p. 3.

Rebuttal:
In California Water & Telephone Co. v. Public Utilities Commission, the Commission had modified a contract between a utility and a developer directing the utility to provide service to a previously undedicated service area. 51 Cal. 2d at 488. The court found that the Commission did not have the authority to modify the private contract. However, the court also held that the Commission did have the authority to regulate the utility and to compel it to serve the developer. Id. at 489. That was the conclusion of the California Public Utilities Commission in its Decision 02-08-076 at p. 13. Based on these facts, this ruling is inapposite for the matter under consideration in this case.

3. Respondent cites Northern Pacific Railroad Co. v Railroad Commission, 58 Wash. 360, 108 P. 938 (1910), and asserts that ". . . the court reversed a lower court's decision that upheld an order of the WUTC's predecessor requiring a railroad spur for the benefit of a private business (a sawmill)." Respondent Motion to Dismiss, p.3.

Rebuttal:
This case is not on point because it is about a railway. Courts have long recognized the difference between a railroad, and such basic utility service providers as water, gas electric and telephone utilities. As the court stated in California Water & Telephone Co. v. Public Utilities Commission, ". . . a fundamental distinction exists between railway companies and other utilities such as water, gas, electric power and telephone companies. This distinction stems from the fact that the latter utilities normally extend their lines to their customers, whereas a railway company's customers bring themselves to the utility." Id. at 492. Reliance on a decision from a railroad case is clearly misplaced.

4. Respondent cites Southern Bell Tel. & Tel. Co. v. Town of Calhoun, 287 F. 381 (1923) for the proposition that " . . . a company is not bound to extend its service beyond the limits in good faith establish by it."

Rebuttal:
The holding in Southern Bell Tel. & Tel. Co. v. Town of Calhoun is whether an unconstitutional "taking" has occurred, and does not address whether a regulatory commission, such as the WUTC, has jurisdiction to grant the relief requested. The issue of taking without just compensation is discussed in the next section.

5. Respondent cites 64 Am. Jur. 2d Public Utilities 36, and says that this establishes that the only duty assumed by a public utility is to render service to meet the wants of the community or territory that it undertook to serve.

Rebuttal:
Generally, citation to a legal encyclopedia such as American Jurisprudence is considered neither precedential nor persuasive. The cited section of American Jurisprudence does state, however, that “. . . where a public utility accepts a franchise to serve the public, it assumes a public duty of providing a service system that will . . . keep pace with the growth of the community . . . and gradually extend its system as the reasonable wants of the community . . . may require.” 64 Am. Jur. 2d Public Utilities § 36. However, this statement of general utility law lends support to the position of the Petitioner’s that a reasonable expansion of a service territory is within the authority of a utility commission to order.

6. Respondent cites Attorney General Opinion (AGO_1955_57_No_223) and based on this opinion concludes “. . . that clearly these statutes [speaking of RCW 80.36.230, .240] obligated companies to define their service territories which became "prescribed" when defined by properly filed tariffs.” Respondent Motion to Dismiss, p. 4.

Rebuttal:
The opinion cited by Respondent cites Clyde Telephone Co. vs. Prescott Telephone & Telegraph Co., Cause No. U-8296 (1950), where the Commission entered an order declaring a portion of respondent's alleged exchange area open territory to be served by any one desiring to render telephone service therein. This action by the Commission was a clear recognition and use of its authority to prescribe exchange area boundaries involuntarily, as contemplated in RCW 80.36.230, .240.

7. Respondent again cites Prescott Tel & Tel Co. v. UTC, 30 Wn. App. 413, 634 P.2d 897 (1981) and argues that " . . . the court said the WUTC had no authority to redraw the exchange area maps filed by Pacific Northwest Bell (PNB) at the request of another telephone company." Respondent Motion to Dismiss, p. 4.

