NORTHWESTERN BELL v. PUBLIC UTIL. COM'N

JOHNSON, Circuit Judge.

US West Communications (USWC) appeals a circuit court judgment affirming the decision of the South Dakota Public Utilities Commission (PUC). PUC ruled that Lightwave Associate's (Lightwave) fiber optic facility is a nonaccess facility which crosses the territory being lawfully occupied and served by another telecommunications company furnishing adequate service; therefore, PUC ruled that the facility is exempt from a public interest determination pursuant to SDCL 49-31-20 and 49-31-21. Lightwave filed a notice of review asserting that PUC lacked jurisdiction. We affirm the circuit court's decision as to jurisdiction. We reverse the circuit court's decision that the facility is exempt from a public interest determination and we remand to PUC for a public interest determination.

FACTS

This action involves an application by Lightwave, a joint venture between the City of Brookings and Sioux Valley Telephone Cooperative, to build a fiber optic toll facility between the cities of Brookings and Sioux Falls. The facility was built through the local exchange franchise territories of several other companies. The facility terminates in USWC's service territory and is intended to carry only interstate telecommunications traffic to and from American Telephone and Telegraph's (AT & T) point of presence in Sioux Falls. Previously, the telecommunications link between Lightwave and AT & T was provided by USWC.

A brief discussion of the procedural history is necessary. On March 31, 1988, PUC determined that it had jurisdiction over this matter, but did not exert jurisdiction as long as the facility carried only interstate traffic. USWC appealed this decision to circuit court. At the request of both parties, the matter was remanded to PUC for a hearing to determine if PUC had jurisdiction.

On October 18, 1988, PUC determined it had jurisdiction over the facility and ordered an evidentiary hearing to consider whether the facility should be built. The evidentiary hearing was completed on March 15, 1989. By a 2—1 vote, (Commissioner Stofferahn dissenting) PUC decided to allow the facility to be constructed without consideration of the public interest. PUC determined that the facility was a "nonaccess" facility, the facility crossed several service territories including USWC's territory, and, thus was not subject to a public interest determination under SDCL 49-31-20 and 49-31-21. USWC appealed to circuit court. On October 27, 1989, the circuit court affirmed the PUC decision in all respects1.

USWC now appeals to this court and Lightwave raises an additional issue of whether PUC correctly asserted jurisdiction over the facility.

SCOPE OF REVIEW

SDCL 1-26-37 controls this court's scope of review from decisions of administrative agencies. We review the agency decision in the same manner as the circuit court and there is no presumption that the circuit court's decision is correct. Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (1986). Thus, we determine, after reviewing the entire record, whether the agency's findings of fact are clearly erroneous and whether the law has been correctly applied. Permann v. South Dakota Dept. of Labor Unempl. Ins. D., 411 N.W.2d 113 (1987).

ISSUE I.

WHETHER PUC ERRED IN ASSERTING JURISDICTION OVER LIGHTWAVE'S PROPOSED FIBER OPTIC FACILITY.

This court has recently explored the dual regulatory structure of the wire communications industry with respect to the PUC's jurisdiction. In American Phone v. Northwestern Bell Tel., 437 N.W.2d 175, 177 (S.D.1989) the court stated:

We conclude that PUC's assertion of jurisdiction in this dispute does not stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress which are "to make available, so far as possible, to all people of the United States a rapid, efficient, nationwide and worldwide wire and radio communication service with adequate facilities at reasonable charges...." 47 U.S.C. § 151 (1988). Additionally, the assertion of jurisdiction does not substantially affect the conduct or development of interstate communications.

In this case, the fiber optic facility was located entirely within this state. Evidently, Lightwave determined that it was more efficient to build their own facility to connect their customers with AT & T's point of presence than to continue to use USWC's services. All of the communications in question are interstate telephone communications. However, since this dispute concerns only communications until they are connected with the interstate carrier (AT & T) and Lightwave has failed to show how PUC's jurisdiction would stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress or how it would substantially affect the conduct or development of interstate communications, the subject in dispute is essentially intrastate in nature.

Furthermore, we determine that Lightwave is a connecting carrier exempted from F.C.C. jurisdiction under 47 U.S.C. § 152(b)(2) which, in part, provides:

Here, Lightwave's only connection with interstate communications is solely through the physical connection with AT & T in Sioux Falls. There are no allegations that Lightwave is controlled directly or indirectly by AT & T. The purpose of this exemption was to exclude "tiny, mostly rural telephone companies from federal regulation." Comtronics, Inc. v. Puerto Rico Tel. Co., 553 F.2d 701, 706 (1st Cir.1977).

We, therefore, affirm the circuit court's decision on the issue of jurisdiction.

ISSUE II.

WHETHER THE FACILITY IS EXEMPT FROM A PUBLIC INTEREST DETERMINATION.

Under SDCL 49-31-20 and 49-31-212 a facility is exempt from a public interest determination after a hearing (SDCL 49-31-20) or a public interest determination with or without a hearing (SDCL 49-31-21) if the following elements are established:

The two elements above are conjunctive; hence, both must exist before a public interest determination exemption is established.

In this case, the parties spend a great deal of time in their briefs arguing whether the facility at issue is a nonaccess facility. Each party spends less time on the issue of whether the facility crosses the territory being lawfully occupied and served by another telecommunications company furnishing reasonably adequate service.

The statutes dealing with telecommunications regulation do not define the term "cross." Additionally, there is no evidence indicating that the word is a term of art with a special meaning to the telecommunications industry. Thus, the court will review the term in its ordinary sense, SDCL 2-14-13, and give the term its plain meaning and effect. Appeal of AT & T Information Systems, 405 N.W.2d 24 (S.D.1987).

The term "cross" is defined as follows: "As a verb it means to pass or extend from one side to the other, as to cross a stream." Black's Law Dictionary 338 (5th ed. 1979). The definition above appears to be the clear plain meaning of the term. This court has recently stated:

AT & T, supra, 405 N.W.2d at 27.

The meaning of the statute is this: to meet the public interest determination exemption the facility must extend from one side of a territory being lawfully occupied and served by another telecommunications company furnishing reasonably adequate service to the other side and be a nonaccess facility. Here, all sides agree that the facility terminates in USWC's territory. It is impossible for an optic fiber line to terminate in and cross a territory simultaneously.

Therefore, PUC's Findings of Fact, numbers 7 and 8, dated April 17, 1989, are clearly erroneous4. We reverse the circuit court's decision and hold that the facility does not cross USWC's territory.

Since the facility does not cross USWC's territory both elements of SDCL 49-31-20 and 21's public interest determination exemption cannot be established. Thus, we remand this case for a public interest determination pursuant to SDCL 49-31-20 or SDCL 49-31-21 depending upon further findings of the PUC.

MILLER, C.J., HENDERSON and SABERS, JJ., and MORGAN, Retired Justice, concur.

JOHNSON, Circuit Judge, for WUEST, J., disqualified.

AMUNDSON, J., not having been a member of the Court at the time this action was submitted to the Court, did not participate.