I.Background
A. Basic local service v. long distance service

Local exchange companies (LECs) sell basic local telecommunications service; interexchange companies (IXCs) sell long distance service. Basic local telecommunications service (basic service) does not include long distance services. But most LECs provide billing and collection services for IXCs. Thus, the LEC’s bill to the customer may include long distance charges, even though the LEC is not providing that service.

B. The duty to serve

A telecommunications utility is required to provide basic service to any customer within its certified area unless an express statutory exception exists. PURA §3.258 (a). This provision is commonly referred to as "the duty to serve." The only statutory exceptions are provided in §3.258 (b), §3.259, and §3.2595. When specific exclusions or exceptions to a statute are stated by the legislature, no other exclusions or exceptions shall apply. Thus, LECs are not excused from their duty to serve unless one of these three statutes permits them to disconnect service for failure to pay long distance charges.

The exceptions in §3.259 and §3.2595 are not applicable. Section 3.259 concerns a refusal to serve if prohibited under unrelated provisions of the Local Government Code (concerning utility service to certain areas). Section 3.2959 concerns discontinuation of service to an entire area, not an individual consumer.

Two arguments can be made that the §3.258 (b) exception for "nonpayment of charges" permits disconnection for failure to pay a long distance bill. First, it could be argued under subsection (b)(1) that the exception for "nonpayment of charges" applies to local and long distance charges, rather than just charges for basic local service. Second, it could be argued under subsection (b)(3) that the failure to pay a long distance bill is a "similar reason" to those listed. The balance of this memo will show that both of these arguments fail.

C. Current PUC rules

Several PUC rules permit denial of service for nonpayment of long distance charges. See, e.g., 16 TAC §§ 23.43 and 23.46. These deposit and disconnection rules all include "the charges of interexchange carriers only where a local exchange carrier’s tariffs provide for billing for the interexchange carrier." Thus, the rules permit discontinuation of service for long distance charges by some, but not all, LECs and when the consumer owes a debt to some, but not all, IXCs. Thus, the PUC’s definition of "charges" varies depending on facts that are completely outside the control of the consumer.

D. An administrative rule that conflicts with a statute is void

Administrative agencies are creatures of statute, have no inherent authority, and may exercise only those specific powers conferred upon them by law in clear and express language; no additional authority will be implied by judicial construction. The key factor in determining whether an agency had statutory authority to promulgate a rule is whether the rule's provisions are in harmony with the general objectives of the Act involved.

Although an agency’s interpretation of a statute is given weight by the courts, actions by the agency must be consistent with, and in furtherance of, expressed statutory purposes. If the agency takes an action which conflicts with the statute, the agency’s action is ineffective.

Thus, the PUC is without power to permit LECs to deny service for failure to pay a long distance bill if that practice is inconsistent with a statute. As the next section will show, that practice is inconsistent both with PURA and the Texas Debt Collection Act.