Telrite Corp. v. Nebraska Pub. Serv. Comm. ( 2014 )

Nebraska Advance Sheets
866 288 NEBRASKA REPORTS
reasons for arrest that must be included in a sworn report are
those facts supporting the officer’s suspicion that the indi-
vidual arrested drove or physically controlled a motor vehicle
while under the influence of alcohol or drugs. Hoppens does
not dispute that Shymkewicz’ sworn report included these
factual reasons or argue that the sworn report was otherwise
deficient. Accordingly, we affirm the judgment of the dis-
trict court.
We note that in Sherman v. Neth,24 the Court of Appeals
held that a sworn report must contain sufficient assertions to
allow an inference that the motorist was on a public road or
private property open to public access. Although we reversed
the Court of Appeals’ decision on other grounds in Sherman
v. Neth25 and remanded the cause to the Court of Appeals
with orders to vacate its decision, we take this opportu-
nity to disapprove the above-stated holding in the Court of
Appeals’ decision.
Affirmed.
Heavican, C.J., participating on briefs.
24
Sherman v. Neth, 19 Neb. App. 435, 808 N.W.2d 365 (2011).
25
Sherman v. Neth, 283 Neb. 895, 813 N.W.2d 501 (2012).
Telrite Corporation, doing business as Life
Wireless, appellant, v. Nebraska Public
Service Commission, appellee.
___ N.W.2d ___
Filed August 22, 2014. No. S-13-870.
1. Public Service Commission: Appeal and Error. Under Neb. Rev. Stat.
§ 75-136(2) (Supp. 2013), an appellate court reviews an order of the Nebraska
Public Service Commission de novo on the record.
2. Appeal and Error. In a review de novo on the record, an appellate court reap-
praises the evidence as presented by the record and reaches its own independent
conclusions concerning the matters at issue.
3. Public Service Commission: Appeal and Error. Under Neb. Rev. Stat. § 75-136(Supp. 2013), an appellate court must reappraise the evidence on the record as
Nebraska Advance Sheets
TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 867
Cite as 288 Neb. 866it relates to the penalty issued by the Nebraska Public Service Commission and
reach an independent conclusion.
4. Appeal and Error. An appellate court is not obligated to engage in an analysis
that is not necessary to adjudicate the case and controversy before it.
Appeal from the Public Service Commission. Reversed and
remanded for further proceedings.
Stephen M. Bruckner, Russell A. Westerhold, and Jacqueline
M. DeLuca, of Fraser Stryker, P.C., L.L.O., for appellant.
Jon Bruning, Attorney General, and L. Jay Bartel for
appellee.
Wright, Connolly, Stephan, McCormack, Miller-Lerman,
and Cassel, JJ.
Connolly, J.
SUMMARY
Telrite Corporation, doing business as Life Wireless (Telrite),
was designated as an eligible telecommunications carrier (ETC)
and a Nebraska eligible telecommunications carrier (NETC)
by the Nebraska Public Service Commission (PSC). These
designations permitted Telrite to participate in the “Lifeline”
program and receive subsidies from federal and state funds
for the provision of telecommunications service to low-income
households. Six weeks after receiving its designations, Telrite
held a 1-day outdoor enrollment event in Omaha, Nebraska. At
the event, Telrite used the wrong enrollment form, and the PSC
later received inquiries and complaints from consumers who
had attended.
The PSC issued a show cause order to Telrite and thereaf-
ter revoked Telrite’s ETC designation and ordered it to cease
and desist from offering Lifeline service in Nebraska. Telrite
appeals from the PSC order, arguing that the PSC imposed an
excessive penalty, exceeded its statutory authority, and failed
to comply with its regulations. We agree that the penalty was
excessive. Therefore, we reverse the order and remand the
cause for further proceedings before the PSC.