Rebuttal:
As stated above, this case is not about an attempt by an interloping utility to deprive a utility of a portion of its service area. Rather, it is about a request by unserved customers to expand the service area of a telephone utility that is already conducting telephone business under the regulation of the Commission. The holding cited by Respondent from the Prescott Tel & Tel Co. v. UTC is once again inapplicable to the matter.

8. Respondent cites ELI v. WUTC, 123 Wn.2d 530, 869 P.2d 1045 (1994) to support the idea ". . . that RCW 80.36.230 does not give the Commission the power to grant monopolies in filed exchange areas." Respondent Motion to Dismiss, p. 4.

Rebuttal:
This argument is a non sequitur. Extending service to Petitioners’ community would not make the proposed expanded exchange area anymore of a monopoly than it is already.

C. The Requested Action Is Not an Unconstitutional Taking.

1. Respondent suggests that ". . . the petition utterly fails to establish that the Petitioner's constitute an "unserved community". Respondent Motion to Dismiss, p. 4.

Rebuttal:
Proof that the Petitioners are a community under 47 U.S.C. §214 is not required to be provided in the Petition, it only needs to be asserted. Proof that the Petitioners constitute a community will be forthcoming in testimony provided to the Commission at the hearing stage, and after the pending motion has been disposed of by the Commission. Petitioners are confident that they can demonstrate that they are a community under the aforementioned law.

2. Respondent claims that ". . . the company [Verizon] receives no federal universal service support at all in Washington. Therefore, 47 U.S.C. §214 (e) (3) simply does not come into play.” Respondent Motion to Dismiss, p. 5.

Rebuttal:
This assertion by Respondent was shown to be false in Petitioner's original response. As set forth in that pleading, Verizon received $22,244,193 in 2003, the last year for which filing information is available (see WUTC Docket No. UT-043067 – WAC 480-120-311(2) Compliance Filing for Verizon). In fact the amount of money received by Verizon out of the federal universal service fund is one of the largest amounts of any carrier operating in Washington, according to the filings.
Respondent may claim in their rebuttal to this Supplemental Response that what they really meant to say was that they accept no High Cost Loop (“HCL”) federal universal service support. This may be the case in Washington. However, Verizon does collect HCL support in Idaho and undoubtedly would try to collect it in Washington if the Petition were granted.

3. Respondent alleges that the statute does not authorize an unconstitutional taking of Verizon's property, and claims there would be no mechanism for recovery of cost.

Rebuttal:
Respondent is in error that there would be no mechanism for cost recovery. That mechanism is the federal universal service fund. A second mechanism would be a special tariff for the exchange area expansion. So the question it comes down to is the compensation "just", considering the fact the Verizon is public utility.

4. Respondent cites Duquesne Light Co. v. Barasch, 488 U.S. 299, 310 109 S.Ct. 609, 102 L.Ed.2d 646 (1989) for support of the notion that ". . . Verizon - like any regulated utility - be permitted an opportunity to recover its costs plus a reasonable return". Respondent Motion to Dismiss, p. 5.

Rebuttal:
What Duquesne Light Co. v. Barasch really says is ". . . that the Constitution protects utilities from being limited to a charge for their property serving the public which is so "unjust" as to be confiscatory." Id. at 488 U.S. 307. As a consequence, so long as the compensation available to Verizon is not confiscatory, it passes constitutional muster. And Verizon has made no showing that the federal funding available to it will be so unjust as to be confiscatory.

5. Respondent cites Duquesne Light; Michigan Bell Tele. Co. v. Engler, 257 F.3d 587 (6th Cir. 2001) and POWER v. WUTC, 104 Wn.2d 798, 711 P.2d 319 (1985) to support its argument that "Requiring Verizon to expend hundreds of thousands of dollars without any just compensation would cause a clear violation of the Takings Clause of the State and Federal Constitutions.” Respondent Motion to Dismiss, p. 5.

