Filed 2/1/23 Securus Technologies v. Public Utilities Com. CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not 

certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has not 

been certified for publication or ordered published for purposes of rule 8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

SECURUS TECHNOLOGIES, 

LLC,

Petitioner,

v.

PUBLIC UTILITIES 

COMMISION,

Respondent;

THE UTILITY REFORM 

NETWORK et al.,

Real Parties in Interest.

B320207

Commission Decision No. 

21-08-037

ORIGINAL PROCEEDINGS; petition for writ of review of a

decision by the California Public Utilities Commission (Cal. PUC 

Decision No. 21-08-037). Decision affirmed. 

Morgan, Lewis & Bockius, F. Jackson Stoddard and Russell 

M. Blau for Petitioner.

Christine Hammond, Dale Holszchuh and Elena Gekker for 

Respondent.

Edelson and Yaman Salahi; Stephen Raher for Real Party 

in Interest Prison Policy Initiative, Inc.
2

INTRODUCTION

Securus Technologies, LLC (Securus), is one of six

telecommunications companies providing incarcerated persons 

calling services (IPCS) in California. In this original proceeding, 

Securus challenges the decision of the California Public Utilities 

Commission (PUC) adopting interim rate relief for IPCS in the 

first phase of a two-phase rulemaking proceeding. Among other 

things, the PUC’s decision: (1) found IPCS providers operate as 

locational monopolies within the incarceration facilities they 

serve and exercise market power; (2) adopted an interim cap on 

intrastate IPCS rates of $0.07 per minute for all debit, prepaid, 

and collect calls; and (3) prohibited providers from charging

various ancillary fees associated with intrastate and 

jurisdictionally mixed1 IPCS. The interim rate cap and 

prohibition on ancillary fees will remain in place until the PUC 

adopts a subsequent decision in the next phase of its rulemaking 

proceeding, which remains open. 

We granted Securus’s petition for writ of review to consider 

its request that we invalidate the PUC’s decision. In support of 

its request for relief, Securus contends the decision is 

unsupported by substantial evidence, is arbitrary and an abuse of 

discretion, ran afoul of certain procedural requirements, and 

violated Securus’s constitutional rights. 

As discussed below, we conclude Securus has not shown the 

decision must be set aside. Accordingly, we affirm the PUC’s 

decision.

1 A call is “jurisdictionally mixed” if the end points of the call 

cannot definitely be determined. (See fn. 15, post, and related 

text.)
3

BACKGROUND

I. Federal Regulation of Interstate IPCS

The Federal Communications Commission (FCC) began 

regulating interstate IPCS in 2012, when it opened a rulemaking 

proceeding to address concerns regarding a lack of competition in 

the IPCS market. The next year, in FCC Order No. 13-113, the 

FCC determined rates for calling services used by incarcerated 

people greatly exceeded the reasonable costs of providing those 

services, and adopted interim interstate rate caps of $0.21 per 

minute for debit and prepaid calls, and $0.25 per minute for 

collect calls.

In October 2015, the FCC issued an order (FCC Order No. 

15-136) “adopt[ing] a comprehensive framework for interstate 

and intrastate [IPCS].” Among other things, the FCC adopted

permanent interstate and intrastate rate caps of $0.11 per 

minute for prisons, $0.14 per minute for jails with average daily 

populations of 1,000 or more, $0.16 per minute for jails with 

average daily populations of 350 to 999, and $0.22 per minute for 

jails with average daily populations of less than 350. The FCC 

also “establish[ed] a limited list of ancillary fees that [it] will 

permit [IPCS] providers to charge[,]” and capped the amounts 

that could be charged for those fees. Of relevance to this case, the 

FCC: (1) capped automated payment fees2 at $3.00 per 

2 Automated payment fees are those charged by IPCS 

providers for various types of transactions, including credit card 

payments, debit card payments, and various other bill processing 

fees. These fees are incurred when incarcerated persons or their 

families use a credit or debit card to fund their IPCS accounts for 

future calls.
4

transaction; (2) capped live agent fees3 at $5.95 per interaction; 

(3) capped paper bill/statement fees4 at $2.00 per statement; and 

(4) with respect single-call and related services fees5, prohibited 

providers from charging more than the exact fee charged by

third-party financial institutions for processing single-call 

transactions, with no markup.

In 2016, the FCC reconsidered its decision to exclude all 

site commission payments6 from the rate caps set in 2015. “[T]o 

account for claims that certain correctional facility costs reflected 

in site commission payments are directly and reasonably related

to the provision of [IPCS]” (footnote omitted), the FCC adopted 

the following revised rate caps: $0.13 per minute for prisons; 

$0.19 per minute for jails with average daily populations of 1,000 

or more; $0.21 per minute for jails with average daily populations 

3 Live agent fees are those associated with the optional use of 

a live operator to complete IPCS transactions. Live agents, for 

example, may assist in setting up an account, adding money to an 

account, or making a call. 

4 Paper bill/statement fees are fees associated with providing 

paper billing statements to IPCS customers.

5 Single-call and related service fees apply where an 

incarcerated person makes a collect call to a recipient who does 

not have an account with the IPCS provider or does not want to 

establish an account. Those calls are billed on a per-call basis 

through a third-party, who charges a transaction fee.

6 Site commissions are a percentage of calling service 

revenues that IPCS providers pay to incarceration facilities. They 

are individually negotiated in the contracts between the 

providers and the facilities they serve, and can vary at the local, 

county, state, and federal levels. 
5

of 350 to 999; and $0.31 per minute for jails with average daily 

populations of less than 350. 

In 2017, the United States Court of Appeals for the D.C. 

Circuit vacated various portions of FCC Order No. 15-136.

(Global Tel*Link v. FCC (D.C. Cir. 2017) 866 F.3d 397, 402.) 

Among other things, the D.C. Circuit vacated the FCC’s caps on 

intrastate IPCS rates, reasoning they “exceed[ed] the FCC’s

statutory authority[.]” (Ibid.) It also vacated the FCC’s 2015 rate 

caps on interstate calls, concluding several of the methods used to 

set those caps were unsupported by reasoned decision-making. 

(See ibid.) Subsequently, in Securus Techs., Inc. v. FCC (D.C. Cir. 

Dec. 21, 2017, No. 16-1321) 2017 U.S. App. LEXIS 26360, the 

D.C. Circuit summarily vacated the FCC’s 2016 order adopting 

revised rate caps because they were “premised on the same legal 

framework and mathematical methodology that [the court] 

rejected in Global Tel*Link v. FCC, [supra, 866 F.3d 397].” 

In an order adopted in August 2020 (FCC Order No. 20-

111)7, the FCC: (1) revised certain limitations on ancillary service 

fees; (2) proposed to lower the interstate rate caps on debit, 

prepaid, and collect calls to $0.14 for prisons and $0.16 for jails;

and (3) proposed to cap rates for international calls. While the 

FCC believed these actions “will ensure that rates and charges 

for interstate and international [IPCS] are just and reasonable[,]” 

it acknowledged “the vast majority of calls made by incarcerated 

individuals are intrastate calls[.]” The FCC therefore “urge[d]

[its] state partners to take action to address the egregiously high 

intrastate [IPCS] rates across the country.”

7 We refer to this order throughout this opinion as the FCC’s 

August 2020 order. 
6

In May 2021, the FCC adopted an order (FCC Order No. 

21-60)8 “lowering interstate rates and charges for the vast 

majority of incarcerated people, limiting international rates for 

the first time, and making other reforms to [its] rules.” Among 

other things, the FCC adopted an interim rate cap of $0.12 per 

minute for debit and prepaid interstate calls from prisons, and 

$0.14 per minute for larger jails. However, it “refrain[ed] from 

adopting new interim rate caps for jails with average daily 

populations below 1,000, which remain subject to the interstate 

total per-minute rate cap of $0.21.”

In addition, the FCC “[r]eformed the current treatment 

of site commission payments to permit recovery only of the 

portions of such payments related specifically to calling 

services . . . .” For “site commission payments result[ing] from 

contractual obligations or negotiations with providers, providers 

may recover from consumers no more than $0.02 per minute for 

prisons and $0.02 per minute for larger jails . . . .” Thus, under

the FCC’s May 2021 order, “the maximum total interstate rate 

caps are $0.14 per minute for prisons and $0.16 per minute for 

jails with 1,000 or more incarcerated people.” 

II. Overview of the IPCS Market in California9

“IPCS in California are generally provided by private 

communications companies under contract with the entity that 

oversees or owns the correctional or detention facility. While 

8 We refer to this order throughout this opinion as the FCC’s 

May 2021 order. 

9 In setting forth this portion of the background, we quote 

from undisputed portions of the challenged PUC decision. All 

footnotes have been omitted from the quoted passages. 
7

incarceration facilities may be owned or operated, either in whole 

[or in] part, by a private company, the facilities still are 

ultimately governed under contract with federal, state, county, or 

city government entities.” Securus is one of six IPCS providers in 

California. 

“Incarceration facilities typically limit provision of IPCS 

within a facility to one provider and often collect [site] 

commission fees for their own purposes pursuant to Penal Code 

section 4025.” Thus, “[i]ncarcerated people are effectively a 

captive customer class who have no choice in service provider and 

the end result is that there are no reasonably available 

substitutes for incarcerated persons and their families to choose 

from.” 

“Some 354 federal, state, and local correctional and 

detention facilities exist in California, detaining or incarcerating 

some 172,543 – 183,011 persons.” “The Federal Bureau of Prisons 

operates federal prisons and detention centers as well as federal 

immigrant detention facilities and military prisons. The State of 

California incarcerates individuals in state prisons, correctional 

facilities, vocational institutions, medical facilities, four juvenile 

facilities, and approximately 43 ‘Conservation Camps.’ The 

California Department of Corrections and Rehabilitation (CDCR) 

oversees these state facilities[.]” “On March 1, 2021, the [CDCR] 

announced it had negotiated a statewide contract with the IPCS 

provider GTL to provide intrastate IPCS . . . at the price of $0.025 

per minute to 90 state-run facilities, effective through 2026.” 

“California counties operate county jails for adults, 

including court holding facilities, temporary holding facilities, 

and long-term jails. California counties also manage 

approximately 70 juvenile detention centers and camps. 
8

California cities also sometimes operate jails or holding facilities. 

Fifty-eight county sheriffs and probation chiefs negotiate their 

contracts independently with IPCS providers.” 

III. Initiation of Underlying Rulemaking Proceeding

Responding to the call to action from the FCC’s August 

2020 order, in October 2020, the PUC instituted a rulemaking 

proceeding to consider whether and how to regulate IPCS in 

California. Through this proceeding, the PUC sought “to ensure 

that incarcerated people in [California] pay just and reasonable 

rates for telecommunications service, under just and reasonable 

terms and conditions.” The PUC categorized the proceeding as 

ratesetting and preliminarily determined hearings might be 

necessary. 

In January 2021, the assigned commissioner filed a Scoping 

Memo and Ruling pursuant to Public Utilities Code section 

1701.1 and article 7 of the PUC’s Rules of Practice and 

Procedure. Therein, the commissioner “set[ ] forth the issues, 

need for hearing, schedule, category, and other matters necessary 

to scope [the rulemaking] proceeding.” In so doing, the assigned 

commissioner bifurcated the rulemaking proceeding into two 

phases.

In Phase I, the PUC would take “expedited action to adopt 

interim relief for inmates and their families by mid-2021.” The 

commissioner noted the need for this “[s]wift action” was “in part 

due to the critical importance of supporting continued family 

contact during the COVID-19 pandemic, which has hit 

incarceration and detention facilities particularly hard.” 

(Footnote omitted.) Among other issues, Phase I would address 

whether and how the PUC should “provide immediate interim 

relief to meet the inmate communication service needs of 
9

incarcerated people and their families at just and reasonable 

rates,” and whether and how the FCC’s regulations on interstate 

and international IPCS should inform the PUC’s approach to 

intrastate IPCS.

Subsequently, in Phase II, the PUC would consider other 

matters relating to the regulation of IPCS, including the setting 

of rate caps, addressing accessibility of services for contacting 

non-incarcerated people with communication disabilities, 

identifying and correcting unacceptable conditions relating to 

IPCS, and other issues. The PUC planned to hold evidentiary 

hearings as needed to resolve contested issues of material fact in 

Phase II. 

IV. Staff Proposal and PUC’s Adoption of Interim Relief

On April 2, 2021, the PUC invited parties to comment on a 

proposal by its Communications Division Staff (Staff) regarding 

interim rate relief for IPCS (Staff Proposal). 

In the Staff Proposal, the Staff found “the intrastate perminute-of-use rates and ancillary service rates being charged to 

inmates in California to be unreasonable.” The Staff therefore 

“recommend[ed] the [PUC] take immediate action to institute 

interim rate relief.” Specifically, the Staff advised the PUC to: 

(1) adopt the FCC’s rate caps implemented in 2013 ($0.21 per 

minute for debit and prepaid calls and $0.25 per minute for 

collect calls), which were still in effect at the time; (2) adopt the 

FCC’s restrictions on several ancillary fees, including single-call 

and related services fees, automated payment fees, live agent 

fees, and paper bill fees; and (3) prohibit IPCS providers from 

charging any other ancillary service fees not specified in the Staff 

Proposal.
10

Subsequently, the Staff modified the Staff Proposal in light 

of the FCC’s May 2021 order. The revised Staff Proposal 

recommended that the PUC “adopt the FCC rate caps of $0.14 

per minute for prisons and $0.16 per minute for jails[ ]” (footnote 

omitted), but “d[id] not recommend the [PUC] adopt the interim 

rate cap of $0.21 per minute for jails with an average daily 

population below 1,000 . . . .” In addition, the revised Staff 

Proposal “eliminated the single-call service charge from the list of 

authorized ancillary service charges.” 

On July 12, 2021, the PUC released a proposed decision 

adopting interim rate relief for IPCS (Proposed Decision) and 

permitted parties to comment on it.

On August 23, 2021, the PUC issued its decision adopting 

interim rate relief for IPCS (PUC Decision No. 21-08-037) 

(Decision). Therein, the PUC first determined it had jurisdiction 

to regulate IPCS rates and fees under Public Utilities Code10

section 451. In so doing, the PUC stated: “We find that IPCS 

providers charge widely varying and, in some cases, excessively 

high prices in California for the same services, resulting in unjust 

and unreasonable rates. Further, we find that IPCS providers 

operate locational monopolies and, whether individually or 

collaboratively with incarceration facilities, use their monopoly 

status within facilities to exercise market power.”

Subsequently, in adopting interim relief, the PUC declined 

to follow the recommendations in the revised Staff Proposal. 

Instead, the PUC “adopt[ed] interim caps on intrastate rates for 

[IPCS] of seven cents ($0.07) per minute for debit, prepaid, and 

10 All further undesignated statutory references are to the 

Public Utilities Code, with the exception of Penal Code section 

4025, which is frequently referred to as “section 4025.” 
11

collect calls[,]” (2) “prohibit[ed] the imposition of single-call, paper 

bill, live agent, and automated payment fees in association with 

intrastate and jurisdictionally mixed IPCS,” and (3) “prohibit[ed] 

the imposition of any other type of ancillary fee or service fee not 

explicitly approved in t[he] [D]ecision.” The PUC’s reasons for

taking these actions are discussed in detail in section III of the

Discussion below. 

On September 22, 2021, Securus filed an application for 

rehearing of the Decision. The PUC issued a decision denying the 

application on April 11, 2022 (Decision No. 22-04-038).

V. Securus’s Petition for Writ of Review

On May 11, 2022, Securus filed a petition for writ of review

of the Decision. The PUC and real party in interest Prison Policy 

Initiative filed answers. Securus filed a reply.

On September 8, 2022, this court issued a writ of review.

11

DISCUSSION

I. Scope of Review and Presumption of Correctness 

The parties agree the scope of our review is governed by 

section 1757, subdivision (a). Pursuant to that statute, our role in 

this case is limited to determining whether any of the following 

occurred: “(1) The commission acted without, or in excess of, its 

powers or jurisdiction. [¶] (2) The commission has not proceeded 

in the manner required by law. [¶] (3) The decision of the 

commission is not supported by the findings. [¶] (4) The findings 

11 Securus’s request for judicial notice filed concurrently with 

its petition for writ of review is hereby granted. In addition, good 

cause appearing, we hereby approve the stipulations filed on 

September 26 and September 28, 2022. 
12

in the decision of the commission are not supported by 

substantial evidence in light of the whole record. [¶] (5) The order 

or decision of the commission was procured by fraud or was an 

abuse of discretion. [¶] (6) The order or decision of the 

commission violates any right of the petitioner under the 

Constitution of the United States or the California Constitution.” 

(§ 1757, subd. (a).) 

“Because the PUC is not an ordinary administrative 

agency, but a constitutional body with broad legislative and 

judicial powers, its decisions are presumed valid. [Citation.] 

Thus, a party challenging a PUC decision has the burden of 

proving it suffers from prejudicial error. [Citation.] The 

presumption of correctness of the PUC’s findings has consistently 

been described by our Supreme Court as a ‘strong’ presumption.” 

(The Ponderosa Telephone Co. v. Public Utilities Com. (2019) 36 

Cal.App.5th 999, 1012-1013 (Ponderosa).) 

As noted above, Securus primarily challenges the Decision 

on procedural (§ 1757, subd. (a)(2)), substantive (id., subd. (a)(4)-

(5)), and constitutional (id., subd. (a)(6)) grounds.

II. Procedural Challenges 

Securus contends the PUC “failed to act in a manner 

required by law” because it: (1) did not adhere to the procedure 

set forth in the Scoping Memo and Ruling; and (2) did not hold an 

evidentiary hearing prior to adopting its interim rate cap as 

required by section 728. We address each argument in turn. 

A. Violation of Scoping Memo and Ruling 

First, Securus contends the PUC proceeded unlawfully 

because it violated the procedures set forth in the Scoping Memo 

and Ruling. Specifically, it appears to argue that by adopting a 
13

rate cap and prohibiting certain ancillary fees on an interim 

basis, the PUC improperly exceeded the scope of the issues to be 

decided in Phase I of the underlying proceeding. In support, 

Securus emphasizes that, in the Scoping Memo and Ruling, the 

PUC stated it would consider whether to adopt rate caps in Phase 

II, rather than in Phase I.

As Securus correctly observes, the Scoping Memo and 

Ruling stated that, in Phase II, the PUC would consider the 

following issue: “Beyond providing interim relief, should the 

[PUC] set rate caps for intrastate [IPCS] to ensure rates that are 

just and reasonable, and affordable?” This provision of the 

Scoping Memo and Ruling, however, did not prohibit the PUC 

from adopting a temporary rate cap as a form of interim relief in 

Phase I. Instead, rather than limiting the types of interim relief 

the PUC may consider in Phase I, the Scoping Memo and Ruling 

broadly defined the relevant issue as follows: “Should the [PUC] 

provide immediate interim relief to meet the inmate 

communication service needs of incarcerated people and their 

families at just and reasonable rates, including those with 

communication disabilities? If so, how?”

In addition to imposing no limits on the types of interim 

relief the PUC may consider in Phase I, the Scoping Memo and 

Ruling indicated the PUC intended to consider a temporary rate 

cap as a form of interim relief. On this point, the commissioner 

stated: “Our work in Phase I will include examining the FCC’s 

adopted and proposed rate and fee caps as starting points or 

models to provide interim relief to ensure access to just and 

reasonable communication service rates for California inmates 

and their families in 2021 on an expedited basis.”
14

Securus does not cite—and we could not locate—any other 

provisions in the Scoping Memo and Ruling preluding the PUC 

from granting interim relief in Phase I by temporarily adopting a 

rate cap and prohibiting IPCS providers from imposing certain 

ancillary fees. We therefore conclude Securus has not 

demonstrated the PUC failed to “proceed[ ] in the manner 

required by law[ ]” (§ 1757, subd. (a)(2)) by violating the 

procedures set forth in the Scoping Memo and Ruling. 