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868 288 NEBRASKA REPORTS
BACKGROUND
Statutory Background
The Telecommunications Act of 1996 (Telecommunications
Act)1 established the principle of “universal service,” which is
broadly defined as the goal of “ensuring that all Americans have
access to affordable phone service.”2 The Telecommunications
Act created the federal Universal Service Fund (Federal Fund)
by requiring telecommunications carriers providing inter-
state services to contribute to “mechanisms established by
the [Federal Communications] Commission to preserve and
advance universal service.”3 Telecommunications companies
participating in universal service programs are eligible to
receive support from the Federal Fund if they are designated
as an ETC.4 The Telecommunications Act provides that state
commissions are primarily responsible for making ETC desig-
nations.5 In Nebraska, the PSC makes ETC designations.6
Among the mechanisms established by the Federal
Communications Commission (hereinafter FCC) and supported
by the Federal Fund is the Lifeline program, under which
qualified low-income consumers pay reduced charges for
voice telephone services.7 ETC’s participating in the Lifeline
program receive a monthly disbursement of $9.25 from the
Federal Fund for each qualified consumer.8 Lifeline support is
limited to a single subscriber per household, and eligibility is
determined by the subscriber’s income or participation in gov-
ernment programs directly related to income.9
1
Pub. L. No. 104-104, 110 Stat. 56 (codified as amended at scattered
sections in title 47 of U.S. Code).
2
WWC Holding Co. v. Public Service Com’n, 44 P.3d 714, 717 (Utah 2002).
3
47 U.S.C. § 254(d) (2006).
4
47 U.S.C. § 254(e).
5
47 U.S.C. § 214(e)(2) (2006).
6
Schumacher v. Johanns, 272 Neb. 346, 722 N.W.2d 37 (2006).
7
47 C.F.R. §§ 54.101 and 54.401(a)(1) (2013).
8
47 C.F.R. § 54.403(a)(1) (2013).
9
See, 47 C.F.R. § 54.409(a) (2013); 291 Neb. Admin. Code, ch. 10,
§ 006.04A (2012).
Nebraska Advance Sheets
TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 869
Cite as 288 Neb. 866The Telecommunications Act also authorized states to cre-
ate their own universal service funds and maintain them with
mandatory contributions from providers of intrastate telecom-
munications services.10 The Nebraska Legislature exercised
this power by enacting the Nebraska Telecommunications
Universal Service Fund Act (NTUSFA).11 The NTUSFA cre-
ated the Nebraska Telecommunications Universal Service Fund
(Nebraska Fund) in order to advance the state universal service
effort.12 The Nebraska Fund receives contributions from sur-
charges collected on all “end-user telecommunications” pro-
vided in Nebraska commerce.13 The NTUSFA also charged the
PSC with the creation of the Nebraska Telephone Assistance
Program to promote universal service for low-income house-
holds and to determine eligibility guidelines and standards for
the federal and Nebraska support mechanisms.14
In addition to making ETC designations as provided by the
Telecommunications Act, the PSC determines the telecom-
munications providers that are eligible for support from the
Nebraska Fund. The PSC denominates a provider eligible
to receive support from the Nebraska Fund as a “Nebraska
Eligible Telecommunications Carrier” (NETC).15 The PSC’s
regulations require ETC’s receiving federal support to par-
ticipate in Nebraska’s universal service program,16 in effect
requiring an ETC to receive an NETC designation. An NETC
providing services under the Lifeline program is entitled
to $3.50 per month for each qualified consumer from the
Nebraska Fund.
Factual and P rocedural Background
Telrite is a Georgia corporation with a certificate of author-
ity to do business in Nebraska. Telrite received its first ETC
10
47 U.S.C. § 254(f).
11
Neb. Rev. Stat. §§ 86-316 to 86-329 (Reissue 2008).
12
§ 86-324(1).
13
291 Neb. Admin. Code, ch. 10, § 002.01 (2012).
14
§ 86-329(1).
15
291 Neb. Admin. Code, ch. 10, § 001.01R (2012).
16
291 Neb. Admin. Code, ch. 10, § 004.04A (2012).
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870 288 NEBRASKA REPORTS
designation in 2010 and has rapidly become “one of the
largest Lifeline ETCs in the country,” with designations in
approximately half of the states. Telrite often attracts custom-
ers by holding outdoor tent events at which it gives qualified
applicants a “free” cell phone. If an applicant is qualified for
the Lifeline program, the cell phone is activated onsite. In
February 2013, Telrite filed an amended application with the
PSC seeking designation to participate in the Lifeline program
in Nebraska as a prepaid wireless service.
