97-001628RX Chester Osheyack vs. Florida Public Service Commission Status: Closed DOAH Final Order on Monday, August 11, 1997.

Summary: Rule allowing LECs billing toll calls for IXCs to disconnect local phone service for failure to pay toll charges is valid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHESTER OSHEYACK , )

)

Petitioner , )

)

vs. ) Case No. 97- 1628RX

)

PUBLIC SERVICE COMMISSION , )

)

Respondent. )

__________________________________)

FINAL ORDER

On June 23, 1997, a formal administrative hearing was held

in this case by televideo before J. Lawrence Johnston,

Administrative Law Judge, Division of Administrative Hearings.

(The Administrative Law Judge and all participants except the

Petitioner were in a specially-equipped hearing room in

Tallahassee; the Petitioner was in a specially-equipped hearing

room in Tampa, Florida. The two hearing rooms were connected by

televideo.)

APPEARANCES

For Petitioner : Chester Osheyack, pro se

418 Kingstown Avenue, Apartment 2

Brandon, Florida 33511

For Respondent : Mary Anne Helton, Associate General Counsel

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-6096

STATEMENT OF THE ISSUES

The issue in thi s case is whether Rule 25-4.113(1)(f),

Florida Administrative Code, is a valid exercise of delegated

legislative authority.

PRELIMINARY STATEMENT

On or about April 4, 1997, Petitioner filed a Petition for

Rescission [sic] of the Disconnect Authority Rule with the

Division of Administrative Hearings (DOAH).

On April 14, 1997, the final formal administrative hearing

(by video) was noticed for May 12, 1997; a Prehearing Order also

was entered.

Petitioner served his response to Respondent’s motion in

opposition on April 15, 1997, and oral argument was heard at a

telephone hearing on April 21, 1997.

An “Order Dismissing Petition With Leave To Amend,

Continuing Final Hearing (By Televideo Conferencing), And

Amending Prehearing Order” was entered on April 29, 1997. It

dismissed Mr. Osheyack’s petition with leave to file an amended

petition within 15 days from the date of the order to focus “on

the allegations supporting the Petitioner’s contentions that the

rule is invalid under Section 120.52(8)(c), (e) and (f), Florida

Statutes ( Supp. 1996).” It also continued the hearing to June

23, 1997, and amended the prehearing order.

Petitioner served his amended petition on May 12, 1997.

In it, he alleged that Rule 25-4.113(1)(f), Florida

Administrative Code is an invalid exercise of delegated

legislative authority because: (1) the rule enlarges, modifies,

or contravenes the specific provisions of the law implemented;

(2) the rule is arbitrary and capricious; (3) the rule is not

supported by competent substantial evidence; (4) the requirements

of the rule are not appropriate to the end specified in the

legislative act; and (5) the rule or the requirements of the rule

are not reasonably related to the purpose of the enabling

legislation.

On May 29, 1997, Respondent Florida Public Service

Commission’s Motion for Official Recognition of Attachments A

through II was filed. It was not opposed, and an Order Taking

Official Recognition was entered on May 30, 1997.

On June 13, 1997, the parties filed a Prehearing

Stipulation which, in part, narrowed the issues to be heard.

Final hearing was held on June 23, 1997, by video

conferencing. At the hearing, Respondent did not object to

Petitioner rephrasing the issues of fact set forth in the

Prehearing Stipulation as follows: (1) whether the Florida

Public Service Commission has jurisdictional and legislative

authority to permit denial, interruption, or disconnection of

basic local exchange telephone service for nonpayment of services

not regulated by the Commission, including but not limited to

interstate long distance service; (2) whether the disconnect

authority rule as currently applied unreasonably expands the

legislative authority provided to the Commission by the Florida

Statutes to the detriment of the consumers; (3) whether the

disconnect authority rule, as currently applied, contravenes the

mandate of the Florida Telecommunications Statutes as amended in

1995, which call for the Commission to promote competition by

approving trade practices that encourage fair competition and

consumer choice while eliminating anticompetitive rules and

regulations; (4) whether the Florida Public Service Commission

has the authority to approve policies that are (allegedly)

arbitrary and capricious in nature and are inconsistent based on

competent evidence; and (5) whether the Florida Public Service

Commission has the authority to approve or sustain policies, such

as the disconnect authority rule, which (allegedly) contravene

the mandates of state law and the principles of conduct defined

in federal law, or the mandates of applicable federal law with

respect to the specific issue of universal service. Petitioner

withdrew issues concerning the Federal Fair Debt Collection

Practices Act, the Florida Consumer Collection Practices Act, and

the statute of limitations; Petitioner also admitted the

antitrust issues raised in his amended petition were not

relevant.