B. Evidentiary Hearing Under Section 728 

Next, Securus contends the PUC proceeded unlawfully 

because it did not hold an evidentiary hearing as, it asserts, is

required under section 728 before adopting its interim rate cap 

and prohibiting certain ancillary fees. Section 728 provides, in 

relevant part: “Whenever the commission, after a hearing, finds 

that the rates or classifications, demanded, observed, charged, or 

collected by any public utility for or in connection with any 

service, product, or commodity, or the rules, practices, or 

contracts affecting such rates or classifications are insufficient, 

unlawful, unjust, unreasonable, discriminatory, or preferential, 

the commission shall determine and fix, by order, the just, 

reasonable, or sufficient rates, classifications, rules, practices, or 

contracts to be thereafter observed in force.” 

The PUC responds with three counter-arguments. First, it 

contends Securus “waived any objections to a lack of evidentiary 

hearings by failing to raise this issue [before the PUC] despite 

[having] multiple opportunities to do so.” Second, the PUC

asserts section 728 is inapplicable where, as here, a rate cap has 

been adopted solely on an interim basis to address hardships 

arising from a public health emergency (i.e., the COVID-19 
15

pandemic). Lastly, it argues that even if section 728 applied, the 

statute does not require full evidentiary hearings.

As discussed below, we agree with the PUC and conclude: 

(1) Securus forfeited its assertion of error based on the PUC’s 

failure to hold an evidentiary hearing in Phase I; and (2) Securus 

has not shown section 728 required the PUC to hold such a 

hearing before adopting the interim relief in the Decision. 

Our Supreme Court has noted that “there is nothing 

remarkable in the concept that one who is entitled to a hearing 

may waive his right thereto by failing to assert it.” (California 

Trucking Association v. Public Utilities Commission (1977) 19 

Cal.3d 240, 245, fn. 7.) Applying this principle here, the record 

reflects Securus participated extensively in Phase I by 

commenting on the PUC’s order initiating the underlying 

rulemaking proceeding, filing opening and reply comments on the 

Staff Proposal, and filing opening and reply comments on the 

Proposed Decision. Securus does not dispute that, in so doing, it 

did not request an evidentiary hearing, or contend the PUC was 

required to hold one before adopting an interim rate cap and

prohibiting certain fees in Phase I.12 Nonetheless, Securus

maintains it did not forfeit its contention, as the Scoping Memo 

and Ruling stated the PUC would not hold hearings until Phase 

12 Acknowledging it “did not use the exact words ‘Section 728 

hearing,’” Securus suggests it asserted its right to such a hearing 

when it “requested that any departure from the 2013 FCC rate 

wait until the submission of cost data[,] which would have 

required an evidentiary hearing.” We reject this argument, as 

Securus has not shown why cost data could have only been 

presented to the PUC at an evidentiary hearing. As discussed in 

section III.B.1 below, Securus could have provided this data along 

with its comments in Phase I. 
16

II, and therefore “could not reasonably have alerted Securus that 

it must request a hearing during Phase I.”

We are not persuaded by Securus’s argument on this point. 

It is true that the Scoping Memo and Ruling’s schedule provided 

for evidentiary hearings in Phase II. Securus, however, does not 

cite—and we could not locate—any language in the Scoping 

Memo and Ruling reflecting the PUC would not consider any 

requests for an evidentiary hearing in Phase I. Nor does the 

Scoping Memo and Ruling state the PUC would not hold a 

hearing upon a party’s request in Phase I. Thus, on the record 

before us, we conclude Securus could have requested a hearing in 

Phase I if it felt one was needed, but did not do so. It therefore

has forfeited its assertion of error based on the lack of a hearing 

before the PUC adopted interim relief in Phase I. 

In any event, even assuming Securus had not forfeited its 

contention, we conclude it has not demonstrated section 728 

required the PUC to hold a full evidentiary hearing before 

adopting the interim relief set forth in the Decision.

In prior administrative orders, the PUC has determined 

section 728 does not “mandate[ ] evidentiary hearings.” (Order 

Modifying Decision (D.) 12-05-037, and Denying Rehearing of 

Decision, as Modified (Cal. P.U.C. Apr. 18, 2013) No. 13-04-030 

[2013 WL 1837160]).) On this point, the PUC “ha[s] previously 

explained that ‘a hearing’ in the context of section[ ] 728 . . .

means an opportunity to be heard, but does not necessarily mean 

an evidentiary hearing.” (Ibid.) We accord “considerable 

deference” to the PUC’s interpretation of section 728 (Pacific Gas 

& Electric Co. v. Public Utilities Com. (2015) 237 Cal.App.4th 

812, 839 (PG&E)), and note that by submitting comments 
17

throughout Phase I, Securus certainly had the opportunity to be 

heard on whether and how the PUC should grant interim relief.

We reject Securus’s contention the PUC order cited above 

should not apply here. In support of its argument, Securus 

observes that the order did not relate to the PUC’s consideration 

of rates; instead, the order pertained to its adoption of a 

surcharge, for which no hearing was required under section 728.

(PUC Decision No. 13-04-030, supra.) This distinction, however, 

does not render the order inapplicable here. Specifically, after 

finding section 728 did not apply, the PUC explained: “In any 

event, assuming arguendo that section 728 or section 729 did 

apply to the proceeding, neither section mandates evidentiary 

hearings.” (Ibid.) 

In addition, the California Supreme Court decisions cited

by Securus do not—as it suggests—establish an evidentiary 

hearing is required under section 728 where, as here, the PUC 

adopts a rate cap solely on an interim basis. In those cases, the 

court briefly noted section 728 requires the PUC to hold a

hearing “in true ratemaking proceedings[ ]” (Southern California

Edison Co. v. Public Utilities Com. (1978) 20 Cal.3d 813, 829

(Edison)) before it “promulgate[s] . . . a general rate tariff.” (City 

of Los Angeles v. Public Utilities Com. (1975) 15 Cal.3d 680, 698

(Los Angeles).) In neither case, however, did the court hold or 

otherwise suggest a full evidentiary hearing must be held before 

the PUC may impose temporary restrictions on rates while

considering whether and how to regulate them long-term. (See 

id., at p. 684 [holding the PUC “possess[ed] the power to 

implement an annual adjustment scheme” to rates charged for 

telephone services based on providers’ “changing federal tax 

expenses”]; Edison, supra, at p. 815 [holding the PUC lawfully 
18

required a utility provider “to amortize, by 36 months of billing 

credit to its customers, substantial overcollections generated by 

operation of its ‘fuel cost adjustment clause’”].)

