SUPREME COURT OF FLORIDA Case No. SC01-2050 LEVEL 3 COMMUNICATIONS, LLC Appellant, v. E. LEON JACOBS, JR., et al. Appellees. AMENDED INITIAL BRIEF OF LEVEL 3 COMMUNICATIONS, LLC Michael R. Romano, Esq. Kenneth A. Hoffman, Esq. Greg L. Rogers, Esq. Florida Bar No. 307718 Level 3 Communications, LLC Martin P. McDonnell, Esq. 1025 Eldorado Boulevard Florida Bar No. 301728 Broomfield, Colorado 80021 Rutledge, Ecenia, Purnell & (720) 888-7015 (Telephone) Hoffman, P.A. (720) 888-5134 (Telecopier) P. O. Box 551 Tallahassee, Florida 323302 (850) 681-6788 (Telephone) (850) 681-6515 (Telecopier) Attorneys for Level 3 Communications, LLC TABLE OF CONTENTS Page TABLE OF CITATIONS ........................................iii STATEMENT OF THE CASE AND FACTS ......................... 1 SUMMARY OF ARGUMENT ................................... 12 ARGUMENT ................................................ 16 I. The Standard of Review ............................... 16 II. The Commission Exceeded its Statutory Authority by Imposing Regulatory Assessment Fees on Level 3’s Collocation Revenues ................................. 18 A. Section 350.113(3), Florida Statutes, limits the imposition of regulatory assessment fees to revenues derived from regulated services. .............. 18 B. The Commission erroneously failed to consider the entire statutory scheme in determining that revenues collected from Level 3's collocation agreements constitute “intrastate business” subject to regulatory assessment fees ................................. 26 C. In 1995, the Legislature Authorized Competition in the Local Telecommunications Market and Significantly Curtailed the Commission’s Regulatory Authority Over Local Telecommunications Carriers .................. 30 D. The Commission has previously held that regulatory assessment fees apply only to ii revenues generated by business activities regulated by the Commission irrespective of the corporate structure of the regulated company ......................................34 III. The Imposition of Regulatory Assessment Fees on Level 3’s Collocation Revenues Discriminates Against Level 3 And Violates Level 3's Constitutional Right to Equal Protection .......................................... 36 CONCLUSION .............................................. 41 iii TABLE OF CITATIONS Cases Page Abdala v. Word Omni Leasing, Inc. 583 So.2d 330 (Fla. 1991) ........... 40 And Justice For All Inc. d/b/a Legal Club of America v. Fl. Dept. Of Insurance, 26 FLW D2304 (Fla. 1st DCA September 26, 2001) ....... 17 Bell Atlantic Telephone Companies v. FCC, 206 F.3d 1 (CADC 2000) ........................................... 23 Citizens v. Public Service Commission, 448 So.2d 1024 (Fla. 1984) ........ 17 City of Cape Coral v. GAC Utilities, Inc. of Florida, 281 So.2d 493 (Fla. 1973) .................................................. 19 City of Jacksonville v. Cook, 765 So.2d 289 (Fla. 1st DCA 2000) .......... 27 Finlayson v. Conner, 167 So.2d 569 (Fla. 1964) ...................... 25 Florida Jai-Alai, Inc. v. Lake Howell Water and Reclamation District, 274 So.2d 522 (Fla. 1973) .................................. 26 Florida Bridge Co. v. Bevis, 363 So.2d 799 (Fla. 1978) ................. 17 Fronton, Inc. v. Florida State Racing Commission, 82 So.2d 520 (Fla. 1955) .............................................. 38 General Telephone Company v. Carter, 115 So.2d 554 (Fla. 1959) ........ 17 GTE Service Corporation v. Federal Communications Commission, 205 F.3d 416 (D.C. Cir. 2000) ................................ 3 Hialeah Race Course, Inc. v. Gulfstream Park Racing Association, 245 So.2d 625 (Fla. 1971) .................................. 39 iv Klonis v. State Department of Revenue, 766 So.2d 1186 (Fla. 1st DCA 2000) .......................................... 27 Ocala Breeders Sales Company, Inc. v. Florida Gaming Centers, Inc., 793 So.2d 899 (Fla. 2001) .................................. 36 Palm Beach Canvassing Board v. Harris, 772 So.2d 1220 (Fla. 2000) ...... 30 Radio Telephone Communications, Inc. v. Southeastern Telephone Company, 170 So.2d 577 (Fla. 1964) .................................. 17 Realty Bond and Share Co. V. Englar, 143 So. 152 (Fla. 1932) ........... 27 Reno v. ACLU, 521 U.S. 844 (1997) ............................... 23 St. Johns River Water Management District v. Consolidated - Tomoka Land Co., 717 So.2d 72 (Fla. 1st DCA 1998) .................... 21 State v. J.R.M., 388 So.2d 1227 (Fla. 1980) ......................... 22 Tampa Electric v. Garcia, 767 So.2d 428 (Fla. 2000) .................16-18 Teleco Communications Co. v. Clark, 695 So.2d 304 (Fla. 1997) .......... 18 United Telephone Company of Florida v. Public Service Commission, 496 So.2d 116 (Fla. 1986) .................................. 