IX. Commission Review of the Application

Public Utilities Code § 5840, which establishes the state video franchise application process, directs that our authority to oversee the state video application process "shall not exceed the provisions set forth in this section."³⁰⁶ These provisions only provide the Commission the authority to evaluate whether a state video franchise application is complete or incomplete.³⁰⁷ We must inform an applicant of whether its state video franchise application is complete within thirty calendar days of receipt of its application.³⁰⁸

Public Utilities Code § 5840 makes no allowance for protests. Finding Section 5840 does not provide for any protest to the Commission's issuance of a state video franchise, the OIR tentatively concluded that none should be permitted. We determined that DIVCA did not afford the Commission discretion in its review of state video franchise applications. The rest of this section reviews and assesses the parties' comments.

A. Position of Parties

Verizon supports the determination and reasoning that led us to conclude that we should permit no protests to applications for a video franchise. According to Verizon, the "44-calendar-day timeframe set forth in the Act for review and issuance of a franchise do not lend themselves to the opportunity for protest as that term is generally understood in Commission practice."³⁰⁹ Verizon adds that substantive issues raised by a protest would be outside the scope of the Commission's review: "[T]he application criteria are very detailed and capable of objective determination, making the approval process largely . . . ministerial . . . . [C]onsider[ing] additional factors in issuing a franchise . . . would violate section 5840(b), which strictly limits the application process and the Commission's authority to the provisions of section 5840."³¹⁰

AT&T puts forth an argument similar to Verizon. AT&T contends that "section 5840 sets forth the entirety of the permissible steps in the application process and it does not include protests. Therefore, protests are not allowed."³¹¹

Small LECs agrees that "AB 2987 does not provide for a protest mechanism, so the Commission should not modify the legislation by enacting one."³¹² SureWest supports this position of Small LECs and of other communications companies without argument.³¹³

In contrast to the communications companies, CCTPG/LIF maintains that we must allow parties to review franchise applications and protest deficiencies. CCTPG/LIF gives three reasons for its position. First, CCTPG/LIF contends that it is "inappropriate to exercise such an important function of Commission discretionary authority without an opportunity for interested parties to be heard":

If the applicant's initial definition of its service territory (required by Sec. 5840(e)(6), (7)) and/or its plan for build-out (required by Sec. 5840(e)(8)) is discriminatory or deficient, interested parties must be given the opportunity to protest. The build-out provisions of AB 2987, if not other parts of the application process, are sufficiently complex and include enough Commission discretion, such that the Commission's grant of an application is not a merely ministerial action.

Second, CCTPG/LIF contends that "AB 2987's timeline of allowing 44 days between a complete application and the granting of a franchise allows for a public application process and a protest process."³¹⁴ Third, CCTPG/LIF points out that "[t]here is simply no language anywhere in AB 2987 that restricts the Commission" from permitting protests to the applications for video franchises.³¹⁵

CFC argues that the proposal to prohibit protests on applications is inconsistent with the statutory scheme. In particular, CFC asserts that our failure to allow protests would "preclud[e] the public from calling to the Commission's attention certain facts surrounding the application which the Commission is required to consider, e.g. compliance with fee payment requirements, discrimination against low-income households."³¹⁶

DRA concurs that the Commission should permit protests. According to DRA, "[p]ermitting protests, providing for a limited time period within which they can be submitted and requiring identification of specific deficiencies will not harm the Commission's ability to efficiently process Applications, but will provide necessary due process rights and assist the Commission in identifying areas where an Application is incomplete or otherwise deficient."³¹⁷

TURN argues that the reasoning that led to the conclusion in the OIR that the Commission should not permit protests "is strained at best, and worst case, is an abuse of discretion."³¹⁸ TURN reasons that "[t]he ability to protest an application is an essential vehicle for interested parties to ensure that adequate procedures are in effect to comply with the legislative intent and the letter of the law."³¹⁹ It also asserts that a protest period "is consistent with the statutorily mandated deadlines"³²⁰