Petitioner called Ms. Beverlee DeMello, Mr. Julian O’Pry,

and Mr. Mark Long. Mr. Osheyack also called Ms. Sally Simmons,

even though she was not listed as a witness for Petitioner.

Instead, Petitioner’s cross-examination of Ms. Simmons was

allowed to go outside the scope of Respondent’s direct

examination. When Petitioner attempted to testify in his own

behalf, Respondent objected because Petitioner never identified

himself as a witness, and Petitioner did not testify.

Petitioner withdrew Exhibits 4 through 6; 10 through 12;

14 through 17; and 24. Ruling was reserved on Respondent’s

objections to the Petitioner’s remaining exhibits to allow

Petitioner to file written responses to the objections.

Respondent called Ms. Sally Simmons and had Respondent’s

Exhibits 28 through 32 admitted in evidence. In addition,

Respondent’s Second Motion for Official Recognition was granted,

and the Federal Communication Commission’s (FCC’s) Report and

Order, Order FCC 86-31, adopted January 14, 1985, in CC Docket

No. 85-88, In the Matter of Detariffing of Billing and Collection

Services, was designated as Official Recognition document (O.R.)

JJ.

At the close of the evidence the Commission ordered the

preparation of the transcript of the final hearing. The

transcript of the hearing was filed on July 1, 1997. Respondent

filed its proposed final order on July 11, 1997; Petitioner did

not file a proposed final order. Nor did the Petitioner file any

response to Respondent’s evidentiary objections.

On July 28, 1997, the Petitioner filed a request for an

extension of time to file his proposed final order, along with

his response to Respondent’s evidentiary objections and a Motion

to Accept Late Filed Exhibits. On July 29, 1997, the Respondent

filed a Response in Opposition to Petitioner Chester Osheyack’s

Motion to Accept Late Filed Exhibits and Letter Concerning

Exhibit Objections; by letter dated August 4, 1997, the

Petitioner replied. The Respondent indicated telephonically on

August 5, 1997, that it also opposes the Petitioner’s request for

an extension of time to file his proposed final order.

It is now ruled that the Petitioner’s Motion to Acc ept

Late Filed Exhibits and request for an extension of time to file

his proposed final order are denied. However, the Petitioner’s

late response to the Respondent’s evidentiary objections does not

prejudice the Respondent, and it has been considered.

Based on the written arguments, it is now ruled that

Respondent’s objections to Petitioner’s Exhibits 1, 2 and 3 are

overruled, and the exhibits are admitted in evidence as party

admissions. Respondent’s objections to Petitioner’s Exhibits 13

and 18 through 23a, b, and c, and 25 through 26 are sustained.

(Petitioner’s Exhibit 27 is received without objection.)

(There is confusion in the record as to whether the

Petitioner intended to withdraw Petitioner’s Exhibits 7 through

9. If not, Respondent’s objections to them, stated in the

Prehearing Stipulation, are sustained.)

FINDINGS OF FACT

History of the Rule

1. The Commission first adopted a rule setting out its

policy on disconnection and refusal of service in August of 1955.

In re: Adoption of rules and regulations governing telephone

companies , Order No. 2195 (June 24, 1955) (O.R. E). ( Prehearing

stipulation p. 10) Rule 20 provided that: “Service may be

denied to any subscriber or applicant for failure to comply with

these rules, the telephone company’s tariff, municipal ordinances

or state laws.” Id .

2. Effective December 1, 1968, the Commission revised its

disconnect rule to specifically provide that a company could

disconnect telephone service for nonpayment. In re: Proposed

revision of rules and regulations governing telephone companies ,

Order No. 4439 (October 17, 1968) (O.R. F). ( Prehearing

stipulation p. 10) Since adoption of Rule 310-4.66(1) in 1968,

the Commission’s disconnect rule has been revised seven times:

In re: Proposed revision of Chapter 2-4 relating to telephone

companies and radio common carriers , Order No. 7132 (March 1,

1976) (O.R. G); In re: Amendment of Rules 25-4.113 and 25-10.74

- Relating to Refusal or Discontinuance of Service , Order No.

13787, 84 F.P.S.C. 10:208 (1984) (O.R. J); In re: Amendment of

Rules 25-4.109 - Customer Deposits, 25-4.110 - Customer Billing,

and 25-4.113 - Refusal or Discontinuance of Service , Order No.

16727, 86 F.P.S.C. 10:157 (1986) (O.R. K); In re: Amendment of

Rule 25-4.113 - F.A.C., pertaining to Refusal or Discontinuance

of Service by Company , Order No. 23721, 90 F.P.S.C. 11:75 (1990)

(O.R. M); In re: Adoption of Rule 25-4.160, F.A.C., Operation of

Telecommunications Relay Service and Amendment of Rules 25-4.113,

F.A.C., Refusal or Discontinuance of Service by Company; 25-

4.150, F.A.C., The Administrator; 25-24.475, F.A.C., Company

Operations; Rules Incorporated , Order No. PSC-92-0950-FOF-TP, 92

F.P.S.C. 9:208 (1992) (O.R. N); In re: Proposed Amendment of

Rule 25-4.113, F.A.C., Prohibiting Refusal or Discontinuance of

Service for Nonpayment of a Dishonored Check Service Charge

Imposed by the Utility , Order No. PSC-92-1483-FOF-PU, 92 F.P.S.C.

12:543 (1992) (O.R. P); In re: Proposed Amendment to Rule 25-

4.113 F.A.C., Refusal or Discontinuance of Service by Company ,

Order No. PSC-95-0028-FOF-TL, 95 F.P.S.C. 1:50 (1995) (O.R. T).

( Prehearing stipulation p.11)

3. By Order No. 12765, issued December 9, 1983, the

Commission expanded its disconnect policy to allow local exchange

companies ( LECs) that bill for interexchange carriers ( IXCs) to

disconnect local service for nonpayment of the long distance

portion of the bill. In re: Intrastate telephone access charges

for toll use of local exchange services , Order No. 12765, 83

F.P.S.C. 12:100, 125 (1983) (O.R. H). ( Tr 118-119) The

Commission believed that “by granting LECs disconnect authority

bad debts for toll charges will be less than without this

authority.” Order No. 12765 at 12:125. ( Tr 120) In addition,

the Commission found that if the IXCs encounter excessive bad

debt expense, the IXCs may increase their toll charges to recoup

expenses, which would cause Florida subscribers to pay higher

toll rates. Order No. 12765 at 12:125. ( Tr 120) The disconnect

authority for nonpayment for IXC toll charges was limited only to

LECs who performed billing and collection services for IXCs.

Order No. 12765 at 12:125. ( Tr 120)

4. By Order No. 13429, issued June 18, 1984, the

Commission ordered Florida’s LECs to file a uniform tariff that

specified their billing and collection procedures and rates when

billing for IXCs. In re: Intrastate telephone access charges

for Toll Use of Local Exchange Services , Order No. 13429, 84

F.P.S.C. 6:221 (1984) (O.R. I). The LECs complied with this

requirement. ( Tr 126-127; Ex 30)

5. Since the Commission first adopted its disconnect

policy, the Legislature has never enacted legislation to

invalidate the Commission’s policy. ( Tr 155) Nor has the Joint

Administrative Procedures Committee ever objected to any version

of the Commission’s disconnect rule. ( Tr 155-156)

The Current Version of Rule 25-4.113(1)(f)

6. Today, Rule 25-4.113(1) provides:

the company may refuse or discontinue telephone service

under the following conditions provided that, unless

otherwise stated, the customer shall be given notice

and allowed a reasonable time to comply with any rule

or remedy any deficiency:

* * *

(f) For nonpayment of bills for telephone service,

including the telecommunications access system

surcharge referred to in Rule 25-4.160(3), provided

that suspension or termination of service shall not be

made without 5 working days’ written notice to the

customer, except in extreme cases. The written notice

shall be separate and apart from the regular monthly

bill for service. A company shall not, however, refuse

or discontinue service for nonpayment of a dishonored

check service charge imposed by the company. No

company shall discontinue service to any customer for

the initial nonpayment of the current bill on a day the

company’s business office is closed or on a day

preceding a day the business office is closed.

* * *

(O.R. CC)

7. LECs that bill for IXCs can still disconnect for

nonpayment of toll calls. ( Tr 122, 158) No company, however,

can disconnect for nonpayment of unregulated services, such as

customer premises services like inside wire maintenance and

information services like voice mail. Rule 25-4.113(4)(e),

Florida Administrative Code. ( Tr 124-125, 130) In addition, the

billing and collection tariffs are not uniform today because LECs

have individually lowered many of the rates they charge for

billing and collection services. ( Tr 128-129; Ex 31).

Two Separate, Pertinent Service Contracts

8. It is important for understanding the Commission’s

rationale for its disconnect rule to recognize that two separate,

pertinent service contracts are involved. ( Tr 151-152) One is

the billing and collection services contract between the LEC and

the IXC. ( Tr 126, 152) The other is the contract for service

between the company providing telephone service and the

subscriber. ( Tr 152)

9. As discussed above, LECs who perform billing and

collection services for IXCs have a tariff on file with the

Commission that sets out the terms, conditions, and rates upon

which the LECs offer this service. ( Tr 126 -129; Ex 31)

10. Pertaining to the contract for telephone service, the

Commission has specified by rule the terms and conditions upon

which a company may refuse or disconnect service. ( Tr 137) Each

company has a tariff on file with the Commission that sets out

the terms and conditions upon which it will refuse or disconnect

service. ( Tr 137; Ex 32)

The Commission’s Dispute Policy

11. If service is going to be disconnected for any

authorized reason, separate notice must first be provided to the

customer. Rule 25-4.113, Florida Administrative Code; In re:

Complaint of Aristides Day Against BellSouth Telecommunications,

Inc. d/b/a Southern Bell Telephone and Telegraph Company

regarding interruption of service , Order No. PSC-94-0716-FOF-TL,

94 F.P.S.C. 6:157 (1994) (O.R. R). If a customer has a pending

complaint concerning disputed charges, Rule 25-22.032(10),

Florida Administrative Code, prohibits disconnection for

nonpayment of the disputed charges. ( Tr 129) (O.R. FF) The

customer, however, is expected to pay the charges not in dispute.

In re: Complaint of Ron White against AT&T Communications and

GTE Florida Incorporated regarding responsibility for disputed

calling card charges , Order No. PSC-92-1321-FOF-TP, 92 F.P.S.C.

11:274 (1992) (O.R. O); In re: Complaint of Leon Plaskett

against BellSouth Telecommunications, Inc. d/b/a Southern Bell

Telephone and Telegraph Company regarding unpaid long distance

bills , Order No. PSC-94-0722-FOF-TL, 94 F.P.S.C. 6:177 (1994)

(O.R. S).

12. When a LEC contracts with an IXC to perform an IXC’s

billing and collection functions, the Commission acts to resolve

disputes over both intra and interstate toll calls. In re:

Complaint against AT&T Communications of the Southern States,

Inc. and United Telephone Company of Florida by Health Management

Systems, Inc., regarding interLATA PIC slamming , Order No. PSC-

97-0203-FOF-TP, 97- F.P.S.C. 2:477, 482 (1997) (O.R. AA). ( Tr

55)

Rationale for Rule 25-4.113(1)(f)

13. The reasons the Commission gave in 1983 to allow

companies to disconnect for nonpayment of toll are still viable

today. ( Tr 122, 158). If LECs could not disconnect for unpaid

IXC bills, the IXCs uncollectible expenses would probably

increase. ( Tr 122-123, 138, 158) Moreover, if local service was

not disconnected, a consumer could run up bad debts with

different IXCs without ever paying for a toll call. ( Tr 124,

135) This bad debt would have to be passed on to Florida

consumers through increased rates to cover the uncollectible

expenses. ( Tr 122-123, 135, 158) Good paying customers should

not have to pay for the fraud created by those who switch from

carrier to carrier leaving behind unpaid toll charges. ( Tr 124,

135)

14. Additional reasons for the policy also exist because of

the 1995 changes to Chapter 364, Florida Statutes (1995). If the

Commission prohibited LECs from disconnecting local service for

nonpayment of toll, LECs would be economically disadvantaged and

alternative local exchange companies ( ALECs) would be advantaged.