17 Van Pelt v. Hilliard, 75 Fla. 792, 18 So. 693 (1918) .................... 22 V.C.F. v. State, 569 So.2d 1364 (Fla. 1st DCA 1990) ................... 21 West Flagler Kennel Club v. Florida State Racing Commission, 153 So.2d 5 (Fla. 1963) ....................................... 39 Wiggins v. City of Jacksonville, 311 So.2d 406 (1st DCA 1975) ............ 38 Yick Wo v. Hopkins, 118 U.S. 356 (1886) ........................... 38 v Federal Communications Commission Orders In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Intercarrier Compensation for ISP- Bound Traffic, 14 FCC Rcd. 3689, (1999) ....................... 23 Order on Remand and Report and Order No. FCC 01-131, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98, and Intercarrier Compensation for ISP-bound Traffic, CC Docket No. 99-68 (2001) ................................. 4, 23 In the Matter of Deployment of Wireline Services Offering Advanced Telecommunications Capability, First Report and Order and Further Notice of Proposed Rulemaking, CC Docket No. 98-147 (Rel. March 31, 1999) ...................................... 3 Florida Public Service Commission Orders In re: Petition by Verizon Florida, Inc. for Declaratory Statement on Applicability of Section 364.336, F.S. and Rule 25-4.0161, F.A.C., Regulatory Assessment Fees, Docket No. 001556-TL, Order No. PSC-01-0097-DS-TL issued January 11, 2001 ......................................... 8-9, 34-36 Fla. Const. Art. V §3(b)(2) ............................................... 12 Statutes §350.113, Fla. Stat. (2001) ................................ 1, 10, 19-21 §350.113(1), Fla. Stat. (2001) ............................. 2, 14, 19, 27 §350.113(3), Fla. Stat. (2001) ................................ PASSIM §364.01, Fla. Stat. (2001) ........................................ 31 vi §364.01(3), Fla. Stat. (2001) ................................... 32, 33 §364.01(3)(f), Fla. Stat. (1993) .................................... 13 §364.01(4), Fla. Stat. (2001) .................................16, 32, 33 §364.01(4)(d), Fla. Stat. (1995) ................................... 14 §364.01(4)(g), Fla. Stat. (1995) ................................... 14 §364.01(4)(i), Fla. Stat. (2001) .................................... 31 §364.02(2), Fla. Stat. (2001) .................................24, 35, 37 §364.02(6), Fla. Stat. (2001) ....................................... 2 §364.02(12), Fla. Stat. (2001) ...................................... 6 §364.01(3)(f), Fla. Stat. (1993) .................................... 13 §364.20, Fla. Stat. (2001) ........................................ 17 §364.336, Fla. Stat. (2001) .................................. PASSIM §364.337, Fla. Stat. (1995) ....................................... 13 §364.337(1), Fla. Stat. (2001) ...................................... 1 §364.337(5), Fla. Stat. (2001) ............................24, 28, 29, 37 §364.381, Fla. Stat. (2001) ....................................... 12 Florida Laws Ch. 90-244, §§33, 49 ........................................... 29 Ch. 95-403 .................................................. 30 vii Ch. 95-403, §23 ............................................... 29 Federal Statutes 47 U.S.C. §251 ............................................... 16 47 U.S.C. §251(b) ......................................... 3, 9, 32 47 U.S.C. §251(c) ......................................... 3, 9, 32 47 U.S.C. §251(c)(2) ............................................ 2 47 U.S.C. §251(c)(6) ......................................... 2, 29 47 U.S.C. §153(43) ............................................. 6 47 U .S.C. §153(46) ......................................... 6, 28 47 U.S.C. §251(h) .............................................. 2 47 U.S.C. §252(b) ............................................. 29 47 U.S.C. §252(c) ............................................. 29 Other Authorities Fla. Admin. Code R. 25-4.0161 ................................... 1 Fla. Admin. Code R. 25-24.835 .................................... 1 Fla. Admin. Code R. 28-105.003 ................................... 6 viii STATEMENT OF THE CASE AND FACTS Level 3 Communications, LLC (“Level 3") is a multi-faceted communications and information services company. Level 3 currently holds a certificate from the Florida Public Service Commission (“Commission”) as an alternative local exchange telecommunications company (“ALEC”).1 Level 3 generates revenues in Florida from business activities that are not regulated by the Commission. Level 3 also generates revenues in Florida from the provision of telecommunications services that are regulated by the Commission. (V. 1, R. 4-5). As a certificated ALEC