Assignment of Proceeding
Susan P. Kennedy is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned Administrative Law Judge in this proceeding.
1. Notice of A.03-10-032 and A.03-10-033 appeared in the Daily Calendar on October 16, 2003.
2. By D. 00-07-039, WTC was granted a CPCN to provide limited facilities-based and resold local exchange services.
3. Old WCG was a Delaware Corporation that owned 100% of WTC.
4. On April 22, 2002, old WCG filed for bankruptcy with the Bankruptcy Court.
5. On September 30, 2002, the Bankruptcy Court approved a POR for old WCG that provided for the creation of new WCG, and the transfer of the ownership of WTC from old WCG to new WCG.
6. WTC retained executives and managers with experience in telecommunications after the transfer of the ownership of WTC from old WCG to new WCG.
7. New WCG has sufficient resources to meet our financial requirements.
8. WCG represents that there were no changes to WTC's rates, terms or conditions of service as a result of its acquisition.
9. The public may benefit from WTC's acquisition by new WCG to the extent the transaction enhances its ability to compete due to increased access to capital.
10. There were no protests to A.03-10-032.
11. The imposition of a fine will help to deter future violations of § 854(a) by WTC and others.
12. WTC's violation of § 854(a) did not cause any physical or economic harm to others, and there is no evidence that WTC significantly benefited from its unlawful conduct or that its actions affected any consumers.
13. WTC did not file A.03-10-032 before the POR took effect.
14. WTC, through its parent new WCG, has the financial resources to pay a fine in the range normally applied by the Commission for violations of § 854(a).
15. There is no record evidence showing that anyone was harmed by WTC's failure to comply with § 854(a).
16. Leucadia has sufficient resources to meet our financial requirements.
17. There will be no change in WTC's management due to the proposed acquisition of new WCG by Leucadia.
18. There will be no change to WTC's rates, terms or conditions of service as a result of the acquisition of new WCG by Leucadia.
19. WTC's customers, and the public, will not be not harmed by the acquisition of new WCG by Leucadia.
20. The public may benefit from the transfer of control to the extent the acquisition of new WCG by Leucadia enhances WTC's ability to compete due to improved access to capital.
21. There were no protests to A.03-10-033.
22. The circumstances of the violation of §854(a) in A.03-10-033 are similar to those for A.03-10-032, except that there is no claim that non-compliance resulted from an order of the Bankruptcy Court.
23. WTC went forward with the second transaction, without waiting for approval of A.03-10-033.
24. The circumstances of the violation of §854(a) in A.03-10-033 are similar to D.00-12-053 and D.03-05-033 where $5,000 fines were imposed.
25. In D.03-09-069, the fine was reduced by $2,500, compared to D.00-12-053 and D.03-05-033, in recognition of the need to implement a bankruptcy court's order.
26. In A.03-10-033, there is no mitigation, and this is WTC's second violation of §854(a), it is therefore appropriate to increase the otherwise applicable fine.
27. Hearings are not required on A.03-10-032 or A.03-10-033.
1. Section 854(a) states that no person or corporation shall acquire control of any public utility organized and doing business in this state without first securing authorization to do so from the Commission, and any such acquisition without that prior authorization shall be void and of no effect.
2. The Commission has broad discretion to determine if it is in the public interest to authorize a transaction pursuant to § 854(a).
3. The two standards used by the Commission to determine if a transaction should be authorized under § 854(a) are whether the transaction will adversely affect the public interest and whether the transaction will serve the public interest..
4. In a situation where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, the Commission will apply the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired.
5. An applicant who desires to provide limited facilities-based and resold local exchange services must demonstrate that it has a minimum of $100,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs.
6. An applicant who desires to provide limited facilities-based and resold local exchange services is required to make a reasonable showing of technical expertise in telecommunications or a related business.
7. New WCG satisfies the Commission's financial and technical requirements.
8. There is record evidence showing that WTC's customers and the public were harmed by its acquisition by new WCG.
9. WTC's acquisition by new WCG is in the public interest.
10. It is reasonable to grant A.03-10-032 to the extent it requests prospective authority under § 854(a) for the transfer of control of WTC from old WCG to new WCG.
