Rules that permit an LEC to deny service for nonpayment of long distance charges violate two state statutes: PURA and the Texas Debt Collection Act.

A. PURA prohibits LECs from denying service for nonpayment of long distance charges

The LEC’s right to disconnect service for nonpayment of long distance charges depends on the meaning of "charges" in §3.258 (b)(1). That section provides an exception to the duty to serve for "nonpayment of charges." "Charges" means either charges for basic local telephone service only or charges for basic and long distance telephone services. This section will show that the only reasonable interpretation of "charges" is to apply solely to charges for basic local telephone service.

1. The only reasonable interpretation of "charges" is to apply solely to charges for basic local telephone service

Three rules of statutory construction are particularly applicable to the interpretation of "charges" in §3.258 (b).

Second, the interpretation must be consistent with the legislature’s intent to encourage universal service. The cardinal rule of construction is to give effect to the legislative intent. That intent must be determined from the statute as a whole, not simply from isolated parts. In this case, the legislature expressly set out its policy of "guaranteeing the affordability of basic telephone service" in Texas. This legislative intent is also referred to as the universal service goal.

The following sections apply these rules of construction to §3.258.

a. §3.258(b)(1) does not include long distance charges

The first statutory construction rule requires us to look beyond the term "nonpayment of charges" in §3.258(b)(1). Taken alone, this phrase would mean that nonpayment of any charge by any provider of goods or services would permit the LEC to disconnect service. For instance, failure to pay a disputed charge on a department store credit card could be grounds for disconnection of telephone service. Clearly the legislature intended to limit the types of charges for which nonpayment entitles the LEC to discontinue service. The first statutory construction rule set out above supports this intent by requiring a reading of the statute as a whole, not just the isolated phrase "nonpayment of charges."

The issue, then, is how the legislature limited the types of charges for which service disconnection is permitted. There are two possible interpretations. Section 3.258 could limit "charges" to either (1) charges for basic local telephone service or (2) charges for local and long distance telephone services.

The only type of good or service mentioned in §3.258 is basic local telephone service. Subsection (a) expressly makes the statute applicable to "basic local telecommunications service." Nowhere in the statute is there a direct or indirect reference to billing and collection service or long distance service. Moreover, §3.258(b)(2) confirms that the exceptions in §3.258(b) relate only to basic local telephone service. That provision provides that the LEC may discontinue service for "nonuse." Obviously this means nonuse of basic local telephone service. It would be absurd to interpret this section to permit a LEC to discontinue basic service for nonuse of another service, such as long distance service.

There is no doubt that the legislature intended to limit the type of service for which nonpayment of charges or nonuse would justify refusal of service. The only type of service mentioned in §3.258 is basic local telephone service. Therefore, the legislature intended to limit the "charges" for which disconnection is permitted to charges for basic local telephone service.

b. §3.258(b)(3) does not include long distance charges

The legislature’s intent to limit the exception to nonpayment of charges for basic local telephone service should not be disregarded through an expanded reading of §3.258(b)(3). That section provides an exception to the duty to serve for "other similar reasons." This exception does not include nonpayment of charges for other services. When general words like "other similar reasons" follow an enumeration of persons or things, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class of those specifically mentioned. As shown above, the class of things provided in §3.258(b)(1) and (b)(2) are things related to basic local telephone service.

Thus, the general words "other similar reasons" apply only to matters concerning basic local telephone service. This exception does not permit disconnection of basic local telephone service for nonpayment of charges for any service other than basic local telephone service.

2. Application of specific rules of statutory construction aids do not permit a contrary reading

As the discussion above shows, there is only one reasonable reading of the exceptions to the duty to serve: "nonpayment of charges" means nonpayment of charges for basic local telephone service. The statute is not ambiguous because there is only one reasonable interpretation. Thus, there is no need to resort to statutory construction aids. However, in this section three such aids will be discussed in detail regarding their application to the exception to the duty to serve.

a. Any ambiguity should be resolved in favor of service

This rule of law is equally, if not more, applicable to the provision of a basic necessity like local telephone service. When there are two competing reasonable constructions of a section of PURA, one favoring the utility in its attempts to avoid its duty to serve and one favoring the public and the goal of universal service, the ambiguity should be resolved in favor of requiring the utility to provide service. This will further the legislature’s goal of "guaranteeing the affordability of basic telephone service" in Texas.

b. The PUC’s erroneous interpretation of "charges" is not controlling

Although courts sometimes give deference to an agency’s interpretation of its own statute, that doctrine does not apply in this case.