TURN argues that a variety of parties should be able to file protests. First, TURN claims localities should be able to file protests, because it is logical to conclude that localities "are served the application to ensure that they are satisfied with the application and to be able to file a protest if necessary."³²¹ Second, TURN contends that Public Utilities Code § 5900 envisions a special role for DRA, which should include the ability to file protests.³²² Third, TURN declares that "since the Legislature anticipated the need for consumer advocacy on . . . matters by singling out DRA, all interested parties should be permitted to protest initial applications . . . ."³²³

The Joint Cities contend that local governments "should be allowed to file comments regarding the granting of any state video franchise that will affect the local government . . . ."³²⁴ The Joint Cities argue that their comments are "instrumental to the Commission making an informed decision in the best interest of . . . communities":³²⁵ "[L]ocal governments will often possess comprehensive and unique evidence relevant to an applicant's financial, legal and technical qualification. This will be especially true where those applicants have operated one or more franchised cable systems in a community for many years"³²⁶

Joint Cities assert that DIVCA anticipates comments concerning applications. Far from "expressly prohibit[ing] the filing of comments concerning applications," Joint Cities point out that DIVCA requires the Commission "to collect adequate assurance that an applicant possesses the financial, legal, and technical qualification necessary to construct and operate the proposed system and promptly prepare any damage to the public right-of-way."³²⁷ Joint Cities add that "DIVCA expressly gives local government the opportunity to review every application from applicants that intend to provide service in that local government's jurisdiction."³²⁸

League of Cities/SCAN NATOA similarly calls for a protest period. It argues that the OIR's tentative finding that there is no legal basis for permitting protests does not constitute a "valid reason for the Commission to abandon its general practice of accepting protests from interested parties of all kinds of applications submitted by entities, whether or not they are subject to the Commission's jurisdiction."³²⁹ Further arguments made by League of Cities/SCAN NATOA echo those made by Joint Cities.

B. Discussion

The plain language of DIVCA does not afford the Commission discretion in its review of state video franchise applications. As such, there is no role for protests in our review of applications. A protest here "would be an idle act" that "could accomplish nothing."³³⁰ This interpretation is further supported by the short statutory review period and the Legislature's explicit lack of provisions for protests.

DIVCA strictly constrains our authority to review applications. Public Utilities Code § 5840(b) states that the "application process described in this section and the authority granted to the commission under this section shall not exceed the provisions set forth in this section."

We have no discretion over the substance or timing of our review of applications. The substance of our review is limited to the task of determining whether the application is complete. DIVCA states that "[i]f the commission finds the application is complete, it shall issue a state franchise before the 14^th calendar day after that finding."³³¹ The only stated grounds for rejecting an application is incompleteness.³³² If an application is incomplete, the Commission must explain "with particularity" how and the applicant has an opportunity to amend the application to overcome the defects.³³³

Timing under all circumstances is tightly circumscribed. We must notify an applicant within thirty calendar days if an application is complete.³³⁴ If we determine an application is complete, we must issue a state video franchise before the fourteenth calendar day after that finding.³³⁵ Our failure to act on an application within the forty-four calendar days of its receipt "shall be deemed to constitute issuance of the certificate applied for without further action on behalf of the applicant."³³⁶ If we find an application is incomplete, the Commission must make this finding "before the 30^th calendar day after the applicant submits the application."³³⁷ The applicant may amend its application, and once an application is amended, the Commission has thirty calendar days to review for completeness.³³⁸

We find that the Commission is duty bound to stay within the application review constraints prescribed by DIVCA. In addition to express restrictions found in DIVCA, California courts more generally have recognized that "[w]here a statute or ordinance clearly defines the specific duties or course of conduct that a governing body must take, that course of conduct becomes mandatory and eliminates any element of discretion."³³⁹ Here the statute at issue, DIVCA, "clearly defines the specific duties or course of conduct a governing body must take." DIVCA states that the Commission "shall" issue a state video franchise if an application is complete,³⁴⁰ and California courts have confirmed that "[t]he word `shall' indicates a mandatory or ministerial duty."³⁴¹ Thus, we find that there is no room for discretion, and as a result, no process or time for protests.