Rebuttal:
Petitioners have shown that compensation will be available to Verizon from the federal universal service fund, (deemed just by an act of Congress) if service is extended as requested by Petitioner. It is implausible that this compensation program would have been established by Congress if the payments available under it were legally “confiscatory”.

6. Respondent cites Armendariz v. Penman, 75 F.3d 1311, 1320 (9th Cir. 1996) and says that " . . . forcing Verizon to build out facilities for these private individuals also violates the Fifth Amendment's requirement that the taking of Verizon's private property be for a "public use". Respondent Motion to Dismiss, p. 5.

Rebuttal:
The Armendariz v. Penman case is about evicting poor people from their homes due to vague housing code violations. The notion that this case is in any way applicable to the extension of service by a regulated telephone utility already providing service makes no sense at all. The Armendariz v. Penman case is distinguishable from the instant proceeding on both the facts and the law.
The state has a legitimate interest in providing a means for its citizens to summon emergency medical assistance. Some petitioners are in poor health and the difference in the amount of time for assistance to arrive when summoned by 911 vs. driving into town could be the difference between life and death, not to mention being able to stay with the afflicted person and in conversation with trained emergency personnel.
Weekend cabins in the Skyko 2 area are trashed on a regular basis and illegal dumping occurs in environmentally sensitive areas all because the neighborhood watch can't summon law enforcement assistance by telephone. Furthermore the so-called "information age" is upon us and to deprive Petitioners access to the World Wide Web is like locking them up in prison. Petitioners have a right to participate in the free exchange of ideas and access to information available to most of the rest of the country's citizens.

D. Commission Lacks Personal Jurisdiction Over Verizon Communications, Inc.

Rebuttal:
Petitioners concede this and this unintentional error was dealt with at the prehearing where Petitioner's motion was granted to make Verizon Northwest, Inc., the Respondent to the Petition.

III. CONCLUSION

For the foregoing reasons, the Petition should not be dismissed.

DATED this 2nd day of August, 2005.




The facts alleged in this supplemental response are true and correct to best of my belief.



________________________________
Douglas B Rupp
Spokesman and Lead Petitioner

Verizon's Motion to Dismiss

I. INTRODUCTION

Pursuant to WAC 480-07-380 Verizon Northwest Inc. ("Verizon") hereby moves to dismiss the Petition for Order to Extend Service Area of Respondent ("Petition"). As explained herein, the Washington Utilities & Transportation Commission ("Commission" or "WUTC") lacks the jurisdiction to force Verizon to extend service outside of its tariffed service exchange boundaries. Forcing Verizon to incur the considerable expense of the extension requested in this case, without compensation, would also violate the Fifth and Fourteenth Amendments to the United States Constitution as an unconstitutional taking.

II. STATEMENT OF FACTS

This Petition involves a remote portion of Snohomish County, more than 3 1/2 miles from the end of Verizon's exchange boundary in Index, Washington. It is not clear from the Petition that all petitioners actually live in the area, or merely own properties, or that they comprise a community. Petitioner Rupp's residence is built across a river accessible only by a cable car. The area between the Petitioners' properties and the end of Verizon's serving territory is primarily National Forest land that will never be developed. Requiring Verizon to provide service to the Petitioners would be extremely costly, by Verizon's ballpark estimate exceeding $200,000. Verizon would never recover the costs of providing service to the Petitioners out of direct revenues from said Petitioners and would also have to incur considerable costs in order to maintain service to such remote customers.

III. LEGAL ARGUMENT

A. The Petition Fails to State a Claim Upon Which Relief Can Be Granted.

Because the Petitioners can prove "no set of facts in support of [their] claim which would entitle [them] to relief, "the Petition should be dismissed. Berge v. Gorton, 88 Wn.2d 156, 759, 567 P.2d 187 (1977). WAC 480-07-380(1)(c) and CR(b)(6) allow for such dismissal. Under Prescott Tel. & Tel. Co. v. UTC, 30 Wn. App. 413, 634 P.2d 897 (1981), the Petitioners would have to prove that Verizon has violated the law or that its service area was unreasonable before the Commissioner would entertain a request to alter exchange area boundaries. The Petition does not set forth any facts that show Verizon has violated any legal duty or that its serving area is unreasonable. Indeed, none of the statutes cited by the Petition could be "violated" because they either state matters of policy, or address duties that apply only within a company's dedicated service area per its filed exchange maps. Therefore, the Petition should be dismissed for failure to state a claim.