First, agency deference is simply a statutory construction aid and does not apply when the statute is unambiguous. The courts will not even consider the agency’s interpretation if the statute is unambiguous:

Thus, before giving weight to the Commissioner's interpretation of the phrase before us, we must conclude that the phrase is ambiguous.

The courts have not been hesitant to disregard the PUC’s interpretations of telephone statutes in the past:

[T]he Commission asserts in the alternative that … we should defer to the Commission's interpretation. [citation omitted] However, such deference is permissible only if the meaning of the statutory language is unclear or ambiguous. [citation omitted] We conclude that PURA Sec. 3(c)(2)(B) is not ambiguous in any material respect and that the Commission's interpretation conflicts with the plain meaning of the provision. Accordingly, we decline to defer to the Commission's interpretation.

Since §3.258(b) is not ambiguous, the PUC’s interpretation of "charges" is not entitled to any weight.

Second, an agency’s interpretation will not be followed if it conflicts with the statute. The interpretation is valid only if it is consistent with the statutory definition and the interpretation may not expand the language of the statute. Courts will reject the erroneous interpretation even if it has been applied for a long time:

Although courts in construing a statute may consider the administrative construction which has been placed on it, … they cannot allow an administrative construction, however long applied, to control over the clear and express provisions of the statute, or to arrogate to the agency express powers which the statute clearly does not grant, and in fact impliedly withholds.

The PUC’s past interpretation of "charges" to include long distance charges violates the only reasonable interpretation of the statute. Thus, the PUC’s interpretation is not entitled to any deference.

Third, even if the courts do give deference to the PUC’s interpretation of "charges," the courts are not bound by the interpretation. Interpretation of a statute, of course, is a question of law and courts are well-suited to determine questions of law on their own. Court’s are particularly adverse to being bound by erroneous interpretations:

[A]n administrative agency's interpretation of a statute is never absolutely binding on this Court, Bullock v. Ramada Tex., Inc., 609 S.W.2d 537, 539 (Tex.1980), and will not be followed "when contrary to the intention of the Legislature as disclosed by the provisions of the act."

Even if the courts do give deference to the PUC’s interpretation of "charges," therefore, the courts will not be bound by the interpretation. Moreover, they will reject it as being contrary to the legislative intent.

Finally, the PUC’s interpretation of "charges" is not entitled to any weight because it is unreasonable. Rather than define "charges" as including long distance charges, the PUC rules interpret "charges" to include only long distance charges for which the LEC provides billing and collection services. Thus, "charges" is defined to have one meaning for LECs that provide billing and collection services (i.e. "charges" means local and long distance charges) but a different meaning for other LECs (i.e. "charges" means only local service). Moreover, even for LECs that provide billing and collection services, "charges" includes long distance charges only by some IXCs, namely, those for whom the LEC provides the billing and collection services.

This fluid definition of "charges" is neither reasonable nor justified by the statute. Charges for long distance service are either "charges" as contemplated by the statute or they are not. Nothing in the statute supports an interpretation that would have the term have a different meaning depending on whether or not an IXC carrier happens to have entered a billing and collection services agreement with the LEC. The PUC’s interpretation is not reasonable and should be rejected.

c. The recodification of PURA did not constitute an approval of the PUC’s interpretation

For the same reasons that the PUC’s interpretation of the statute is not entitled to any weight by the courts, the recodification of PURA did not amount to a legislative acceptance of this erroneous interpretation. Most importantly, the doctrine of legislative acceptance applies only when the statute to be construed is ambiguous. Since §3.258(b) is not ambiguous, the legislature did not accept the PUC’s erroneous interpretation of the statute when it recodified PURA.

B. Texas Debt Collection Practices Act

Substantive Rule § 23.45(c)(4) permits the LEC to charge a 5% late charge on the entire deferred payment balance in violation of Texas Debt Collection Act §11.04 (b). That statute prohibits a debt collector from:

collecting or attempting to collect any interest or other charge, fee, or expense incidental to the obligation unless such interest or incidental fee, charge, or expenses is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer.