IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 05-0951

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In re Southwestern = Bell=20 Telephone Company, L. P., Relator

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On Petition for Writ of = Mandamus

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Argued January 24,=20 2007

Chief Justice Jefferson delivered the opinion of the = Court.

Justice Willett did not participate in the=20 decision.

In = this=20 original proceeding, we must decide whether the Public Utilities = Commission=20 (PUC) has exclusive jurisdiction over claims that Southwestern Bell = Telephone=20 (SWBT)[1]=20 improperly collected the Texas Universal Service Fund (TUSF) surcharge = from=20 customers. We conclude that the PUC has exclusive jurisdiction and = conditionally=20 grant relief.

Background

&nbs= p;=20 This dispute involves the interplay of several facets of = telecommunications=20 regulation: universal service, switched access rates, incentive = regulation, and=20 the Texas Universal Service Fund surcharge.

Universal=20 Service

&nbs= p;=20 Universal service=97that is, =93adequate and efficient = telecommunications service=94=20 available to all citizens at =93just, fair, and reasonable = rates=94=97has long been a=20 policy objective of our state and national governments. Tex. Util. Code =A7 = 52.001(a); see=20 also 47 U.S.C. =A7 151 (2000); AT&T Commc=92ns of Tex., L.P. = v. Sw. Bell=20 Tel. Co., 186 S.W.3d 517, 521-22 n.18 (Tex. 2006). Achieving this = goal=20 requires subsidization of rural and residential service that would = otherwise be=20 prohibitively expensive. AT&T, 186 S.W.3d at 521. In the = past,=20 switched access rates=97rates paid by long-distance carriers to local = carriers so=20 that long-distance customers could access local networks=97were used to = subsidize=20 universal service. Pub. Util. Comm=92n of Tex., Scope of Competition = in=20 Telecommunications Markets of Texas at 82 (Jan. 1999). These = rates=20 were priced higher than their cost, in part so that local carriers could = recoup=20 the expense of providing service in high-cost rural areas of the state.=20 Id.

Incentive=20 Regulation

&nbs= p;=20 This system changed, however, in 1995 when the Legislature=92s = amendments to PURA=20 introduced incentive regulation.[2]=20 See Act of May 16, 1995, 74th Leg., R.S., ch. 231, =A7 49, 1995 = Tex. Gen.=20 Laws 2017, 2045-53 (current version at Tex. Util. Code ch. 58). = These=20 amendments permitted local carriers to opt out of the traditional = regulatory=20 framework if they agreed to cap rates for basic services, including = switched=20 access rates, at 1995 levels for four years. Tex. Util. Code =A7=A7 = 58.021, 58.051,=20 58.054; AT&T, 186 S.W.3d at 522-23. In exchange, the carrier = could=20 not, "under any circumstances, [be] subject to a complaint, hearing, or=20 determination regarding the reasonableness of the company's: (1) rates; = (2)=20 overall revenues; (3) return on invested capital; or (4) net income." = TEX. UTIL.=20 CODE =A7 58.025(a); see Act of May 16, 1995, 74th Leg., R.S., ch. = 231, =A7=20 49, 1995 Tex. Gen. Laws 2017, 2046, formerly TEX. REV. CIV. STAT. art. = 1446c-0,=20 =A7 3.352(d), recodified by Act of May 8, 1997, 75th Leg., R.S., ch. = 166, =A7 1,=20 1997 Tex. Gen. Laws 713, 864. Because switched access rates were capped, = the=20 funds available to subsidize universal service could not increase and, = due to=20 competitive pressures, might decrease. AT&T, 186 S.W.3d at = 521-22.=20 SWBT elected incentive regulation.