Accordingly, we conclude Securus has not established the 

PUC failed to “proceed[ ] in the manner required by law[ ]” 

(§ 1757, subd. (a)(2)) by adopting the interim relief set forth in 

the Decision without holding an evidentiary hearing. 

III. Substantive Challenges

A. Standard of Review 

The principles governing review of the PUC’s factual 

findings for substantial evidence are well-settled. “It is for the 

agency to weigh the preponderance of conflicting evidence, and its 

findings are not open to attack for insufficiency if they are 

supported by any reasonable construction of the evidence.” 

(Ponderosa, supra, 36 Cal.App.5th at p. 1013.) “In other words, if 

the PUC’s findings are supported by any substantial evidence, 

they may not be set aside. [Citation.] Accordingly, ‘[t]o accomplish 

the overturning of a [PUC] finding for lacking the support of 

substantial evidence, the challenging party must demonstrate 

that based on the evidence before the [PUC], a reasonable person 

could not reach the same conclusion.’” (Ibid.) “‘In determining 

whether substantial evidence supports a finding, the court may 

not reconsider or reevaluate the evidence presented to the 

administrative agency. [Citation.] All conflicts in the evidence 

and any reasonable doubts must be resolved in favor of the 

agency’s finding and decision.’” (Uphold Our Heritage v. Town of 

Woodside (2007) 147 Cal.App.4th 587, 596; see also SFPP, L.P. v. 

Public Utilities Commission (2013) 217 Cal.App.4th 784, 794 
19

[reviewing court “may not substitute [its] own judgment ‘as to the 

weight to be accorded evidence before the [PUC]”].) 

Likewise, the principles governing review of a decision by 

an administrative agency for abuse of discretion are well-settled. 

“When reviewing the exercise of discretion, ‘[t]he scope of review 

is limited, out of deference to the agency’s authority and 

presumed expertise: “The court may not reweigh the evidence or 

substitute its judgment for that of the agency. [Citation.]”’ 

[Citation.] ‘In general . . . the inquiry is limited to whether the 

decision was arbitrary, capricious, or entirely lacking in 

evidentiary support . . . .’ [Citations.] When making that inquiry, 

the ‘“‘court must ensure that an agency has adequately 

considered all relevant factors, and has demonstrated a rational 

connection between those factors, the choice made, and the 

purposes of the enabling statute.’”’” (American Board of Cosmetic 

Surgery v. Medical Board of California (2008) 162 Cal.App.4th 

534, 547-548, fn. omitted.) 

B. Analysis 

1. Lack of Data in the Record Regarding 

Costs of Providing IPCS 

Because it arises numerous times throughout the petition, 

we first address Securus’s contention the PUC acted arbitrarily 

and abused its discretion by adopting its interim rate cap and 

prohibitions on ancillary fees without considering data or other 

evidence relating to the costs providers incur in furnishing IPCS. 

In support of its position, and acknowledging the cost data was 

not in the Phase I record, Securus appears to argue: (1) it was the 

PUC’s responsibility to solicit cost data from providers to 

evaluate whether and how to provide interim relief; and (2)
20

Securus reasonably believed it could not and/or need not submit 

cost data in Phase I because the Scoping Memo and Ruling 

“indicated [the PUC] would not consider evidence until Phase 

II[.]”

We are not persuaded by either of Securus’s arguments. 

With respect to its first contention, Securus does not cite—and we 

could not locate—any rule in the PUC’s Rules of Practice and 

Procedure or any other legal authority demonstrating the PUC 

was required to solicit certain evidence from the parties prior to 

adopting interim relief in Phase I. Nor does Securus cite—and, 

again, we could not locate—any portion of the record showing the 

PUC imposed such a requirement upon itself. We acknowledge 

the Scoping Memo and Ruling stated the underlying rulemaking

“proceeding will undertake discovery on the costs of the provision 

of inmate communication services,” and that Phase I would 

address whether the PUC “[s]hould . . . seek verifiable evidence of 

the true costs of service providers of inmate communication 

services[.]” Neither of these provisions, however, required the 

PUC, on its own initiative, to request cost data from providers 

before adopting interim relief.

We likewise reject Securus’s second argument. While the 

Scoping Memo and Ruling stated evidentiary hearings would be 

held in Phase II, it did not state or otherwise suggest the PUC 

would not consider any evidence until then. Nor did it prohibit 

parties from offering evidence for the PUC’s consideration in 

Phase I. Indeed, other parties submitted evidence and data to 

support their comments on the Staff Proposal asking the PUC to

grant interim relief by implementing rate caps lower than those 

set by the FCC. Consequently, Securus has not tendered a 

reasonable excuse for its failure to submit cost data for the PUC’s 
21

consideration in evaluating whether and how to adopt interim 

relief in Phase I. 

For the reasons discussed above, Securus has not shown 

the PUC was responsible for the omission of providers’ cost data 

from the Phase I record, as it contends. Under these 

circumstances, we conclude Securus has not established the PUC 

acted arbitrarily or abused its discretion by adopting the interim 

relief set forth in the Decision without considering cost data. 

2. Adoption of Interim Rate Cap

To arrive at its interim rate cap of $0.07 per minute, the 

PUC first relied on Evidence Code section 452, subdivision (h) to

“take official notice that the CDCR capped intrastate IPCS rates 

in California prisons at $0.025 per minute [in March 2021], 

through 2026.” (Footnote omitted.) The PUC determined the

CDCR-GTL contract rate “provides an interim benchmark of the 

costs of providing IPCS at a reasonable rate.” It also noted that 

because site commissions are not permitted in prisons, the 

CDCR-GTL contract rate “excludes site commission costs.”

The PUC then stated: “Building on [the information 

derived from the CDCR-GTL contract rate], and using the best 

information before us, we reason that it is unlikely that it costs 

IPCS providers more than double the cost of providing call 

services to the California state prison system to provide IPCS to 

jails of all sizes. The FCC’s [May 2021 order] finds that it costs 

service providers approximately 22 – 25 percent more to provide 

IPCS to jails with a population greater than 1,000 as compared to 

prisons. Increasing the $0.025 rate achieved between the CDCR 

and GTL by the 22 – 25 percent potential cost difference level 

identified by the FCC results in a rate of $0.031, potentially, for 

larger jails. Doubling the $0.025 per minute rate achieved in the 
22

California state prison system results in a potential rate of $0.05 

per minute for all jails.” (Footnotes omitted.) 