B. The Commission Does Not Have Jurisdiction to Forcibly Alter Verizon's Exchange Area Boundaries.

The Commission lacks jurisdiction to redraw Verizon's exchange area over Verizon's objection to include new locations not included within Verizon's dedicated serving area and the case should be dismissed pursuant to 12(h)(3). Simply put, the Commission lacks jurisdiction to force Verizon to extend its facilities beyond the area that Verizon has designated as its dedicated serving area. "In dealing with public utilities, regulation of use within the dedicated use is as far as the police power may be extended and . . . when the regulation exceeds this, it is always void for unreasonableness . . . ." Pacific Telephone & Telegraph Co. v. Eshleman, 166 Cal. 640, 680, 137 P. 1119, 50 L.R.A.N.S. 652 (1913). In California Water & Telephone Co. v. Public Utilities Commission, 51 Cal. 2d 478, 334 P.2d 887 (1959) the California Supreme Court annulled an order of the California Public Utilities Commission that directed a water utility to extend its mains to a new proposed residential division, on the basis that the statutory power to regulate a utility's activities does not include the power to force the utility to undertake a new activity, such as providing service in an area the utility had not dedicated itself to serve.

In Northern Pacific Railroad Co. v. Railroad Commission, 58 Wash. 360, 108 P. 938 (1910), the court reversed a lower court's decision that upheld an order of the WUTC's predecessor requiring a railroad to build a spur for the benefit of a private business (a sawmill). The court rejected the Commission's claim that it had police power to regulate railroads and therefore could require them to extend their line. Similarly, here the WUTC has no power to require Verizon to extend facilities beyond the area encompassed by its exchange boundaries.

A company is not bound to extend its service outside or beyond the limits in good faith established by it. Southern Bell Tel. & Tel. Co. v. Town of Calhoun, 287 F. 381 (1923). The only duty assumed by a public utility is to render service to meet the wants of the community or territory that it undertook to serve. 64 Am. Jur. 2d Public Utilities § 36 (2001).

None of the statutes cited by the Petitioner empower the Commission to redraw unilaterally Verizon's service boundaries. RCW 80.3 6.23 0 and 80.36.240 have been interpreted to mean that the Commission prescribes exchange area boundaries when it accepts, according to long-held practice, the tariff maps filed by telecommunication companies that define their selected service territory. A 1956 Attorney General Opinion (AGO-1955-57-No-223) explained the significance of these two statutes:

The foregoing statutes [RCW 80.36.230, .240] were enacted at the 1941 session of our state legislature. The act in question gave recognition to and directly authorized what the commission and its predecessors had been doing for years. As an integral part of its telephone tariff activities both before and after 1941 the commission has, in effect, prescribed exchange area or territorial boundaries through its requirement that each telephone company have on file with the commission a map setting forth the boundaries of the area or areas in which such company is offering telephone service under its filed tariffs, rules and regulations. This requirement was last set forth by an order in Cause No. FH-7778, effective February 1, 1944. The commission may be said to have utilized its tariff functions as the means of making RCW 80.36.230 effective.

Clearly these statutes obligated companies to define their service territories which became "prescribed" when defined by properly filed tariffs. The only two cases to address RCW 80.36.230 do not support extending jurisdiction to the Commission to force serving difficult and uneconomical areas. In Prescott Tel. & Tel. Co. v. UTC, 30 Wn. App. 413, 634 P.2d 897 (1981) the court said the WUTC had no authority to redraw the telephone exchange maps filed by Pacific Northwest Telephone Company (PNB) at the request of another telephone company. The second case, ELI v. WUTC, 123 Wn.2d 530, 869 P.2d 1045 (1994), simply held that RCW 80.36.230 does not give the Commission the power to grant monopolies in filed exchange areas.