( Tr 123, 147-148) This is because LECs could not disconnect

local service for nonpayment of toll, but the ALECs could

continue to disconnect due to the Commission’s limited

jurisdiction and regulation over ALECs. ( Tr 123, 147-148)

15. Moreover, deposit requirements are affected by the

disconnect policy. If LECs could not disconnect for nonpayment,

deposit requirements would probably increase. ( Tr 123-124, 195)

Large deposits are a barrier to access to telecommunications

services and would have an adverse effect on subscribership.

( Tr 124)

16. Finally, the Rule puts costs on the cost causer.

( Tr 158)

The Rule’s Impact on Universal Service

17. The obligation to provide universal service is the

obligation to offer access to basic telephone service at

reasonable and affordable rates. Section 364.025(1), Florida

Statutes (1995). ( Tr 139, 167; Ex 29) As long as a customer

pays the nondisputed portion of his bill, service will not be

disconnected. ( Tr 143) Therefore, Rule 25-4.113(1)(f) does not

preclude a subscriber from obtaining basic local service, as long

as he pays the undisputed portion of his telephone bill.

( Tr 142-143)

18. Basic service includes access to all locally available

IXCs. Section 364.02(2), Florida Statutes (1995). ( Tr 133-134)

Any consumer who pays his bill can have access to any available

carrier in the market where he resides. ( Tr 133-134, 149)

The Rule’s Impact on Competition

19. Today the toll market is reasonably competitive.

( Tr 144) In 1995, the Legislature authorized competition in the

local market. However, very few providers are actually providing

basic local service; therefore, market conditions have not

substantially changed since Rule 25-4.113 was last amended.

( Tr 144-145) The basic local market is still largely a monopoly

despite the legislative changes at the state and federal level.

( Tr 145; Ex 28)

20. The Commission is charged with regulating

telecommunications companies during the transition from monopoly

to competitive services. Section 364.01(3), Florida Statutes

(1995). ( Tr 156, 197-198)

21. To a certain extent, all rules and regulations restrict

competition. ( Tr 147) In this case, the benefits of the rule

outweigh any negative impact the rule may have on competition,

because the rule keeps uncollectible expenses lower than they

would otherwise be and it also puts costs on the cost causer.

CONCLUSIONS OF LAW

Burden of Proof

22. The burden of proof in this proceeding is on Petitioner

to prove by a preponderance of the evidence that Rule 25-

4.113(1)(f) constitutes an invalid exercise of delegated

legislative authority. Adam Smith Enterprises, Inc. vs.

Department of Environmental Regulation , 553 So. 2d 1260 (Fla. 1st

DCA 1989); Agrico Chemical Co. vs. Department of Environmental

Regulation , 365 So. 2d 759 (Fla. 1st DCA 1979). ( Prehearing

Stipulation p. 11-12)

The Statutory Tests for Validity of the Rule

23. The Federal Telecommunications Act of 1996 may be

instructive regarding the jurisdiction which has been reserved to

the states concerning the regulation of telecommunications

companies. However, when determining whether a rule is an

invalid exercise of delegated legislative authority under Section

120.56, the appropriate question is whether the agency action

“goes beyond the powers, functions, and duties delegated by the

[Florida] Legislature.” Section 120.52(8), Florida Statutes

( Supp. 1996). Besides, the FCC has specifically deferred to the

states to determine whether they will allow LECs to disconnect

“local services for nonpayment of interstate toll services that

are not offered by the LEC.” FCC Order No. 86-31, p. 31 (O.R.

JJ). The FCC continues to defer to the states concerning

disconnection of local service for nonpayment of interstate toll

for non-lifeline customers. ( Tr 143-144)

24. The Florida Legislature has defined what makes a rule

an invalid exercise of delegated legislative authority in Section

120.52(8), Florida Statutes ( Supp. 1996). The Petitioner has

identified three instances that may apply here. They are:

(c) The rule enlarges, modifies, or contravenes the

specific provisions of law implemented, citation to

which is required by s. 120.54(3)(a)1.;

· * *

(e) The rule is arbitrary or capricious; [and]

(f) The rule is not supported by competent substantial

evidence. . . .

