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In re Application of Dobson Telephone Co.

Court of Appeals of Oklahoma, Division IV

September 22, 2016

IN THE MATTER OF THE APPLICATION OF DOBSON TELEPHONE COMPANY d/b/a MCLOUD TELEPHONE COMPANY FOR FUNDING FROM THE OKLAHOMA UNIVERSAL SERVICE FUND,
v.
STATE OF OKLAHOMA ex rel. OKLAHOMA CORPORATION COMMISSION, Appellee. DOBSON TELEPHONE COMPANY d/b/a MCLOUD TELEPHONE COMPANY, Appellant,

          Mandate Issued: 03/21/2017

         APPEAL FROM AN ORDER OF THE CORPORATION COMMISSION

          Clyde A. Muchmore, William H. Hoch, Melanie Wilson Rughani, Mark S. Grossman, CROWE & DUNLEVY, A PROFESSIONAL CORPORATION, Oklahoma City, Oklahoma, and Ron Comingdeer, Kendall Parrish, RON COMINGDEER & ASSOCIATES, P.C., Oklahoma City, Oklahoma, for Appellant.

          Robert J. Campbell, Jr., OKLAHOMA CORPORATION COMMISSION, Oklahoma City, Oklahoma, for Appellee

          JOHN F. FISCHER, JUDGE.

         ¶1 Dobson Telephone Company, d/b/a McLoud Telephone Company, appeals a Final Order from the Oklahoma Corporation Commission denying Dobson's request for funding from the Oklahoma Universal Service Fund. Dobson sought reimbursement for costs incurred when it was required by the City of Oklahoma City to relocate its telecommunications lines to accommodate the widening of a city street. The Oklahoma Universal Service Fund was established pursuant to the Oklahoma Telecommunications Act of 1997 to make funds available to eligible telecommunications service providers like Dobson "to promote and ensure the availability of primary universal services, at rates that are reasonable and affordable...." 17 O.S.2011 § 139.106 (B). The Commission determined that reimbursement was not authorized unless the request to relocate had been made by a State agency. The Commission's interpretation defeats the purpose of the Fund. The Commission's Final Order is vacated, and this case is remanded for further proceedings. [1]

         BACKGROUND

         ¶2 Dobson is a telecommunications provider serving nine exchanges and providing "general universal services" to approximately eleven thousand subscribers in central Oklahoma. To service its McLoud exchange, Dobson maintains telecommunications lines and other facilities in the right-of-way of Choctaw Road in the City of Oklahoma City. In September of 2012, the City notified Dobson that it would have to move its telecommunications lines and facilities to accommodate the widening of Choctaw Road. Dobson did so at a cost it represented to be $420, 842.41. In December of 2013, Dobson submitted a request for reimbursement of that cost to the Oklahoma Universal Service Fund. [2] The Fund is administered by the Oklahoma Corporation Commission, and the Commission's Public Utility Division investigated Dobson's request. The Division determined that Dobson's request was governed by 17 O.S.2011 § 139.106 (K)(1)(b). That section authorizes reimbursement for costs "required by existing or future federal or state regulatory rules, orders, or policies or by federal or state law...." According to the Division, this provision only applies to highway right-of-way relocation costs incurred at the direction of the Oklahoma Department of Transportation or a board of county commissioners. Consequently, the Division concluded that the Fund was not authorized to pay relocation costs required as a result of the City's relocation demand. The Division recommended denial of Dobson's request for reimbursement. [3]

         ¶3 Dobson filed a Request for Reconsideration. It attached a copy of Oklahoma City Ordinance No. 23499 § 50-13. The ordinance authorizes public utilities like Dobson to use City street rights-of-way for location of telecommunications lines but also requires relocation at the utility's expense when requested to do so by the City. After further briefing, the matter was argued to the Commission en banc. The Commission found: "The City, not the State, owns the right-of-way here, and the Legislature has not enacted either a general law or a local law that applies to relocation of [Dobson's] utility line." The Commission concluded that relocation pursuant to a municipal ordinance failed to show the requisite increase in costs "arising from federal or state action" for reimbursement from the Fund because a municipal ordinance is not a "state law." [4] The Commission adopted the Division's recommendation and denied Dobson's request for reimbursement from the Fund. The validity of the Commission's decision is dependent on the correctness of its interpretation of the statutory term "state law."

