Respondents Did Not Violate Rule 1 in Answering Question 8

Question 8 asks the applicant to state that neither applicant nor an officer, director or owner of applicant has been sanctioned by a state regulatory agency for failure to comply with that agency's rules or orders. Respondents answered "true" in response to Question 8.

We ask this question to determine an applicant's regulatory compliance history since it would be relevant and highly probative of the applicant's prospective compliance with California authorities. (73 CPUC2d, supra, at 292.) A sanction is a punitive or coercive measure or action that results from failure to comply with a law, rule, or order. (Merriam-Webster's Dictionary of Law.)

At the time the Titan application was filed (July 1999), the Michigan Public Service Commission had fined ACI for its failure to comply with the Commission's procedures for changing telecommunications service providers. The Michigan Commission had issued a show cause order on February 26, 1999 that required ACI to respond within 21 days. Because ACI did not respond to the order and Michigan staff found that contact phone numbers had been changed and then disconnected, the Michigan Commission concluded in an order issued April 30, 1999, that ACI was out of business and had violated the show cause order and the Commission's procedures for changing telecommunications service providers. The Michigan Commission fined ACI $940,000 and prohibited ACI's directors, officers, principals, and agents from engaging in the telecommunications business in Michigan until the fine was paid.⁴

The record establishes that the Michigan Commission sanctioned ACI but not Bucci. Respondents did not mislead the Commission in responding "true" to Question 8 in this instance, because the Michigan Commission had not sanctioned Bucci and it is not clear that either ACI or Bucci received the show cause order.

In Texas, the Office of Consumer Protection (OCP) of the Public Utility Commission sent a letter on June 23, 1998 that constituted a notice of intent to assess an administrative penalty on ACI for switching long distance services without proper verification. If the violations were not cured within 30 days, the OCP would recommend a fine of $120,000. A signed receipt indicated the notice was received on June 29, 1998. On April 27, 1999, ACI's receiver and the OCP entered into a settlement agreement in which ACI agreed to pay the fine but did not admit wrongdoing. The settlement agreement states:

The parties expressly acknowledge and agree that remedial actions on the part of ACI do not constitute and shall not be deemed as constituting, any admission by ACI of wrongdoing, violation of the PUC's Substantive Rules or Texas statutes or liability for any administrative penalties in the circumstances referenced in Paragraph (1) [violations of PUC Substantive Rules § 26.106] above.

Because the settlement agreement expressly excludes admission that ACI failed to comply with the Texas Commission's regulations, that Commission did not "sanction" ACI. That Commission also did not sanction Bucci. In this instance, we find that Respondents did not mislead the Commission in responding "true" to Question 8.