We find no merit in parties' arguments that the OIR used "strained" reasoning in support of the decision to limit protests.³⁴² Although its language was abbreviated, the OIR contained the essence of the legal analysis above.

Parties point out that our argument that the statute fails to envision protests is not a good reason for prohibiting them.³⁴³ We agree with this position. The reason for not permitting protests is that the statute explicitly calls for a review of applications that does not involve Commission discretion. As a result, no protests can be allowed, since to introduce a protest process brings in the Commission's use of discretion. The fact that the statute did not explicitly permit or require protests is simply a supporting indication that we are correct to find that we are not afforded discretion in our review of applications.

Similarly, the fact that we have a tightly prescribed time frame to review an application supports the interpretation that no protests are contemplated by DIVCA. Parties that argue that the thirty-day interval allotted for review of application completeness is sufficiently long to permit a protest period, which necessarily includes opportunity for reply comments, show scant understanding of typical Commission processes. We note that Verizon's review of "the Commission's website (the contents of which are subject to official notice) shows that over the past two years, 79 protested advice letters took an average of approximately six months to reach decision."³⁴⁴ This observation comports with our own understanding of Commission processes.

We find that it would be difficult, if not impossible, to allow even limited protests like those advocated by DRA.³⁴⁵ If we permitted protests limited to factors that could assist us in our review, due process and fairness would necessitate (i) an opportunity for applicants to respond to the protest and (ii) a detailed resolution of the issue by the Commission. The thirty-day review period would preclude this level of scrutiny.

Arguments of CFC and CCTPG/LIF also are not persuasive.³⁴⁶ They fail to address statutory provisions envisioning a limited role for the Commission.

TURN, likewise, fails to convince us that DRA and local entities, or any other parties, have a right to protest. We find no statutory basis for TURN's assertion that DRA - due to the role given to it by Public Utilities Code § 5900(k) - has a special right to protest.³⁴⁷ Public Utilities Code § 5900(k) expressly gives DRA a right to advocate "regarding renewal of a state-issued franchise and enforcement of Sections 5890, 5900, and 5950," but no part of DIVCA gives DRA the express right to advocate regarding a state video franchise application (which is governed by the review process established in Public Utilities Code § 5840).

TURN and Joint Cities further misconstrue DIVCA when they assert that Public Utilities Code § 5840(e)(1)(D) indicates local entities may file protests.³⁴⁸ Section 5840(e)(1)(D) simply states "[t]hat the applicant will concurrently deliver a copy of the application to any local entity where the applicant will provide service."³⁴⁹ The statute provides no express grant of a right to review and comment on the application; it only provides a local entity notice that a video service provider filed an application to offer video service within its jurisdiction. Moreover, we find that this service requirement may be justified solely on the basis that a local entity needs advance notice to prepare for its new duties under DIVCA. Thus, we do not find that an affected local entity's receipt of a copy of an application gives it the right, either expressly on implicitly, to file a protest.

We are similarly unconvinced by Joint Cities' argument that they hold key information concerning the applicant's legal, financial and technical qualifications, and, therefore, they should be permitted to file a protest.³⁵⁰ We do not need comments to determine whether an applicant possesses these qualifications. A bond - which we require - in and of itself provides adequate assurance that an applicant possesses these qualifications.³⁵¹ Thus, our decision regarding compliance with Public Utilities Code § 5840(e)(9) does not require extensive substantive review: We need only check for evidence of a bond.

To the extent an applicant is ineligible for a state video franchise pursuant to Public Utilities Code §§ 5840 or 5930, we note that a local entity's decision to bring this information to the Commission would not constitute a protest. Section X explains that the Commission could independently verify this information. We then could reject an application for, suspend, and/or invalidate a state video franchise.

