Definition of “Public Utility”; DAS Service vs. Cell Phone Service; Agency Deference; Statutory Construction.

Crown Castle NG East, LLC v. Pennsylvania Public Utility Commission, 188 A.3d 617 (Pa. Cmwlth. 2018), allocatur granted Jan. 3, 2019, appeal docket 2 MAP 2019

In 2017 the Pennsylvania Public Utility Commission (PUC) reversed its long-held view that neutral-host Distributed Antenna System (DAS) companies are public utilities.  Wireless cell phone service providers (WSPs) use DAS to augment their existing networks to collect cell phone transmissions in highly congested areas through micro antennas (instead of cell towers) and transmit the voice and data through fiber optic landlines to the WSPs. Following an investigatory notice and comment paper hearing, the PUC concluded that DAS providers no longer fit the statute’s (unchanged) definition of “public utility.”  The result, if ultimately affirmed by the courts, is that the PUC would no longer regulate DAS, and DAS providers would no longer be entitled to eminent domain power and exemption from local zoning when attempting to place facilities. 

On appeal of the PUC’s decision by DAS provider Crown Castle, the en banc Commonwealth Court reversed, holding that: (1) the PUC’s about-face “is not entitled to much deference” because it reversed the PUC’s long-held prior interpretation; (2) the PUC’s new interpretation is “not supported by the statutory language”; and (3) the PUC’s new interpretation (a) conflicts with the Commonwealth Court’s holding in Rural Telephone Company Coalition v. Pennsylvania Public Utility Commission, 941 A.2d 751 (Pa. Cmwlth. 2008) that wholesale service similar to DAS is public utility service, and (b) is, contrary to the PUC’s claim, unsupported by the FCC’s order in In Re: Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, 29 FCC Rcd. 12865, 12867 (F.C.C. 2014) (2014 Wireless Infrastructure Order). The Pennsylvania Supreme Court has now granted allocatur to review each of these questions.

First, on the deference question, the Commonwealth Court acknowledged that the PUC’s interpretation is generally “entitled to substantial deference because of the highly technical nature” of the PUC statute and the PUC’s role in interpreting it, 188 A. 3d at 631, but reasoned based on previous Commonwealth Court precedent that the PUC’s interpretation in this instance “is not entitled to much deference” because it deviates from the PUC’s previous interpretation of the same statutory language.  It appears that the Pennsylvania Supreme Court has not had the opportunity to weigh in on this particular application of the appellate court deference required when reviewing agency decision making.  As a practical matter, however, the issue may not be dispositive of the outcome because the Commonwealth Court essentially found that the PUC’s new interpretation was clearly wrong.

Second, in determining that the PUC’s new interpretation is not supported by the statutory language, the Commonwealth Court looked to statutory definition of “public utility” and the cell phone provider exclusion:

(1) [A public utility is] Any person or corporations now or hereafter owning or operating in this Commonwealth equipment or facilities for:

* * *

(vi) Conveying or transmitting messages or communications, except as set forth in paragraph (2) (iv), by telephone or telegraph or domestic public land mobile radio service including, but not limited to, point-to-point microwave radio service for the public for compensation.

* * *

(2) The term does not include:

* * *

(iv) Any person or corporation, not otherwise a public utility, who or which furnishes mobile domestic cellular radio telecommunications service.

Section 102 of the Code, 66 Pa. C.S. § 102.

The court observed that the cell phone service exclusion in (2)(iv) expressly applies only to a “person” not otherwise a public utility “who or which furnishes” cell phone service, but that the PUC had erroneously read into the definition of “furnish,” and thus the cell phone service exclusion, the ownership of equipment and facilities used in furnishing cell phone service, thereby expanding the exclusion beyond the clear words of the statute:

Under the Commission’s interpretation, the exclusion now includes not only a person or company that “furnishes” CMRS, but also any person or company who owns or operates equipment that is used, pursuant to a service agreement, in furnishing CMRS, even if that person or company does not, itself, furnish CMRS. However, words and phrases may not be added to a statute if the addition will “in any way affect its scope and operation.” 1 Pa. C.S. § 1923(c) (emphasis added). The addition of language is not warranted where the existing statutory text makes sense as it is written and the implied reading of words into that text “change[s] the existing meaning or effect of the actual statutory language.”

188 A.3d at 632 (emphasis in original).

Third, the court found that its own prior precedent compelled reversal of the PUC, and that the PUC’s reliance on an FCC decision was misplaced. In Rural Telephone, the court found that transmission path services provided by Core Communications to internet service providers so that the ISPs could provide ISP service to the general public was a telecommunications service under the statute notwithstanding the fact that the ISPs used it to provide a service not regulated by the Commission, and that the same rationale controls here:

Thus, like Core in Rural Telephone, Crown Castle and other neutral-host DAS network operators offer contractual transport services to their WSP customers that should not, as the Commission did in the DAS Order, be equated to the CMRS offered by the WSP, over which the Commission has no jurisdiction. Yet, the DAS Order does not distinguish between the transport path service, which relies on fixed wireless technology and is otherwise within the Commission’s jurisdiction, from the CMRS transported along that path, which the WSPs sell to their customers and is not regulated by the Commission under Section 102 of the Code. As such, the Commission’s conclusion that DAS network operators actually furnish CMRS on this basis is inconsistent with Rural Telephone.

188 A. 3d at 634.

The court likewise rejected the PUC’s reliance on the FCC’s decision in the 2014 Wireless Infrastructure Order. There, the FCC explained that certain siting protections set forth in the Federal Act and the FCC’s rulings for wireless facilities would apply to DAS facilities, including neutral-host DAS deployments, “to the extent [those facilities] are or will be used for the provision of personal wireless services.”  188 A.3d at 636.  The court pointed out, however, that the FCC distinguished between wireless services and facilities used to provide those wireless services, and in extending siting protections to wireless facilities the FCC did not equate DAS networks with wireless service. Therefore, the court concluded, the FCC order offered no support for the PUC’s new interpretation of its statute.

The issues the Supreme Court will decide, as stated by PUC in its request for discretionary review, are:

(1) Did the Commonwealth Court err in holding, based on its misinterpretation and misapplication of a federal court case, that the PUC was not entitled to deference as to its expert interpretation of its enabling statute?

(2) On a question of first impression involving the jurisdictional status of operators of Distributed Antenna Systems, did the Commonwealth Court commit an error of law by determining that the PUC’s interpretation of the definition of “public utility” and the statutory exclusion for wireless service was inconsistent with the statutory language and rules of statutory construction?

(3) Did the Commonwealth Court commit an error of law by determining that the Commission’s finding that Distributed Antenna Systems are not jurisdictional public utilities was inconsistent with the Commonwealth Court’s precedent and federal law?