C. Neither Congress Nor the WUTC Can Order an Unconstitutional Taking.

The Petitioner alleges 47 U.S.C. § 214 a basis for this Commission to require Verizon to extend service to the Petitioners. This fails for several reasons. First, the petition utterly fails to establish that the Petitioners constitute an "unserved community." Twelve owners of property in a remote forest do not create a community, particularly if several of the properties contain only vacation places.

Second, while Verizon has federal eligible telecommunications carrier (ETC) status in Washington, it does not provide any services that are supported by federal universal support mechanisms, which is a stated predicate in section 214 for the designation petitioners seek. This condition is not met in Verizon's case because the company receives no federal universal service support at all in Washington. Therefore, 47 U.S.C. § 214(e)(3) simply does not come into play.

Finally, and most important, this statute does not authorize an unconstitutional taking of Verizon's property. Since there is no mechanism for recovery of the significant cost that would be incurred to provide the service, forcing Verizon to build facilities and maintain service in this area would be an unconstitutional uncompensatedtakings2 WASH. CONST. art. I, § 3, U.S. CONST. amend. V, XIV.

The Fifth Amendment (as applied to the states by the Fourteenth Amendment) mandates that Verizon -like any regulated utility - be permitted an opportunity to recover its costs plus a reasonable return. See, e.g., Duquesne Light Co. v. Barasch, 488 U.S. 299, 310, 109 S. Ct. 609, 102 L.Ed.2d 646 (1989). Requiring Verizon to expend hundreds of thousands of dollars to provide service without g just compensation would cause a clear violation of the Takings Clauses of the State and Federal Constitutions. See, e.g., Duquesne Light Co. v. Barasch, 488 U.S. 299, 3 10, 109 S. Ct. 609, 102 L.Ed.2d 646 (1989); Michigan Bell Tele. Co. v. Engler, 257 F.3d 587 (6th Cir. 2001); POWER v. WUTC, 104 Wn.2d 798,711 P.2d 319 (1985).

Furthermore, forcing Verizon to build out facilities for these private individuals also violates the Fifth Amendment's requirement that the taking of Verizon's private property be for a "publicc use." A taking for purely private use is unconstitutional even if just compensation is paid. Armendariz v. Lenman, 75 F.3d 13 1 1, 1320 (9th Cir. 1996).

D. The Commissioner has no Personal Jurisdiction Over Verizon Communications, Inc.

Pursuant to CR 12(b)(2), the Commission lacks jurisdiction over the named respondent, Verizon Communications, Inc., so the Petition must be dismissed. That corporation is created and existing under Delaware law, located at 1095 Avenue of the Americas, New York, N.Y., 10036. It provides no services in Washington and is not a regulated company subject to the Commission's jurisdiction, because it is not a "public service company" under RCW 80.04.110.

IV. CONCLUSION

For the foregoing reasons, the Petition should be dismissed.

DATED this 13th day of June, 2005.

GRAHAM & DUNN PC

Verizon's Answer

Respondent, Verizon Northwest, Inc. ("Verizon") hereby answers and submits defenses to the Petition filed by ... ("Petitioners"). The paragraph numbers of the following answers correspond to the paragraphs of the Petition for Order to Extend Service Area. ("Petition").

1. Parties.

1.1 Verizon is without knowledge or information sufficient to verify the names and addresses of Petitioners contained in this paragraph, and therefore denies the same.

1.2 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

1.3 Verizon denies that it is Verizon Communications, Inc. Verizon is a wholly owned subsidiary of that company. Verizon admits that it is a public service company doing business in the state of Washington.