Section 120.52(8), Florida Statutes ( Supp. 1996).

Competent Substantial Evidence

25. As demonstrated by Respondent at the hearing, Rule 25-

4.113(1)(f) is supported by competent substantial evidence. The

Commission has determined that long distance rates may increase

if LECs are not allowed to disconnect for nonpayment of toll

bills. ( Tr 122-123, 138, 158) In addition, the Commission has

shown that companies may increase their deposit requirements if

they are not allowed to disconnect for nonpayment. ( Tr 123-124)

This could constitute a serious barrier to subscribership.

( Tr 124) Moreover, Petitioner failed to show that subscribership

in Florida is lower than it would be otherwise because of the

Commission’s policy. To the contrary, subscribership in Florida

has increased over the last ten years. ( Tr 139) The

Commission’s rule is consistent with its policy to put costs on

the cost causer. In re: Review of Southern Bell Telephone and

Telegraph Company’s Late Payment Charge , Order No. 17915, 87

F.P.S.C. 7:300 (1987) (O.R. L). ( Tr 158) Finally, if the

Commission were to prohibit LECs from disconnecting local service

for nonpayment of toll, ALECs would be economically advantaged to

the LECs’ disadvantage. ( Tr 123)

26. Reasonab le persons should accept the above evidence as

adequate to support the Commission’s policy to allow LECs to

disconnect for nonpayment of toll. Agrico , 365 So. 2d at 763

(“Competent substantial evidenced has been described as such

evidence as a reasonable person would accept as adequate to

support a conclusion.”) Rule 25-4.113(1)(f) is therefore found

to be based upon competent substantial evidence.

Lawful Implementation of Statutory Authority

27. As discussed above, one of the statutes implemented by

Rule 25-4.113 is Section 364.19, Florida Statutes (1995). It

provides:

The commission may regulate, by reasonable rules, the

terms of telecommunications service contracts between

telecommunications companies and their patrons.

Section 364.19 Florida Statutes (1995). The rulemaking authority

contained in this statute is very broad. It does not limit the

contract terms to be regulated. Nor does it limit the types of

service contracts that the Commission may regulate.

28. As pertains to Rule 25-4.113, the C ommission interprets

Section 364.19 as authorizing the Commission to regulate two

types of service contracts: billing and collection contracts

between the LEC and IXC, and contracts for service between the

LEC and consumer. ( Tr 151-152)

29. All well-drawn service contracts spell out the terms

for terminating the contracted for service. It is black letter

law that consideration is an element of a binding contract. In

this case, payment is required to obtain service. Accordingly, a

reasonable contract term is that serviced may be refused or

disconnected for nonpayment of a portion of the contracted for

service. By allowing companies to disconnect for nonpayment, the

Commission has simply spelled out what to do in the case of a

breach of contract for service as authorized by Section 364.19,

Florida Statutes (1995).

30. In this case, only LECs that bill and collect for IXCs

may disconnect local service for nonpayment of toll. Order 12765

at 12:125. ( Tr 120) Because the LEC is authorized to collect

all charges that are due to the IXC, it follows that if any one

of those charges are not paid, the LEC should be able to

disconnect for nonpayment. It does not matter whether the charge

is an intra or interstate call because the charge is due and

payable to the LEC.

31. If a LEC decides to disconnect telephone service, it

must do so under the terms and conditions set forth in Rule 25-

4.113 and in the company’s limitations and use of service tariff.

( Tr 137); Ex 32) For instance, the LEC generally cannot

disconnect service without providing five days’ separate written

notice. Rule 25-4.113(1)(f), Florida Administrative Code. The

remainder of Rule 25-4.113 provides additional restrictions upon

the company’s ability to refuse or disconnect service.