³⁰⁶ Id. at § 5840(b).

³⁰⁷ Id. at § 5840(h).

³⁰⁸ Id. at § 5840(h)(1).

³⁰⁹ Verizon Opening Comments at 7.

³¹⁰ Id. (citations omitted).

³¹¹ AT&T Reply Comments at 3.

³¹² Small LECs Opening Comments at 7.

³¹³ SureWest Opening Comments at Exhibit A (mark-up of Attachment B at 14).

³¹⁴ CCTPG/LIF Opening Comments at 5.

³¹⁵ Id. at 4.

³¹⁶ CFC Opening Comments at 4-5.

³¹⁷ DRA Opening Comments at 3.

³¹⁸ TURN Opening Comments at 3.

³¹⁹ Id. at 5.

³²⁰ Id.

³²¹ Id. at 4.

³²² Id. at 4. See Cal. Pub. Util. Code § 5900(k) ("The Division of Ratepayer Advocates shall have authority to advocate on behalf of video customers regarding renewal of a state-issued franchise and enforcement of Sections 5890, 5900, and 5950.").

³²³ TURN Opening Comments at 4.

³²⁴ Joint Cities Opening Comments at 2.

³²⁵ Id. at 3.

³²⁶ Id.

³²⁷ Id.

³²⁸ Id. at 4.

³²⁹ League of Cities/SCAN NATOA Opening Comments at 8-9.

³³⁰ Irvine v. Citrus Pest Dist., 62 Cal.App.2d 378, 383 (Cal. Ct. App. 1944).

³³¹ Cal. Pub. Util. Code § 5840(h)(2) (emphasis added).

³³² Id. at § 5840(h)(1).

³³³ Id. at § 5840(h)(3).

³³⁴ Id. at § 5840(h)(1).

³³⁵ Id. at § 5840(h)(2).

³³⁶ Id. at § 5840(h)(4).

³³⁷ Id. at § 5840(h)(1).

³³⁸ Id. at § 5840(h)(3).

³³⁹ Rodriguez v. Solis, 1 Cal.App.4th 495, 504-505 (1991) (citing Great Western Sav. & Loan Assn. v. City of Los Angeles, 31 Cal.App.3d 403, 413 (1973)).

³⁴⁰ Cal. Pub. Util. Code § 5840(h)(2).

³⁴¹ Lazan v. County of Riverside, 140 Cal.App.4th 453, 460 (2006).

³⁴² See, e.g., TURN Opening Comments at 3 (characterizing the Commission's rationale regarding protests as "strained at best, and worst case, is an abuse of discretion").

³⁴³ See, e.g., League of Cities/SCAN NATOA Opening Comments at 8-9 (making this argument).

³⁴⁴ Verizon Reply Comments on the PD at 3, n.16.

³⁴⁵ See DRA Opening Comments at 3 (urging the Commission to allow limited protests).

³⁴⁶ CCTPG/LIF Opening Comments at 5; CFC Opening Comments at 4-5.

³⁴⁷ TURN Opening Comments at 4.

³⁴⁸ Joint Cities Opening Comments at 4; TURN Opening Comments at 4.

³⁴⁹ Cal. Pub. Util. Code § 5840(e)(1)(D).

³⁵⁰ Joint Cities Opening Comments at 3. In support of this argument, Joint Cities cite Public Utilities Code § 5840(e)(9). This statute provides that the "application for a state franchise . . . shall include . . . [a]dequate assurance that the applicant possesses the financial, legal, and technical qualifications necessary to construct and operate the proposed system and promptly repair any damage to the public right-of-way caused by the applicant. To accomplish these requirements, the commission may require a bond." Cal. Pub. Util. Code § 5840(e)(9).

³⁵¹ Cal. Pub. Util. Code § 5840(e)(9).