TUSF = Surcharge

&nbs= p;=20 Partially in response to the effects of incentive regulation, the = Legislature=20 substantially amended the universal service subchapter of PURA in 1997,=20 see Act of May 8, 1997, 75th Leg., R.S., ch. 166 =A7 1, 1997 Tex. = Gen. Laws=20 850, directing the PUC to =93adopt and enforce rules . . . to establish = a=20 universal service fund=94 that is =93funded by a statewide uniform = charge payable by=20 each telecommunications provider that has access to the customer = base.=94 Tex. Util. Code =A7=A7 = 56.021, 56.022(a).=20 The PUC promulgated a rule allowing providers to recover their portion = of the=20 TUSF from retail customers via a =93Texas Universal Service=94 = surcharge, assessed=20 as a percentage of the customer=92s bill, excluding Lifeline and Link Up = services.=20 16 Tex. Admin. Code =A7 = 26.420(f)(6). The TUSF plan includes programs that, in conjunction with = the=20 Federal Universal Service Fund, assist telecommunications providers in = providing=20 basic local services at reasonable rates in high cost rural areas. Pub. = Util.=20 Comm=92n of Tex., Scope of Competition in Telecommunications Markets = of Texas=20 at 41 (Jan. 2007). The PUC approved SWBT=92s application to add the = TUSF=20 surcharge, and SWBT has been collecting it since 1999.

Procedural=20 History

&nbs= p;=20 Plaintiffs Debbie Clara Trevino, Arnoldo Benavides, and Annette Muniz,=20 individually and as representatives of a putative class consisting of = all SWBT=20 residential customers in Texas, sued SWBT in Hidalgo County district = court.=20 Plaintiffs alleged that SWBT=92s electing incentive regulation under = chapter 58 of=20 the Public Utility Regulatory Act (PURA) violated that chapter=92s rate = cap=20 provisions because it also collected the TUSF under chapter 56. = Specifically,=20 plaintiffs alleged:

By=20 applying the [TUSF] charge to the total bills of its residential = customers, SWBT=20 effectively increases the rate charged for many of the basic network = services=20 listed in Tex. Util. Code = =A7=20 58.051(a). Since it was not a rate charged for basic network services on = June 1,=20 1995, Plaintiffs allege SWBT=92s [TUSF] charge violates SWBT=92s rate = freeze=20 agreement under the incentive regulation found in Chapter 58 of the = PURA.=20 Plaintiffs allege that SWBT=92s billing of its [TUSF] charge for basic = network=20 services has resulted and continues to result in monthly overcharges to = SWBT=92s=20 residential customers. Plaintiffs are not challenging the reasonableness = of=20 SWBT=92s rates. Plaintiffs are challenging the legality of SWBT=92s = [TUSF] charge=20 for basic network services, in light of its rate freeze agreement under = Tex. Util. Code =A7 = 58.021.

Plaintiffs=20 sought a declaration that SWBT=92s TUSF charge was a rate charged for = basic=20 network services and that SWBT increased that rate in violation of its = rate=20 freeze agreement, as well as an order requiring SWBT to refund the = [TUSF] to its=20 customers[3]=20 (the =93core claims=94). Plaintiffs also requested attorney=92s fees. = SWBT filed a=20 plea to the jurisdiction, arguing that the PUC had exclusive = jurisdiction over=20 the core claims, and the trial court denied it. The court of appeals = denied=20 mandamus relief, ___ S.W.3d ___, and SWBT now seeks a writ of mandamus = from this=20 Court.[4]

Analysis

Mandamus

&nbs= p;=20 Initially, we address whether mandamus is appropriate. Mandamus relief = is an=20 extraordinary remedy that issues only if the court clearly abused its = discretion=20 and the relator has no adequate remedy by appeal. In re Entergy = Corp.,=20 142 S.W.3d 316, 320 (Tex. 2004). We recently addressed whether mandamus = should=20 lie to correct a trial court=92s denial of a plea to the jurisdiction = based on an=20 agency=92s exclusive jurisdiction and concluded that:

if the PUC=20 has exclusive jurisdiction in this dispute, the judicial appropriation = of state=20 agency authority would be a clear disruption of the =91orderly processes = of=20 government.=92 This disruption, coupled with the hardship imposed on = [the relator]=20 by a postponed appellate review, warrants an exception to our general=20 proscription against using mandamus to correct incidental trial court=20 rulings.

Id. at=20 321 (quoting State v. Sewell, 487 S.W.2d 716, 719 (Tex. 1972)). = That=20 analysis applies here. Allowing the trial court to proceed if the PUC = has=20 exclusive jurisdiction would disrupt the orderly processes of = government. That,=20 coupled with the hardship occasioned by postponed appellate review, = makes=20 mandamus an appropriate remedy.[5]

&nbs= p;=20 Plaintiffs argue that SWBT=92s petition for writ of mandamus is untimely = because=20 SWBT did not file its mandamus petition with this Court until more than = a year=20 after the court of appeals denied relief. Plaintiffs rely on = Rivercenter=20 Associates v. Rivera, 858 S.W.2d 366, 367-68 (Tex. 1993), in which = we denied=20 mandamus relief to a party who waited over four months to file a = mandamus=20 petition. We concluded that the defendant had not shown diligent pursuit = of its=20 rights and that the record revealed no justification for the delay. = Id.=20 In the present case, however, SWBT=92s delay was justified. After the = court of=20 appeals denied mandamus relief, plaintiffs alleged that SWBT violated = its tariff=20 with the Federal Communications Commission.[6]=20 SWBT removed the case to federal district court, and that court remanded = the=20 case to state court eleven months later. From the time the case was = removed to=20 federal court until it was remanded to state court, the state court was=20 prohibited from taking further action. See 28 U.S.C =A7 1446(d) = (The filing=20 of a notice of removal with the state court =93shall effect the removal = and the=20 State court shall proceed no further unless and until the case is = remanded.=94).=20 Under these circumstances, SWBT did not waive its right to mandamus = relief.

The = PUC=92s=20 Jurisdiction

Now = we must=20 decide whether the core claims fall within the PUC=92s exclusive = jurisdiction.=20 SWBT argues that the PUC should resolve this dispute because chapter 56 = creates=20 a comprehensive regulatory scheme for universal service in Texas, giving = the PUC=20 exclusive original jurisdiction. Plaintiffs argue that because SWBT = elected=20 incentive regulation, section 58.025 prohibits the PUC from hearing this = dispute. See Tex. Util. = Code=20 =A7 58.025(a)(1).

&nbs= p;=20 We presume that district courts are authorized to resolve disputes = unless the=20 Constitution or other law conveys exclusive jurisdiction on another = court or=20 administrative agency. Entergy, 142 S.W.3d at 322. An agency has=20 exclusive jurisdiction when a pervasive regulatory scheme indicates that = the=20 Legislature intended for the regulatory process to be the exclusive = means of=20 remedying the problem to which the regulation is addressed. Subaru of = America, Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 = (Tex. 2002).=20 Whether an agency has exclusive jurisdiction is a matter of law that we = review=20 de novo. Id. at 222. If an agency has exclusive jurisdiction to = resolve a=20 dispute, a party must first exhaust administrative remedies before a = trial court=20 has subject matter jurisdiction. Id.

&nbs= p;=20 We recently held that =93PURA is intended to serve as a =91pervasive = regulatory=20 scheme=92 of the kind contemplated in David McDavid Nissan.=94=20 Entergy, 142 S.W.3d at 323 (concluding that the PUC has exclusive = jurisdiction to hear a dispute between two electric companies). The same = reasoning applies to this dispute. In section 52.002(a), the Legislature = specifically granted the PUC =93exclusive original jurisdiction over the = business=20 and property of a telecommunications utility.=94 Tex. Util. Code =A7 = 52.002(a). In=20 addition to this explicit grant of exclusive original jurisdiction, = chapter 56=20 constitutes a comprehensive regulatory scheme for a Texas Universal = Service Fund=20 administered by the PUC. Section 56.021 directs the PUC to =93adopt and = enforce=20 rules requiring local exchange companies to establish a universal = service fund.=94=20 Id. =A7 56.021. Section 56.022 provides that the universal = service fund=20 shall be funded by a uniform statewide charge paid =93in accordance with = procedures approved by the commission.=94 Id. =A7 56.022. Section = 56.023=20 directs the PUC to =93adopt eligibility criteria and review procedures, = including=20 a method for administrative review . . . to fund the universal service = fund and=20 make distributions from that fund.=94 Id. =A7 56.023(a)(1). Thus, = PURA is=20 intended to serve as a pervasive regulatory scheme that governs the = Texas=20 Universal Service Fund.

&nbs= p;=20 Plaintiffs argue that the PUC does not have jurisdiction because it = cannot grant=20 the relief they request. A close inspection of Plaintiffs=92 claims, = however,=20 reveals that the Legislature intended that the PUC determine this type = of=20 dispute and gave it the power to grant the relief requested. = Plaintiffs=92 first=20 amended petition, the live pleading when the trial court heard SWBT=92s=20 jurisdictional plea, asserts various claims[7]=20 that, in substance, asked the trial court to (1) declare that the TUSF = surcharge=20 violates PURA; and (2) order SWBT to return the surcharge (including = accrued=20 interest) to its customers.

&nbs= p;=20 The PUC, as the administrator of the TUSF, has the authority to grant = such=20 relief and has the expertise to decide this matter. The Legislature = granted the=20 PUC =93the general power to regulate and supervise the business of each = public=20 utility within its jurisdiction and to do anything specifically = designated or=20 implied by this title that is necessary and convenient to the exercise = of that=20 power and jurisdiction.=94 Tex. Util. Code=20 =A7 14.001. With regard to the TUSF specifically, the Legislature = directed=20 the PUC to =93adopt eligibility criteria and review procedures, = including a=20 method for administrative review, the commission finds necessary = to fund=20 the universal service fund=94 and the PUC =93shall adopt rules for = the=20 administration of the universal service fund . . . and may act as = necessary=20 and convenient to administer the fund.=94 Id. =A7 = 56.023(a)(1), (d)=20 (emphasis added). For billing disputes, the PUC=92s authority is even = more=20 comprehensive, as it may =93resolve disputes between a retail customer = and a=20 billing utility, service provider, [or] telecommunications utility.=94 = Id.=20 =A7 17.157(a). In exercising its authority in resolving disputes, the = PUC may=20 investigate an alleged violation, order a service provider to produce=20 information or records, and require a service provider to =93refund or = credit=20 overcharges or unauthorized charges with interest.=94 Id. =A7 = 17.157(b)(1),=20 (3), and (6). The PUC also has the authority to seek to enjoin a utility = from=20 engaging in acts that violate PURA, and it can assess administrative = penalties=20 against that utility. Id. =A7 15.021, .023. These provisions, = along with=20 the Legislature=92s grant to the PUC of =93exclusive original = jurisdiction over the=20 business and property of a telecommunications utility,=94 id. =A7 = 52.002(a),=20 establish that the Legislature granted the PUC the authority to approve = a TUSF=20 surcharge, regulate a service provider=92s collection of the surcharge, = hear=20 disputes between customers and service providers concerning the TUSF, = and grant=20 refunds where appropriate. Moreover, plaintiffs=92 request for = core-claim=20 attorney=92s fees, presumably pursuant to the declaratory judgment act, = Tex. Civ. Prac. & Rem. Code = =A7=20 37.009, cannot operate to vest the trial court with jurisdiction where = there was=20 none before. Cf. Utica Lloyd=92s of Texas v. Mitchell, 138 F.3d = 208, 210=20 (5th Cir. 1998) (noting that, =93[a]lthough the Texas [Declaratory = Judgment Act]=20 expressly provides for attorney=92s fees, it functions solely as a = procedural=20 mechanism for resolving substantive =91controversies which are already = within the=20 jurisdiction of the courts=92=94) (quoting Housing Authority v. = Valdez, 841=20 S.W.2d 860, 864 (Tex. App.=97Corpus Christi 1992, writ denied)). As we = explained=20 in Entergy, the =93specific grant to the PUC of =91exclusive = original=20 jurisdiction=92 makes it clear that the Legislature intended this = dispute . . . to=20 begin its journey toward resolution at the PUC.=94 Entergy, 142 = S.W.3d at=20 323. Accordingly, we conclude that the PUC has exclusive jurisdiction = over the=20 core claims.