         STANDARD OF REVIEW

         ¶4 The Oklahoma Constitution provides that appellate review of Corporation Commission orders "shall be judicial only, and in all appeals involving an asserted violation of any right of the parties under the Constitution of the United States or the Constitution of the State of Oklahoma, the Court shall exercise its own independent judgment as to both the law and the facts." Okla. Const. art. 9, § 20. In other appeals, appellate review "shall not extend further than to determine whether the Commission has regularly pursued its authority, and whether the findings and conclusions of the Commission are sustained by the law and substantial evidence." Id. The issue in this appeal concerns only the Commission's legal interpretation of the Fund statute. Statutory interpretation presents a question of law. Troxell v. Okla. Dep't of Human Servs., 2013 OK 100, ¶ 4, 318 P.2d 206.

         ¶5 The issues raised in Dobson's appeal necessarily concern its property interest in reimbursement for expenses contemplated by the Fund statute, a fundamental interest protected by the Oklahoma and United States Constitutions. However, that characterization does not determine the applicable standard of review. Whether this court exercises its "independent judgment" as to the Commission's statutory interpretation or reviews that interpretation to determine whether it is "sustained by the law, " our review is the same and no different than the de novo review we employ regarding issues of law in other contexts. Legal issues involving statutory interpretation are subject to de novo review. Heffron v. District Court of Oklahoma Cnty., 2003 OK 75, ¶ 15, 77 P.3d 1069. De novo review is non-deferential, plenary and independent. Neil Acquisition, L.L.C. v. Wingrod Inv. Corp., 1996 OK 125, n.1, 932 P.2d 1100.

         ANALYSIS

         ¶6 Dobson appeals the denial of its request for reimbursement of the costs it incurred when it was required by the City of Oklahoma City to relocate its telecommunications lines. Disposition of Dobson's appeal requires the interpretation and construction of the Oklahoma Telecommunications Act of 1997, 17 O.S.2011 and Supp. 2014 §§ 139.101 to 139.110. The particular section at issue, which created the Oklahoma Universal Service Fund, authorizes reimbursement to providers like Dobson for certain cost increases. As identified by the parties, the relevant portion of that section provides:

K. 1. Each request for OUSF funding by an eligible [telecommunications provider] serving less than seventy-five thousand access lines shall be premised upon the occurrence of one or more of the following:
....
b. if, as a result of changes required by existing or future federal or state regulatory rules, orders, or policies or by federal or state law, an eligible local exchange telecommunications service provider experiences... an increase in costs, it shall recover the revenue reductions or cost increases from the OUSF....

17 O.S.2011 § 139.106 (K)(1)(b). According to the Commission, this provision would have permitted reimbursement had Dobson incurred the cost of relocating its telecommunications lines as the result of an order from the Department of Transportation or a board of county commissioners. But, because this relocation was required by a municipality, pursuant to a municipal ordinance, reimbursement was not authorized. The Commission reached this conclusion based on its narrow interpretation of the term "state law." We find the Commission's interpretation untenable.

         I. The Commission's Interpretation

         ¶7 When the Commission received Dobson's request for reimbursement, its Public Utility Division investigated the application "to identify which government authority owned the road (i.e., State, County, or City)." The Division recommended denial of Dobson's request after determining that the City owned the road, and neither the Oklahoma Department of Transportation nor any board of county commissioners had ordered the relocation. The brief in support of the Division's recommendation states that the Division "lacks documentation to support or recognize a city municipality as a proper authority able to exercise state law. [The Division] does not believe [Dobson's] cost of the facilities relocation is eligible for reimbursement under 17 O.S. § 139.106 (K)(1)(b)." The Commission adopted the Division's recommendation, finding that the term "state law" does not include municipal ordinances. That issue has not been previously decided by any Oklahoma court.