Subsequently, the PUC determined “California IPCS 

providers should be up to the challenge of matching or beating 

the $0.05 average per minute rate achieved in other states’ prison 

systems for incarceration facilities of all sizes.” Put differently, it

found providers could feasibly offer IPCS at $0.05 per minute in 

California. In so doing, the PUC observed: “Other states are 

offering rates lower than their adopted caps: for instance, a 2016 

New Jersey bill capped in-state call rates at $0.11 per minute but 

the rate posted for calls by New Jersey Department of 

Corrections as of May 2021 is just $0.044 per minute. In Illinois, 

House Bill 6200 (effective January 1, 2018) prohibited the state’s 

corrections department from charging more than $0.07 . . . per 

minute for calls but as of May 2021, the Illinois Department of 

Corrections posted rates of $0.009 per minute (effective July 

2018). Further . . . as of April 2021, the rate for phone calls from 

jails in Dallas County, Texas is $0.119 per minute, and in New 

York City, where jail phone calls are free to families, the rate 

paid by the city is $0.03 per minute.” (Footnotes omitted.) On this 

record, the PUC “conclude[d] that $0.05 is a reasonable ‘base rate’ 

to use to identify an appropriate interim per-minute rate.”

The PUC then noted “some California counties currently 

rely on site commission funds for rehabilitative/educational and 

other purposes pursuant to Penal Code [s]ection 4025.” (Footnote 

omitted.) Accordingly, the PUC “add[ed] $0.02 per minute” to the 

$0.05 per minute base rate “to account for potential site 

commission payments[,]” noting this “mirrors the FCC’s action in 

its [May 2021] [o]rder, for jails with populations larger than 

1,000.” (Footnote omitted.)
23

a. $0.05 Per Minute Base Rate

Securus advances several arguments challenging the PUC’s 

adoption of the $0.05 per minute base rate underlying its interim 

rate cap. We address each in turn. 

First, Securus contends the PUC abused its discretion by 

relying on the CDCR-GTL contract rate of $0.025 per minute as 

the starting point for its analysis. Specifically, it argues “the 

[PUC] erroneously took ‘official notice’ of the CDCR-GTL [r]ate[ ]” 

under Evidence Code section 452, subdivision (h). In so doing, 

Securus emphasizes that in September 2021, the contract was set 

aside in a mandamus proceeding unrelated to this case. It

therefore contends “the CDCR-GTL [r]ate is now ‘reasonably 

subject to dispute’ as the benchmark for an interim IPCS rate 

cap[.]”

Rule 13.10 of the PUC’s Rules of Practice and Procedure

provides: “Official notice may be taken of such matters as may be 

judicially noticed by the courts of the State of California pursuant 

to Evidence Code section 450 et seq.” (Cal. Code Regs., tit. 20, 

§ 13.10.) Evidence Code section 452, subdivision (h), in turn, 

permits judicial notice of “[f]acts and propositions that are not 

reasonably subject to dispute and are capable of immediate and 

accurate determination by resort to sources of reasonably 

indisputable accuracy.” 

We do not agree with Securus’s argument. The Decision

reflects the PUC took notice of the fact that, in March 2021, GTL 

agreed to provide IPCS to 90 facilities in California’s prison 

system at a rate of $0.025 per minute for intrastate calls. It is 

true that the contract has been set aside because GTL sought to 

charge $1.25 per call for video calls and $0.10 per minute for 

international calls, in violation of the requirement in the CDCR’s
24

and California Department of Technology’s request for proposals

that bidders’ call rates not exceed $0.05 per minute. This later

finding on the contract’s invalidity, however, did not place into 

dispute the fact noticed above (i.e., a few months before the 

Decision was issued, GTL offered to charge $0.025 per minute for 

intrastate IPCS in California prisons). Therefore, Securus has not 

shown the PUC erred by taking official notice of the fact at issue. 

Next, although not entirely clear, Securus appears to 

contend the PUC abused its discretion by using the CDCR-GTL 

contract rate to estimate the costs of providing IPCS in prisons 

and jails of all sizes. In support of its position, Securus asserts: 

(1) “[r]ecord evidence demonstrates [the contract rate is] a poor 

benchmark for the rest of the industry[ ]” because the rate

“reflects economies of scale that cannot possibly be approached by 

any provider serving an individual county or city jail[ ]”; and (2)

in contrast with operators of county and local jails, the CDCR 

may not collect site commissions, which are prohibited in prisons. 

We do not agree with Securus’s argument for three reasons. 

First, the PUC did not—as Securus contends—use the CDCRGTL contract rate as the benchmark of estimating the costs of 

providing IPCS in all facilities. Instead, in its findings of fact, the 

PUC stated: “The March 2021 CDCR contract [rate] of $0.025 per 

minute provides a benchmark of the costs of providing intrastate 

IPCS at reasonable rates in prisons.” (Italics added.) Second, we 

fail to see how Securus’s argument on the “economies of scale” 

reflected in the contract rate is supported by “[r]ecord evidence[,]” 

as it is unaccompanied by citations to the record. Third, as 

discussed above, the PUC expressly acknowledged “[t]he CDCR 

and GTL intrastate IPCS contract rate of $0.025 per minute . . . 
25

excludes site commission costs[,]” and separately accounted for 

those costs in setting its interim rate cap.

Subsequently, Securus contends the PUC employed a 

flawed methodology when adjusting the $0.025 per minute 

CDCR-GTL contract rate to account for the differences in IPCS 

costs between prisons and jails. Specifically, it asserts the PUC

arbitrarily applied the FCC’s finding on the cost-differential 

between prisons and large jails “to [estimate the costs for] small 

and large jails.” (Italics in original.)

We are not persuaded by this argument because the PUC 

did not—as Securus appears to contend—simply apply the 22 to 

25% cost differential to the CDCR-GTL rate to account for the 

differences in IPCS costs between prisons and jails of all sizes. 

Instead, the PUC used the FCC’s cost differential as a reference 

point, noting: “Increasing the $0.025 rate achieved between 

CDCR and GTL by the 22 – 25 percent potential cost difference 

level identified by the FCC results in a rate of $0.031, potentially, 

for large jails.” With that in mind as a point of comparison, the 

PUC then observed: “Doubling the $0.025 per minute rate 

achieved in the California state prison system results in a 

potential rate of $0.05 per minute for all jails.”