On May 29, 2013, the PSC issued an order designating
Telrite as both an ETC and NETC. The order stated that Telrite
had committed to comply with all of the Nebraska-specific
requirements for ETC’s and NETC’s, including the requirement
to use the form approved by the PSC. The order did not direct
Telrite to comply with any specific requirements other than the
use of a particular form.
On July 12, 2013, Telrite held its first enrollment event in
Nebraska at an outdoor tent in Omaha. Consumer interest was
heavy, and the PSC was later notified that applicants had to
“wait[] in line for extended periods of time in over ninety (90)
degree heat with no shelter or water.” As reported by a local
media outlet, the police were called to the event when “tempers
flared on a hot day.” The PSC fielded a number of inquiries
from consumers in the days following the event. The questions
included: “When was the free phone they received going to
be hooked up?”; “When were the tents going to be open again
and where?”; “Were there any phones left and could they pick
it up at the office?”; “Why was the media coverage not better
as to when and where this event was taking place?”; “Why
were there only tents in Omaha and not in Lincoln?”; “Why
wasn’t more information provided in the [PSC’s] office about
where there are free phones being handed out?”; and “Why
was the information about the free phone give away not made
more public?” The PSC also received a report that Telrite’s
representatives had run out of cell phones and told prospec-
tive applicants to return on Sunday, July 14, but that when
the consumers did so, Telrite representatives were not present.
After the PSC contacted Telrite, it voluntarily ceased enrolling
additional customers in Nebraska on July 15.
Nebraska Advance Sheets
TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 871
Cite as 288 Neb. 866The PSC issued an order on July 30, 2013, demanding that
Telrite show cause why its ETC designation should not be
revoked or administrative penalties levied against it. The order
alleged that Telrite had not contacted the PSC before begin-
ning operations in Nebraska, failed to use the form approved
by the PSC, and handed out flyers that failed to state that the
PSC made the final eligibility determination. In its answer,
Telrite “apologize[d] for the errors made during the launch
of its Lifeline service in Nebraska” and “humbly ask[ed] the
[PSC] to afford it the opportunity to correct its mistakes.”
Telrite admitted that it had “failed to implement state-specific
customization of [Telrite’s] FCC-default standard forms” and
control “unruly behavior in the queue.” Explaining that turnout
had exceeded expectations, Telrite promised to hire security
for future events and make water available if the temperature
exceeded 85 degrees.
The PSC held a hearing on the show cause order on August
27, 2013. Telrite’s counsel began by stating that the PSC had
the power to order “revocation, fine, some other remedy,
whatever you deem appropriate,” but that its decision should
be “guided by . . . the public interest.” Brian Lisle, Telrite’s
president, admitted that Telrite had used the form applicable
in states where the FCC is responsible for ETC designations
instead of the form approved by the PSC. Lisle testified that
he had sent an e-mail to Telrite’s compliance department about
the Nebraska-specific requirements, but that there had been “a
lack of follow-up on communication there.” Lisle testified that
the independent contractor who administered the Omaha event
had received “FCC training” but not “[Nebraska Telephone
Assistance Program] training.”
Lisle also testified about the status of persons who had
received cell phones at the Omaha event and Telrite’s plan
to “re-enroll” those individuals. Lisle stated that about 944
people had applied at the event and that Telrite approved 796
of the applications onsite. Unless they had contacted Telrite
to cancel, the approved applicants were receiving service as
of the hearing. Telrite, however, had not received any dis-
bursements from either the Federal Fund or Nebraska Fund.
Lisle testified that Telrite intended to contact its Nebraska
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872 288 NEBRASKA REPORTS
customers and ask them to complete and return the Nebraska
application. Lisle promised that, in the future, Telrite would
use “employee teams” in Nebraska and abstain from giving
away free cell phones onsite. Instead, Telrite would take appli-
cations and later mail cell phones to the applicants approved
by the PSC.