&nbs= p;=20 Plaintiffs attempt to cast some of their claims as a violation of = chapter 58's=20 rate caps (over which they assert the PUC lacks jurisdiction), but the = pleadings=20 demonstrate that their real point of contention is with the TUSF = surcharge. Even=20 if chapter 58 were implicated, two statutory provisions indicate that = chapter=20 56=97the TUSF chapter=97controls over chapter 58. First, section 56.002 = provides=20 that if chapter 56 conflicts with another provision, chapter 56 = prevails. Tex. Util. Code =A7 56.002. = Second,=20 section 58.061 states that =93[t]his subchapter [chapter 58] does not = affect a=20 charge permitted under . . . Subchapter B, Chapter 56.=94 Id. =A7 = 58.061.=20 Thus, the PUC=92s exclusive jurisdiction over the TUSF surcharge is not = affected=20 by the chapter 58's rate cap provisions.

&nbs= p;=20 Our recent decision in AT&T Communications of Texas v. = Southwestern Bell=20 Telephone, 186 S.W.3d 517 (Tex. 2006), also supports this = conclusion. In=20 AT&T, we determined that while the PUC cannot reduce switched = access=20 rates or determine their reasonableness, it is obligated to uphold = duties listed=20 in other provisions. Id. at 531-32. We specifically noted = that=20 =93[t]he Commission=92s lack of authority to reduce switched access = rates does not=20 preclude it from determining that they have an anticompetitive effect = and=20 attempting to fashion an appropriate remedy within its power.=94 = Id. at=20 531. Likewise, in this case, while the PUC cannot determine the = reasonableness=20 of switched access rates under chapter 58, see TEX. UTIL. CODE = =A7=20 58.025(a), it must nonetheless carry out its duties pursuant to chapter = 56's=20 regulatory scheme. See, e.g., Tex. Util. Code =A7 = 56.021-.023.

New = claims=20 asserted after the jurisdictional plea

After the=20 trial court denied SWBT=92s jurisdictional plea, plaintiffs filed = several amended=20 petitions asserting new claims for breach of contract and violations of = the=20 Texas Deceptive Trade Practices-Consumer Protection Act, some of which = pertain=20 not to the TUSF, but to SWBT=92s =93Touch-tone=94 charges. SWBT=92s plea = to the=20 jurisdiction was limited to the core claims, and its request for = mandamus relief=20 asks that we order the trial court to dismiss =93those claims pending at = the time=20 [the trial court] denied Relator=92s Plea to the Jurisdiction.=94 SWBT = asserts that=20 our decision on the core claims =93may prove helpful to both the trial = court and=20 the litigants in resolving jurisdiction over the newly added [claims], = and any=20 future claims as well.=94 We agree. SWBT also asks that we order the = trial court=20 to stay all claims not addressed by SWBT=92s plea to the jurisdiction = pending the=20 PUC=92s determination of the core claims, or that we direct the trial = court to=20 vacate its order denying the plea and conduct further proceedings = consistent=20 with this opinion. Although abatement may well be appropriate, we = believe the=20 latter course is the more prudent. SWBT has not yet filed a = jurisdictional plea=20 as to the new claims, and the parties have not briefed or presented = those issues=20 to the trial court. See In re Perritt, 992 S.W.2d 444, 446 (Tex. = 1999).=20 Should SWBT file such a plea as to the new claims, the trial court may = consider=20 it with the benefit of this opinion and our recent decision in In re = Sw. Bell=20 Tel. Co., L.P., 226 S.W.3d 400 (Tex. 2007) (holding that trial court = abused=20 its discretion in refusing to abate claims within the PUC=92s primary=20 jurisdiction).

III

Conclusion

&nbs= p;=20 We conclude that the PUC has exclusive jurisdiction over the core = claims, and=20 the trial court abused its discretion in denying SWBT=92s jurisdictional = plea.=20 Accordingly, we conditionally grant the writ of mandamus as to those = claims and=20 direct the trial court to (1) vacate its January 6, 2004, order denying = SWBT=92s=20 motion to dismiss; (2) dismiss the core claims for lack of subject = matter=20 jurisdiction; and (3) conduct further proceedings consistent with this = opinion.=20 Tex. R. App. P. = 52.8(c); In re=20 E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 227 (Tex. 2004). = We are=20 confident the trial court will promptly comply, and the writ will issue = only if=20 it does not.

______________________________

Wallace B.=20 Jefferson

Chief=20 Justice

OPINION=20 DELIVERED: August 31,=20 2007 &nb= sp; &nbs= p; = ; = =20