Lastly, Securus appears to argue the record lacks 

substantial evidence to support a finding that, notwithstanding 

additional costs associated with site commissions, California 

IPCS providers could feasibly furnish services at a rate of $0.05 

per minute. On this point, it argues the PUC “relie[d] entirely on 

evidence that is flawed on its face, misstate[d] that evidence . . . , 

and dr[ew] inferences that cannot be supported by [that] 

evidence[.]”
26

In reviewing a finding for substantial evidence, we are not 

restricted to the evidence cited by the PUC. Instead, we “‘“must 

consider all relevant evidence in the record[.]”’” (Clean Energy 

Fuels Corp. v. Public Utilities Com. (2014) 227 Cal.App.4th 641, 

649, italics added.) In so doing, we observe the record contains 

the following uncontradicted evidence: (1) in March 2021, GTL 

agreed to provide intrastate voice calls at a rate of $0.025 per 

minute in California’s prison system; (2) 14 other states have 

prison voice calling rates of $0.05 cents per minute or less; (3) the 

rates for intrastate calls in some city and county jails in other 

states are less than $0.05 per minute (e.g., $0.0119 per minute in 

Dallas and $0.03 per minute in New York City); (4) in Maryland, 

New Jersey, and Washington, several incarceration facilities with 

populations below 500 charge less than $0.07 per minute for 

calls; and (5) nearly 40% of jails in California (85 of 214) charge

$0.05 per minute or less for intrastate voice calls. Resolving all 

reasonable doubts in the PUC’s favor, we conclude that, taken 

together, this evidence could lead a reasonable person to find

that, without accounting for site commission costs, California 

IPCS providers could feasibly charge $0.05 per minute for 

intrastate calls in prisons and jails. 

In challenging the sufficiency of the evidence described 

above, Securus questions the probative value of rates charged in 

other states which, in its view, were “cherry-picked” to support 

adoption of a lower interim rate in California. Securus also 

questions whether evidence of rates charged in prisons should 

inform the feasibility of rates charged in jails. In addition, it 

notes that by showing 40% of jails in California charge rates at 

$0.05 per minute or lower, the record demonstrates 60% of 

California jails charge rates higher than $0.05 per minute. 
27

Securus argues that based on this information, the PUC should 

have inferred $0.05 per minute is not a reasonable rate to impose 

on California jails. These arguments largely go to the weight the 

PUC should have given to the evidence, and point out other 

reasonable inferences that could have been drawn therefrom. It is 

not our role to “‘reconsider or reevaluate the evidence presented 

to the administrative agency[ ]’” (Uphold Our Heritage v. Town of 

Woodside, supra, 147 Cal.App.4th at p. 596) or to disturb “the 

PUC’s factual findings based on . . . undisputed evidence from 

which conflicting inferences may reasonably be drawn[.]” 

(Ponderosa, supra, 36 Cal.App.5th at p. 1013.) 

In sum, for the reasons discussed above, we conclude 

Securus has not shown the PUC’s adoption of $0.05 per minute as 

the base rate for its interim rate cap was an abuse of discretion or 

unsupported by substantial evidence. 

b. $0.02 Per Minute Addition for Site 

Commissions

Securus contends the PUC abused its discretion by 

adopting its $0.02 per minute “adder” to the $0.05 per minute 

base rate to account for site commission costs. In support of its 

position, Securus appears to advance two arguments. 

First, Securus contends the PUC erred by adopting the 

$0.02 per minute adder because it is insufficient to compensate 

providers for their site commission costs under current contracts.

At the heart of this contention is Securus’s argument the PUC 

abused its discretion by adopting the adder without considering 

evidence of providers’ site commission costs. For the reasons 

discussed in section III.B.1 above, we conclude this argument is 

meritless. 
28

Next, Securus contends the PUC’s adoption of the adder

runs afoul of Penal Code section 4025. On this point, Securus 

asserts section 4025 “gives sheriffs discretion to use commission 

revenues to fund welfare programs, and to pass through the costs 

of those programs to users of IPCS.” It therefore argues that by 

adopting the FCC’s $0.02 per minute cap on site commissions, 

which is intended to allow providers to compensate facility 

operators only for the costs they incur directly in providing 

IPCS,13 the PUC unlawfully restricts county sheriffs’ discretion to 

collect and use site commissions for statutorily-authorized 

purposes. As discussed below, we do not agree with this 

argument. 

We begin our analysis with the relevant statutory 

provisions. Penal Code section 4025, subdivision (d) provides: 

“There shall be deposited in the inmate welfare fund any money, 

refund, rebate, or commission received from a telephone company 

or pay telephone provider when the money, refund, rebate, or 

commission is attributable to the use of pay telephones which are 

primarily used by inmates while incarcerated.” Subdivision (e) 

states, in pertinent part: “The money and property deposited in 

the inmate welfare fund shall be expended by the sheriff 

primarily for the benefit, education, and welfare of the inmates 

confined within the jail. Any funds that are not needed for the 

13 In its May 2021 order, the FCC “f[ound] that contractually 

prescribed site commission payments do not warrant recovery 

insofar as they exceed the level needed to compensate a 

correctional institution for the costs (if any) an institution incurs 

to enable interstate and international [IPCS] to be made 

available to its incarcerated people.” It ultimately concluded: 

“Providers may recover up to $0.02 per minute to account for 

these facility costs.” 
29

welfare of the inmates may be expended for the maintenance of 

county jail facilities. Maintenance of county jail facilities may 

include, but is not limited to, the salary and benefits of personnel 

used in the programs to benefit inmates, including, but not 

limited to, education, drug and alcohol treatment, welfare, 

library, accounting, and other programs deemed appropriate by 

the sheriff. Inmate welfare funds shall not be used to pay 

required county expenses of confining inmates in a local 

detention system, such as meals, clothing, housing, or medical 

services or expenses, except that inmate welfare funds may be 

used to augment those required county expenses as determined 

by the sheriff to be in the best interests of inmates.” (Pen. Code, 

§ 4025, subd. (e).)

Through the statutory text above, the Legislature dictates

where site commission payments from IPCS providers must be 

deposited (Pen. Code, § 4025, subd. (d)) and specifies how those 

funds must be spent (id., subd. (e)). In so doing, the Legislature 

impliedly authorizes county sheriffs to collect site commissions. It 

does not, however, require sheriffs to do so, or mandate the 

collection of a certain amount. Nor does it require certain costs or 

inmate welfare programs to be wholly or exclusively funded 

through site commission revenues. And it does not prohibit the 

PUC from regulating the amount that may be charged to IPCS 

users.

In adopting the $0.02 per minute adder, the PUC did not 

impose any restrictions on the purposes for which sheriffs may 

use site commission revenues. On this point, the PUC explained: 

“Although the FCC strictly limited eligible site commission 

payments [resulting from contractual obligations or negotiations]

to those reasonably related to the facility’s cost of enabling 
30

IPCS . . . , we do not so limit eligible site commission costs today. 

We do not limit revenue collection within our per-minute cap of 

$0.07 to only those costs related to a facility’s costs to provide 

IPCS because we wish to allow a reasonable transition period or 

cushion for counties to identify other funding sources for cost 

centers currently funded through inmate welfare funds.”

(Footnote omitted.)

Accordingly, the Decision adopts a temporary ceiling on 

how much IPCS providers may charge users to account for site 

commissions, but imposes no limits on how sheriffs may use those 

funds once received. Thus, even with the $0.02 adder in place, 

sheriffs retain the authority to collect site commissions. Where 

those funds are received, sheriffs must deposit them into an 

inmate welfare account pursuant to section 4025, subdivision (d), 

and may only use them for the purposes enumerated in 

subdivision (e). (Pen. Code, § 4025, subds. (d) & (e).) Under these 

circumstances, we discern no violation of section 4025. 