2. Rules/Statutes at Issue.

2.1 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

2.2 The statute, RCW 80.36.040, speaks for itself. Verizon denies that said statute imposes any duty upon it in connection with this Petition.

2.3 The statute, RCW 80.36.090, speaks for itself. Verizon denies that the statute imposes any duty upon it in connection with this Petition.

2.4 The statute, RCW 80.36, speaks for itself. Verizon denies that said statute imposes any duty upon it in connection with this Petition.

2.5 The statutes, RCW 80.36.230 and 240, speak for themselves. Verizon denies that these statutes grant the Commission the power to force Verizon to extend service outside of its tariffed service exchange boundaries.

2.6 The statute, RCW 80.36.260, speaks for itself. Verizon denies that this statute imposes any duty upon it in connection with this Petition.

2.7 The statute, RCW 80.36.300, speaks for itself. Verizon denies that the statute imposes any duty upon it in connection with this Petition.

2.8 The rule, WAC 480-120-071, speaks for itself. Verizon denies that this rule imposes any obligation upon it in connection with this Petition.

2.9 The statute, 47 USC § 214, speaks for itself. Verizon denies that this statute authorizes the commission to force Verizon to extend service outside of its tariffed service exchange boundaries.

2.10 The statute, 47 USC § 254, speaks for itself. Verizon denies that the statute imposes any duty upon it in connection with this Petition.

3. Statements of Fact.

3.1 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

3.2 Verizon admits that the petitioners live outside the serving boundary of Verizon. Verizon is without knowledge or information sufficient to admit that it is the "nearest provider" and therefore denies the same.

3.3 Verizon denies the first sentence, and is without knowledge or information sufficient to form an answer as to the second sentence, and therefore denies the same.

3.4 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

3.5 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

3.6 Verizon is without knowledge or information sufficient to form an answer to this paragraph, and therefore denies the same.

Affirmative Defenses

By way of further answer and as affirmative defenses to the Petition, Verizon alleges as follows:

First Affirmative Defense:

1. The Petition fails to state a claim upon which relief can be granted.

Second Affirmative Defense:

2. The Commission lacks jurisdiction to afford the relief requested by the Petition.

Third Affirmative Defense:

3. The Petition fails to join necessary parties, to wit: other telecommunications carriers that might serve Petitioners, which are necessary for a just adjudication.

Fourth Affirmative Defense:

4. The intrastate tariffs, which define Verizon's dedicated serving area, have been reviewed and approved by the Commission and have the effect of law and cannot be changed as a result of this Petition.

Fifth Affirmative Defense:

5. The Petition lacks a necessary condition precedent in that Verizon receives no federal universal service support as an eligible telecommunications carrier.

Sixth Affirmative Defense:

6. The Commission lacks jurisdiction over the named respondent, Verizon Communications, Inc.

WHEREFORE, having fully answered the Petition, Verizon prays for the following relief:

1. An Order from the Commission dismissing the Petition with prejudice;

2. Such other relief as the Commission finds fair, just, reasonable, sufficient.

DATED this 13th day of June, 2005.

GRAHAM & DUNN PC

Initial Filing 5/23/2005

COME NOW the above-named Petitioners, by and through their spokesman and lead petitioner: Douglas Rupp, and in their petition allege as follows:

1. PARTIES

1.1 The Petitioners are:



1.2 Petitioners own real property which is nearby to the current service area of Respondent

1.3 Respondent is Verizon Communications, Inc. Respondent is a public service company doing business in the state of Washington.

2. RULES/STATUTES AT ISSUE

2.1 The following statues and provisions of the Washington Administrative Code and United States Code may be brought into issue: RCW 80.36.040; RCW 80.36.090; RCW 80.36.170; RCW 80.36.230; RCW 80.36.240; RCW 80.36.260; RCW 80.36.300; WAC 480.120.071; 47 USC 214; 47 USC 254.