One of the concerns expressed by commissioners was the
potential for households receiving multiple Lifeline subsidies.
One commissioner noted that the FCC was trying to combat
a “run on the fund” by ineligible persons and had removed
“millions of people” from the Lifeline rolls, which suggested
to the PSC that “there is a lot of waste and a lot of abuse
there.” At the Omaha event, Telrite’s representatives validated
applicants’ information onsite by comparing the information
given by applicants to a database of current Lifeline enrollees.
Lisle testified about Telrite’s enrollment process, including
the steps intended to flag “duplicate[s].” Lisle admitted that
Telrite’s representatives at the Omaha event did not have
access to the database of Nebraska enrollees maintained by
the PSC.
Telrite cited statistics suggesting that low-income Nebraskans
are underserved by Lifeline providers. Telrite’s counsel stated
that the “penetration rate”—the percentage of eligible house-
holds that are enrolled in the Lifeline program—is 40 percent
nationally but only 6 percent in Nebraska. He further stated
that several of Nebraska’s neighboring states were outper-
forming it, noting that the penetration rate was 42 percent in
Kansas, 29 percent in Missouri, and 28 percent in Iowa.
On September 17, 2013, the PSC entered an order revok-
ing Telrite’s ETC designation and directing Telrite to cease
and desist from offering services as a Lifeline provider in
Nebraska. In its order, the PSC identified three main areas of
concern that supported its decision. First, Telrite had failed to
comply with Nebraska Telephone Assistance Program require-
ments a mere 6 weeks after it had promised to do so during
the application process. Second, Telrite had substantial experi-
ence with the Lifeline program and was therefore less deserv-
ing of leniency. The third factor identified by the PSC was a
lack of oversight. The PSC found Telrite’s failures “even more
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TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 873
Cite as 288 Neb. 866disturbing” given the heightened scrutiny that the Lifeline pro-
gram had borne in recent years. The order generally referred
to violations of the PSC’s “rules, regulations and orders” but
did not identify any specific rules, regulations, or orders that
Telrite had violated.
ASSIGNMENTS OF ERROR
Telrite assigns, restated and reordered, that the PSC erred
by (1) ordering an excessive penalty; (2) determining that it
possessed the authority to revoke an ETC designation; (3)
concluding that Telrite had violated the PSC’s rules and regula-
tions; and (4) failing to follow its rules and regulations govern-
ing ETC’s and NETC’s.
STANDARD OF REVIEW
[1,2] Under Neb. Rev. Stat. § 75-136(2) (Supp. 2013),
an appellate court reviews an order of the PSC de novo on
the record. In a review de novo on the record, an appellate
court reappraises the evidence as presented by the record and
reaches its own independent conclusions concerning the mat-
ters at issue.17
ANALYSIS
Excessive P enalty
Telrite argues that the penalty meted out by the PSC in its
order—revocation of Telrite’s ETC designation and an order
to cease and desist from providing Lifeline services—was
excessive. Telrite emphasizes that it accepted responsibil-
ity for its mistakes, has a “rigorous application and review
process,” and proposed corrective measures.18 Furthermore,
Telrite notes that the underlying violation “amount[ed] to
little more than using the wrong form.”19 The PSC argues that
Telrite has understated the significance of its conduct, espe-
cially in light of the concern for fraud in the Lifeline program,
17
In re Margaret Mastny Revocable Trust, 281 Neb. 188, 794 N.W.2d 700(2011).
18
Brief for appellant at 22.
19
Id. at 11 (emphasis in original).
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874 288 NEBRASKA REPORTS
and that the Omaha event occurred a mere 6 weeks after
Telrite received its designations. Although we do not express
an opinion whether lesser penalties are justified, we agree
with Telrite that revocation and a cease-and-desist order were
not warranted on the facts before us.