32. Petitioner failed to produce any evidence to show that

Section 364.19 is insufficient authority for the rule. Moreover,

Petitioner acknowledged the “broad discretionary powers” Section

364.19 provides the Commission. (Amended Petition p. 2)

33. The rule al so implements Section 364.03, Florida

Statutes (1995), which provides in pertinent part:

Every telecommunications company shall, upon reasonable

notice, furnish to all persons who may apply therefor

and be reasonably entitled thereto suitable and proper

telecommunications facilities and connections for

telecommunications services and furnish

telecommunications service as demanded upon terms to be

approved by the commission.

34. Under the 1995 changes to Chapter 364, the Legislature

exempted price-capped LECs, ALECs, and IXCs from the provisions

of this statute. Sections 264.051(1)(c) and 364.337(2) and (4),

Florida Statutes (1995). ( Tr 153) Rate-of-return regulated

LECs, however, are still subject to Section 364.03. ( Tr 152)

Thus, Rule 25-4.113 implements Section 364.03 by setting the

terms upon which a rate-of-return regulated LEC may refuse or

disconnect telephone service. ( Tr 153)

35. Finally, Rule 25-4.113 implements Section 427.704,

Florida Statutes (1995). Paragraph (1) (f) of the rule

implements this statute by allowing companies to disconnect for

nonpayment of the telecommunications access system surcharge

which the Commission imposes pursuant to Section 427.704, Florida

Statutes. ( Tr 155) The surcharge provides the funds to

implement the “statewide telecommunications access system to

provide access to telecommunications relay services by persons

who are hearing impaired or speech impaired, or others who

communicate with them.” Section 427.704(1), Florida Statutes

(1995).

36. The Commissio n’s interpretation of Sections 364.03,

364.19, and 427.704, Florida Statutes (1995), is reasonable and

rationally related to the implementing statutes. Florida

Waterworks Association vs. Florida Public Service Commission , 473

So. 2d 237, 240 (Fla. 1st DCA 1985) (citation omitted)

(Respondent has wide discretion to interpret the statutes which

it administers “and will not be overturned on appeal unless

clearly erroneous.”)

37. Moreover, weight should be given to the presumption

that Rule 25-4.113(1)(f) is valid because the Commission’s

disconnect policy has been codified since 1955. Jax Liquors,

Inc. vs. Division of Alcoholic Beverages and Tobacco, Department

of Business Regulation , 388 So. 2d 1306, 1308 (Fla. 1st DCA 1980)

(“[T]he presumption of the Rule’s validity gains added weight

from its having laid upon the public record in Florida

Administrative Code for several legislative sessions without

disapproval or interference by either the legislature or its

Administrative Procedures Committee.”)

38. Rule 25-4.113(1)(f) does not contravene, enlarge, or

modify the statutes which it implements. Nor does Rule 25-

4.113(1)(f) contravene, enlarge, or modify the universal service

and competition requirements in Chapter 364. The rule allows end

users to access basic local service, which includes access to all

locally available interexchange companies, as long as the bill is

paid. Moreover, the Commission has the discretion and exclusive

jurisdiction to determine what regulation is necessary in this

transition phase from the provision of monopoly service to

competition.

The Rule is Not Arbitrary and Capricious

39. Petitioner has also failed to show Rule 25-4.113(1)(f)

was enacted without thought, reason, or irrationally. Agrico ,

365 So. 2d at 763 (“A capricious action is one which is taken

without thought or reason or irrationally.”) Petitioner has also

failed to show that Rule 25-4.113(1)(f) is despotic or

unsupported by facts or logic. Id . (“An arbitrary decision is

one not supported by facts or logic, or despotic.”) In addition,

Petitioner has failed to show that the rule is without a rational

basis or that it is not related to the statutes that it

implements. Jax Liquors , 388 So. 2d at 1308.

40. Instead, Respondent has shown that the Commission’s

policy is consistent with its role authorized by the legislature,

which is to exercise appropriate regulatory oversight during “the

transition from the monopoly provision of local exchange service

to the competitive provision thereof . . . to protect consumers

and provide for the development of fair and effective competition

. . . .” Section 364.01(3), Florida Statutes (1995). The

Commission has the exclusive jurisdiction to determine what is

the appropriate regulatory oversight necessary during this

transition phase. Section 364.01(2), Florida Statutes (1995).