2.2 RCW 80.36.040 grants the right for a telecommunications company doing business in this state to construct and maintain necessary telecommunications lines for public traffic along and upon any public road, street, or highway.

2.3 RCW 80.36.090 requires every telecommunications company to furnish reasonably entitled persons with telephone service on demand.

2.4 RCW 80.36.170 prohibits a telecommunications company from subjecting any particular person or locality to undue or unreasonable disadvantage in any respect whatsoever and grants the Commission primary jurisdiction to determine violations.

2.5 RCW 80.36.230 & 240 grant the Commission power to prescribe telecommunication exchange area and/or territorial boundaries.

2.6 RCW 80.36.260 grants the Commission power to order extensions to telecommunications lines to promote the security or convenience of the public or in order to secure adequate telecommunications service.

2.7 RCW 80.36.300 states that it is the policy of the State to preserve affordable universal telecommunications service; advance the availability of telecommunications service; and ensure customers pay only reasonable charges for telecommunications service.

2.8 WAC 480.120.071 requires an extension of service to occupied premises unless granted a waiver by the Commission.

2.9 47 USC 214 grants the Commission power to determine which telecommunications carrier is best able to provide service to a requesting un-served community and shall order such carrier to provide telecommunications service.

2.10 47 USC 254 prescribes a policy based on the principle that consumers in rural, insular, and high cost areas should have access to telecommunications and information services reasonably comparable to services and rates available in urban areas.

3. STATEMENTS OF FACT

3.1 Petitioners desire telephone service but have been unable to receive such service because the telephone grid ends at approximately milepost 2.5 on Index-Galena Road in Snohomish County, whereas Petitioners live either near or before milepost 5.6 on said road in a community known locally as Skyko 2.

3.2 According to Commission staff, the Petitioners live outside the serving boundary of the nearest provider (Respondent).

3.3 Respondent has offered to provide service if the Petitioners pay the full cost of construction, with an initial non-refundable fee of $11,040.00 just to cover the cost of providing an estimate of the ultimate construction cost. This is far beyond the means of the Petitioners.

3.4 According to Commission staff, no alternate telecommunications company is interested in providing service to the Petitioners.

3.5 Petitioners are unable to receive cell telephone service due to the topography of the surrounding area and lack of a serving cell tower. Cell reception becomes unavailable approximately 200 yards beyond the Index town bridge (approximately milepost 1.1 on Index-Galena Rd)

3.6 An examination of the topography of the surrounding area using commercially available topographical software shows there is no viable line of sight for a radio-telephone system between the end of the grid and the Skyko 2 community without at least one powered repeater placed on United States Forest Service land.

3.7 Petitioners (except for petitioner D. Rupp) have no affordable alternative communications method (e.g. satellite internet) whatsoever due to either line of sight issues or interference from the surrounding heavy forest.

3.8 Some Petitioners are elderly or are in poor health and cannot summon or receive emergency medical assistance other than by driving to the nearest town (Index).

3.9 Access to Petitioner’s locale is along a well maintained, paved county road (Index-Galena Road) on a Snohomish county owned right-of-way with ample room for roadside poles or underground cable.


WHEREFORE, Petitioners pray for relief as follows:

1. That a formal hearing be held on the issues raised by this Petition.

2. That the Commission extends the current service area of Respondent to include properties owned by Petitioners in and near Skyko 2

3. That Respondent shall be ordered to supply service to the properties owned by Petitioners in and near Skyko 2.

4. For such other and further relief as the Commission deems just and equitable.

DATED this 17th day of May, 2005.


The facts alleged in this petition are true and correct to best of my belief.



________________________________
Douglas B Rupp
Spokesman and Lead Petitioner

Introduction

47 USC 214 (e)(3) leaves the enforcement of that law to the state utilities commission. Our community filed a formal petition with the Washington Utilities and Transportation Commission (WUTC) in May 2005 naming Verizon as the most qualified telephone company to provide service. I had no idea at the time what I was getting myself in for.