[3] As an initial matter, the parties disagree whether we
should defer to the PSC’s penalty determination. Telrite asserts
that, because § 75-136 authorizes de novo review, we do not
owe any deference to the PSC’s determination. The PSC main-
tains that our previous decisions require us to affirm the sanc-
tion ordered by the PSC absent “‘arbitrar[iness] or an ‘abuse
of discretion.’”20 In those cases, we stated that determinations
by the PSC are a matter peculiarly within its expertise and
involve a breadth of judgment and policy determination that
an appellate court should not disturb in the absence of a show-
ing that the PSC’s action was arbitrary or unreasonable.21 But
we made these statements before 2013, when the Legislature
amended § 75-136 to provide a “de novo on the record” stan-
dard of review.22 Before 2013, a party appealed from the PSC
under the Administrative Procedure Act and an appellate court
reviewed the PSC’s order for errors appearing on the record.23
Under this standard of review, our inquiry was limited to
whether the decision conformed to the law, was supported
by competent evidence, and was neither arbitrary, capricious,
nor unreasonable.24 Our review of pre-2013 cases shows that
the deference accorded to the PSC was tied to the deferen-
tial standard of review applied by an appellate court under
the Administrative Procedure Act. We therefore reject the
PSC’s contention that it is due the same degree of deference
20
Brief for appellee at 32, citing In re Proposed Amend. to Title 291, 264
Neb. 298, 646 N.W.2d 650 (2002).
21
In re Claims Against Atlanta Elev., Inc., 268 Neb. 598, 685 N.W.2d 477(2004); In re Application of Jantzen, 245 Neb. 81, 511 N.W.2d 504 (1994).
22
2013 Neb. Laws, L.B. 545, § 5.
23
See, e.g., Chase 3000, Inc. v. Nebraska Pub. Serv. Comm., 273 Neb. 133,
728 N.W.2d 560 (2007).
24
Id.Nebraska Advance Sheets
TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 875
Cite as 288 Neb. 866it enjoyed before the Legislature amended § 75-136. Under
the amended § 75-136, an appellate court must reappraise the
evidence on the record as it relates to the penalty issued by the
PSC and reach an independent conclusion.25
Our de novo review of the record leads us to conclude that
the revocation and cease-and-desist order was not warranted.
In reaching this conclusion, we consider the purposes and
goals of the Telecommunications Act and the NTUSFA. In 47
U.S.C. § 254(b), the Telecommunications Act identifies the
following “[u]niversal service principles”: (1) “Quality serv­
ices . . . at just, reasonable, and affordable rates”; (2) access
to advanced telecommunications to all regions of the United
States; (3) telecommunications access to “low-income consum-
ers and those in rural, insular, and high cost areas”; (4) “an
equitable and nondiscriminatory contribution to the preserva-
tion and advancement of universal service” by telecommu-
nications providers; (5) “specific, predictable and sufficient”
federal and state support mechanisms; and (6) the provision of
access to advanced telecommunications services for schools,
health care providers, and libraries. The NTUSFA similarly
includes these “principles” as undergirding the state’s policy of
preserving and advancing universal service. In addition to these
six principles, the NTUSFA includes the principle of keeping
the costs of administering the Nebraska Fund to a minimum.26
But the Legislature has identified the purpose of the NTUSFA
as “ensur[ing] that all Nebraskans, without regard to their
location, have comparable accessibility to telecommunications
services at affordable prices.”27
The PSC’s termination of Telrite’s participation as a Lifeline
provider in Nebraska does not further the principles of uni-
versal service. High among the goals of the federal and state
universal service effort is the provision of telecommunica-
tions service to low-income households. Lisle testified that
about 6 percent of eligible households in Nebraska participate
25
See In re Margaret Mastny Revocable Trust, supra note 17.
26
§ 86-323.
27
§ 86-317.
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876 288 NEBRASKA REPORTS
in the Lifeline program, compared to 40 percent nationally.
Furthermore, while the problems that occurred at the Omaha
event were due in part to Telrite’s poor planning, they were
exacerbated by a larger-than-expected turnout indicative of an
unmet demand for Lifeline service in Nebraska. Additionally,
the complaints fielded by the PSC in the wake of the Omaha
event show that consumers were largely concerned about hav-
ing greater access to Telrite’s offerings. Taken as a whole, the
record suggests that there are a substantial number of low-
income households in Telrite’s intended service area that would
benefit from its presence in the marketplace.