11. The purpose of § 854(a) is to enable the Commission to review a proposed acquisition before it takes place in order to take such action as the public interest may require.
12. Granting A.03-10-032 on a retroactive basis would thwart the purpose of § 854(a).
13. Application.03-10-032 should be denied to the extent it requests retroactive authority under § 854(a) for WTC's acquisition by new WCG.
14. Since the Commission approval of A.03-10-032 is prospective only, WTC's acquisition by new WCG is void under § 854(a) for the period of time prior to the effective date of this decision, and WTC and new WCG are at risk for any adverse consequences that may result from having implemented the transfer of control without Commission authority.
15. WTC failed to comply with § 854(a) by effectuating the transfer of control without Commission authorization.
16. Violations of § 854(a) are subject to monetary penalties under § 2107 of not less than five hundred dollars, nor more than twenty thousand dollars for each offense.
17. Any violation of § 854(a), regardless of the circumstances, is a serious offense that should be subject to fines.
18. The Commission has held that the size of a fine should be proportionate to the severity of the offense.
19. The Commission has held that the size of a fine should reflect the conduct of the utility.
20. Since WTC did ultimately file A.03-10-032, its violation is not an extremely egregious offense.
21. In D.98-12-075, the Commission held that the size of a fine should reflect the financial resources of the utility.
22. In D.98-12-075, the Commission held that a fine should be tailored to the unique facts of each case.
23. In D.98-12-075, the Commission held that any decision which imposes a fine should (1) address previous decisions that involve reasonably comparable factual circumstances, and (2) explain any substantial differences in outcome.
24. In connection with A.03-10-032, WTC should be fined $10,000 for violating § 854(a).
25. Since WTC possesses a CPCN to provide limited facilities-based and resold local exchange telecommunications services within California, we will apply the requirements for such authority to Leucadia.
26. Leucadia satisfies the Commission's financial and technical requirements.
27. The acquisition of new WCG by Leucadia is in the public interest.
28. It is reasonable to grant A.03-10-033 to the extent it requests prospective authority under § 854(a) for the transfer of control of WTC from new WCG to Leucadia.
29. Application.03-10-033 should be denied to the extent it requests retroactive authority under § 854(a) for WTC's acquisition by Leucadia.
30. Since the Commission approval of A.03-10-033 is prospective only, WTC's acquisition by Leucadia is void under § 854(a) for the period of time prior to the effective date of this decision, and WTC, new WCG, and Leucadia are at risk for any adverse consequences that may result from having implemented the transfer of control without Commission authority.
31. WTC failed to comply with § 854(a) by effectuating the transfer of control to Leucadia without prior Commission authorization.
32. We find no mitigation in WTC's explanation that it went forward with the second transaction, without waiting for approval of A.03-10-033, for business reasons.
33. In connection with A.03-10-033, WTC should be fined $10,000 for violating § 854(a).
34. Application 03-10-032 and A.03-10-033 are ratesetting proceedings, and no hearings are necessary.
35. The following order should be effective immediately.
IT IS ORDERED that:
1. Application (A.) 03-10-032, filed by WilTel Local Network, LLC (WTC), for authority under Pub. Util. Code § 854 for a transfer of control of WTC from Williams Communications Group, Inc. to WilTel Communications Group, Inc. is granted to the extent it requests authority effective as of the date of this order.
2. Application 03-10-033 for a transfer of control of WTC to Leucadia National Corporation (Leucadia) is granted to the extent it requests authority effective as of the date of this order.
3. Application 03-10-032 and A.03-10-033 are denied to the extent that they request retroactive authority for the transfers of control.
4. WTC shall pay a fine in the amount of $20,000 for violating Pub. Util. Code § 854(a). It shall pay the fine within 20 days from the effective date of this order by tendering to the Fiscal Office of the California Public Utilities Commission a check in the amount of $20,000 made payable to the State of California General Fund.
5. Application 03-10-032 and A.03-10-033 are closed.
This order is effective today.
Dated _____________________, at San Francisco, California.