Moreover, as acknowledged by Petitioner, Sections 364.03 and

364.19 Florida Statutes (1995), “provide the Commission with

broad discretionary powers to regulate the telecomunications

industry.” (Petitioner's Amended Petition p.2)

41. During the hearing, Petitioner questioned Mark Long

concerning the Commission’s ultimate denial of GTE Florida

Incorporated’s Advanced Credit Management (ACM) tariff. In re:

Request for approval of tariff filing to clarify blocking of

specific calls related to the Advanced Credit Management tariff

by GTE Florida Incorporated , Order No. PSC-96-0530-FOF-TL, 96

F.P.S.C. 4:293 (1996). The Commission denied the ACE tariff

because it precluded customers from getting basic local service

by blocking access to all locally available IXCs. Id . At 4:294.

Thus, customers were paying for basic local service and not

getting it. ( Tr 110, 135) This is different, however, from the

application of Rule 25-4.113(1)(f). When a customer is

disconnected for nonpayment, he is not getting basic local

service, but neither is he paying for it. ( Tr 110-111, 135)

42. In addition, Petitioner questioned Mr. Julian O’Pry

concerning the Commission’s denial of Southern Bell’s proposed

tariff which, if approved, would have allowed Southern Bell to

refuse or disconnect service for debt associated with telephone

service initiated in other states. In re: Request for approval

of tariff filing to change the definition of “Company” and allow

denial of service for monies owed in other states by BellSouth

Telecommunications, Inc. d/b/a Southern Bell Telephone and

Telegraph Company , Order No. PSC-93-0069-FOF-TL, 93 F.P.S.C.

1:397 (1993) (O.R. Q). ( Tr 62) Respondent included this order

in its motion for official recognition to show that the

Commission would not allow a company to refuse or disconnect

service for non-payment if the Commission did not regulate or

have any control over the service. The Commission stated: “Even

if a debt would otherwise be sufficient grounds for refusal of

service, the Commission has no review of or control over the

circumstances surrounding the creation of the debt in another

state.” Order No. PSC-93-0069-FOF-TL at 1:399. In the case at

bar, the Commission does have control over the debt created in

Florida, especially where the LEC performs the billing and

collection service pursuant to Section 364.19, Florida Statutes

(1995). ( Tr 62). Thus, the Commission has control over the

circumstances that create the debt in Florida.

43. Finally, if the Commission does not have jurisdiction

to permit LECs to disconnect local service for nonpayment of

interstate toll for which the LEC provided the billing and

collection service , the public interest would not be served. It

would then follow that the Commission would not have jurisdiction

to preclude a LEC from disconnecting service for nonpayment of

the interstate toll. This would create a situation in which a

LEC could disconnect without following the notice provisions and

other restrictions set out in Rule 25-4.113. Furthermore, if the

Commission has no disconnect authority whatsoever, it could place

no restrictions on refusal or discontinuance of service. A

company could then disconnect service for an y reason at any time.

( Tr 157)

44. Petitioner has failed to prove by a preponderance of

the evidence that Rule 25-4.113(1)(f) is arbitrary and

capricious.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of

Law, the amended petition seeking to invalidate Rule 25-

4.113(1)(f), Florida Administrative Code, is denied.

DONE AND ORDERED this 11th day of August 1997, in

Tallahassee, Leon County, Florida.

___________________________________

J. LAWRENCE JOHNSTON

Administrative Law Judge

Division of Administrative H earings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488- 9675 SUNCOM 278-9675

Fax filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of August 1997.

COPIES FURNISHED:

Chester Osheyack

17850-A Lake Carlton Drive

Lutz, Florida 33549

Mary Anne Helton

Associate General Counsel

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-6096

William D. Talbot, Executive Director

Public Services Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-6096

Rob Vandiver, General Counsel

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-6096

Blanca Bayo, Director

Records and Recording

Florida Public Service Commission

2540 Shumard Oak Boulevard

Tallahassee, Florida 32399-6096

Carroll Webb, Executive Director

Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statutes.

Review proceedings are governed by the Florida rules of appellate

procedure. Such proceedings are commenced by filing one copy of

a notice of appeal with the agency clerk of the Division of

Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the Appellate

District where the party resides. The notice of appeal must be

filed within 30 days of rendition of the order to be reviewed.