Moreover, the PSC’s concern for fraud in the Lifeline pro-
gram does not justify the penalty. During the hearing held on
the show cause order, the commissioners noted that the FCC
was currently combatting a “run on the fund” by ineligible
applicants and had removed “millions of people” from the
Lifeline rolls. But there is no indication in the record that
Telrite facilitated applications by ineligible persons, and as
the PSC admits, Telrite has not received any support from
either the Federal Fund or Nebraska Fund for the individuals
it approved.
Telrite, using a “pool[ed]” database of current Lifeline sub-
scribers created from the records of 20 to 24 ETC’s, rejected
more than 15 percent of the applications it received due to
ineli­ibility concerns. Lisle testified that Telrite would con-
g
tinue to run applicants’ information through this database
before transmitting the application to the PSC as an extra
precaution against duplicates. Furthermore, we note that there
is substantial overlap between the FCC’s eligibility criteria,
which were incorporated into the forms used by Telrite, and the
PSC’s eligibility criteria.28
Telrite admitted that it made mistakes, but these initial
administrative missteps occurred over the course of a single
day and were immediately curtailed. Furthermore, these errors
are easily remedied. Telrite submitted to the PSC a proposed
28
Compare 47 C.F.R. § 54.409(a) with 291 Neb. Admin. Code, ch. 10,
§ 006.04A.
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TELRITE CORP. v. NEBRASKA PUB. SERV. COMM. 877
Cite as 288 Neb. 866process to “re-enroll” its Nebraska subscribers using the cor-
rect form and flyers to be handed out at future events stating
that the PSC would make the final eligibility determination.
The PSC did not object to either of these proposals.
We need not express an opinion regarding the appropriate-
ness of lesser sanctions. The NTUSFA provides that the PSC
has the power to withhold funds if a telecommunications
company fails to comply with the PSC’s orders or regulations
and, under Neb. Rev. Stat. § 75-156 (Supp. 2013), administra-
tively fine any person who violates the NTUSFA.29 We note
in passing that noncompliance with the PSC’s orders violates
the NTUSFA30 and may subject a telecommunications provider
to fines under § 75-156. But the only order in the record that
Telrite violated was the May 29, 2013, order, which stated that
Telrite must use a Nebraska-specific form. Under § 75-156(1),
the PSC has the discretion to issue fines of up to $10,000 per
day if it finds, by clear and convincing evidence, that “any
term, condition, or limitation of any certificate, permit, or
authority issued by the [PSC]” or “any rule, regulation, or
order of the [PSC]” was violated. Should the PSC consider the
imposition of an administrative fine on remand, § 75-156(5)
directs it to consider the gravity of Telrite’s violation and
its good faith efforts to achieve compliance after being noti-
fied of the violation. And, of course, Telrite’s conduct at the
Omaha event may be considered should future compliance
problems occur.
R emaining Assignments
of Error
[4] Because we conclude that the penalty ordered by the
PSC was excessive, we do not reach Telrite’s remaining assign-
ments of error. An appellate court is not obligated to engage
in an analysis that is not necessary to adjudicate the case and
controversy before it.31
29
§ 86-324(2)(c) and (f).
30
See § 86-324(2)(b).
31
Lang v. Howard County, 287 Neb. 66, 840 N.W.2d 876 (2013).
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878 288 NEBRASKA REPORTS
CONCLUSION
From our de novo review of the record, we conclude that
the revocation and cease-and-desist order imposed by the PSC
was excessive. We do not make light of Telrite’s failure to
use the correct form a mere 6 weeks after the PSC ordered it
to do so. Nor do we express an opinion whether lesser sanc-
tions are justified. But, considering the low participation rate
of Nebraska households in the Lifeline program and the pur-
poses of both the Telecommunications Act and the NTUSFA,
revocation and a cease-and-desist order were not warranted
by Telrite’s failure to use the correct form during a 1-day
event. Accordingly, we reverse, and remand to the PSC for
further proceedings.
R eversed and remanded for
further proceedings.
Heavican, C.J., participating on briefs.