         ¶8 However, in August of 2015, after this case was decided, the Commission amended its Rules and Regulations related to the Telecommunications Act to add a definition of the word "state, " a previously undefined term: " 'State' means the State of Oklahoma." Oklahoma Administrative Code § 165:59-1-4 (amended at 32 Okla. Reg. 868, eff. August 27, 2015). Assuming that the Commission amended its rules to make clear that "state law" means state statute, and that relocation expenses resulting from municipal direction would not be reimbursed from the Fund, the Commission's action is relevant for two reasons. [5] First, it establishes that there is no "longstanding" interpretation of the Fund statute to which we can refer. See Schulte Oil Co., Inc. v. Okla. Tax Comm'n, 1994 OK 103, ¶ 4, 882 P.2d 658');">882 P.2d 658 (explaining the teaching of Oral Roberts Univ. v. Okla. Tax Comm'n, 1985 OK 97, 714 P.2d 1013, that "an agency's longstanding construction of an ambiguous or uncertain statute will not be disturbed without cogent reason"). Second, the word "state" is not capitalized in section 139.106(K)(1)(b) of the statute as it is in the Commission's rule. Although somewhat a matter of convention, common nouns are often capitalized when reference is made to a specific person or thing. The Commission's definition illustrates this point. Had the Legislature defined "state" as the Commission appears to have intended, we would be bound by that definition. See Oliver v. City of Tulsa, 1982 OK 121, ¶ 19, 654 P.2d 607. But no corresponding definition of "state" appears in the definitions section of the Telecommunications Act nor has any been added which conforms to the Commission's apparent position. See 17 O.S.Supp. 2014 § 139.102. "In the absence of specific statutory definition, we must assume that the law-making body intended a common word to be interpreted in its ordinary and usual parlance." Reynolds v. Porter, 1988 OK 88, ¶ 9, 760 P.2d 816. And, we are not bound by the Commission's recent interpretation. Even longstanding construction of a statute by the agency charged with its administration may be disregarded for "cogent reasons, " for example, if the "construction is erroneous." Oral Roberts Univ. v. Oklahoma Tax Comm'n, 1985 OK 97, ¶ 12, 714 P.2d 1013 (citing McCain v. State Election Bd., 1930 OK 323, 289 P. 759). If the Commission's construction of the Fund statute is erroneous, a cogent reason for disregarding its construction is that its construction defeats the stated policy of the statute.

         ¶9 Further, the Commission's "interpretation" of the statute is not particularly clear. Dobson's request for reimbursement from the Fund attaches the Commission's required form. In the first section of the form, the Commission requests the applicant to "indicate under which category your request for funding is being made." Dobson checked the second, and only relevant, alternative: "Infrastructure expenditures or costs incurred in response to facility or service requirements established by a legislative, regulatory, or judicial authority or other governmental entity mandate." This language repeats the language of section 139.106(G). However, no separate entry appears in this "category" section of the form for costs incurred as the result of "state law" using the language found in section 139.106(K)(1). That language does appear in the next section of the form: "which of the following occurrences" caused the cost increase: (A) "Decrease in Revenue from Federal Universal Service Fund" or (B) "Reduction in Revenue/Increase in Cost from Existing or Future Federal or State Regulatory Rules, Orders, or Policies or by Federal or State Law." Dobson selected the latter. The Commission's form appears to recognize a connection between costs incurred pursuant to sections 139.106(G) and (K) and also that Fund sources are available for both. Further, the Commission concedes that Dobson was required to relocate its transmission lines as the result of a "governmental entity mandate." [6] 17 O.S.2011 § 139.106 (G)(2)

         ¶10 Nonetheless, the Commission argues that there is a statutory distinction between costs resulting from the mandate of any governmental entity and costs resulting from "state law." Essentially, the Commission relies on principles of statutory construction to support its position. It contends, in essence, that if the Legislature had intended for the Fund to pay eligible telecommunications providers for their relocation costs incurred as the result of municipal action, the Legislature would have done so in express terms. It concludes that by limiting reimbursement to "existing or future federal or state regulatory rules, orders, or policies or by federal or state law" the Legislature clearly indicated its intent to exclude from reimbursement any costs incurred as the result of municipal action. The rules of statutory construction are well-known and cited by both parties. See, e.g., City of Tulsa v. Pub. Emps. Relations Bd., 1998 OK 92, ¶ 14, 967 P.2d 1214; Samman v. Multiple Injury Trust Fund, 2001 OK ...


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