In sum, for the reasons discussed above, we conclude 

Securus has not demonstrated the PUC abused its discretion by 

adopting an adder of $0.02 per minute to account for site 

commissions.

3. Elimination of Ancillary Fees 

As noted above, the Decision temporarily “prohibit[s] the 

imposition of any automated payment fees, paper bill/statement 

fees, live agent fees, and single-call fees in association with 

intrastate and jurisdictionally mixed calls[.]” In adopting this 

restriction, the PUC observed “[n]o party provided data on the 

record” demonstrating “the current uncapped ancillary fees 

charged in connection with IPCS calls are just or reasonable.”

The PUC also explained: “[T]he record does not indicate why the 
31

incarcerated and their families should pay service fees not 

required in commercial calling services, including automated 

payment fees, paper bill/statement fees, and live operator fees.”

Securus contends the PUC erred by prohibiting the fees 

above for three primary14 reasons. We address each in turn. 

First, Securus argues that the PUC abused its discretion by 

prohibiting the fees without evidence showing providers will be 

able to recover the costs of providing ancillary services absent 

revenues from those fees. In so doing, Securus essentially asserts

the PUC acted arbitrarily because it did not consider evidence 

relating to providers’ costs when adopting the interim restrictions 

at issue. Again, for the reasons stated in section III.B.1 above, we 

reject this argument. 

Next, Securus contends “[t]he Decision gives no meaningful 

reason for finding that the elimination of most ancillary fees is 

justified.” This is not true. As discussed above, in adopting its 

interim restrictions on ancillary fees, the PUC explained “the 

record does not indicate why the incarcerated and their families 

should pay service fees not required in commercial calling 

14 In a footnote, Securus also “objects that the [PUC] was 

without jurisdiction to regulate ancillary services and acted ultra 

vires in doing so.” It further contends the PUC “lacks jurisdiction 

to regulate fees billed by providers to consumers located outside 

of California.” These conclusory contentions are wholly 

unsupported by reasoned argument, citations to the record, or 

citations to legal authority. We therefore treat them as forfeited 

and decline to address them on the merits. (See Benach v. County 

of Los Angeles (2007) 149 Cal.App.4th 836, 852 [points of error 

raised but unsupported by reasoned argument and citations to 

legal authority may be treated as forfeited]; Nwosu v. Uba (2004) 

122 Cal.App.4th 1229, 1246 [arguments unsupported by 

necessary citations to the record may be deemed forfeited].) 
32

services . . . .” The Decision reflects this determination is based 

on the following unchallenged findings of fact: (1) “Providers are 

currently imposing some 35 ancillary fees in connection with 

IPCS[ ]”; (2) “Most ancillary service fees and charges found in 

connection with the IPCS market are not imposed in any other 

segment of the telecommunications market in California[ ]”; (3) 

“Fifteen state prison systems have eliminated automated

payment/automated deposit fees[ ]”; (4) “As of April 2021, GTL 

does not impose an automated payment/automated deposit fee on 

incarcerated persons in multiple facilities in California[ ]”; (5) 

“Customers not residing in incarceration facilities typically 

receive paper utility bills or bank statements without paying 

additional fees[ ]”; (6) “Most telephone corporations and other 

utilities provide customer services for free, including services 

such as speaking with a live agent to set up an account, adding 

money to an account, or assisting with making a call[ ]”; and (7) 

“IPCS providers did not provide information or evidence to justify 

the imposition of ancillary service fees not required by 

commercial calling services on incarcerated persons and their 

families.”

Lastly, Securus contends the Decision must be overturned 

because it “never specif[ies] which ‘jurisdictionally mixed’ calls 

are subject to [its] prohibition[ ]” on certain ancillary fees. Again, 

this is not true. The PUC expressly adopted the definition of 

“jurisdictionally mixed calls” set forth in the FCC’s August 2020 

order. On this point, the Decision first observed, “[I]n the rare 

cases when a provider cannot definitively determine the end 
33

points of a call, the FCC 2020 Order[

15] clarifies that the provider 

should treat the call as jurisdictionally mixed and thus subject to 

the FCC’s ancillary service requirements adopted for interstate 

calls at that time.” Applying that definition, the Decision then 

states: “[W]hen the end[ ]points of a call cannot be definitely 

determined, the call should be classified as jurisdictionally mixed, 

and the . . . ancillary fee requirements adopted here apply.”

Accordingly, for the reasons discussed above, we conclude 

Securus has not shown the PUC abused its discretion by adopting 

its interim prohibition on certain ancillary fees.

4. Findings Relating to Market Power 

As noted above, the PUC determined “[p]roviders of IPCS 

in California operate locational monopolies in the facilities they 

serve and exercise market power.” “The FCC has found a 

locational monopoly to exist when a location owner attempts to 

limit the entry of new competition to increase profitability and 

demand a share of the profits in the form of a locational rent or 

commission fee.” (Footnote omitted.) The Decision “define[s] 

‘market power’ . . . as the ability of a company to sustain prices at 

levels above those a competitive market would produce.” 

(Footnote omitted.)

In arriving at the conclusion above, the PUC found the 

IPCS market consists of two markets. In the first market, 

providers “‘compete’ for the right to provide IPCS to the 

incarcerated[.]” In the second market, the incarcerated and their 

families purchase IPCS from providers. Relying on the FCC’s 

15 The FCC noted “the jurisdictional nature of a call depends 

on the physical location of the endpoints of the call[.]” (Footnote 

omitted.)
34

findings set forth in the its May 2021 order, the PUC rejected the 

contention that competitive forces in the first market prevent the 

exercise of market power. Among other things, the PUC noted 

“‘[t]he [FCC] has observed that “because the bidder who charges 

the highest rates can afford to offer the confinement facilities the 

largest [site] commissions, the competitive bidding process may 

result in higher rates” [footnote 91]. Thus, even if there is 

“competition” in the bidding market as some providers assert, it 

is not the type of competition the [FCC] recognizes as having an 

ability to “exert downward pressure on rates for consumers.”’

[footnote 92.]” (Quoting the FCC’s May 2021 order, footnote

omitted.) 

Accordingly, the PUC determined IPCS providers exercise 

market power in the second market. It explained: “[N]o data 

provided demonstrates that incarceration facilities have ever 

selected more than one IPCS provider to serve the same facility. 

In general no party disputes Staff’s conclusion that incarcerated 

people are a captive customer class who have no choice in service 

provider. Incarceration facilities are limiting access to the 

provision of calling services to a single IPCS provider, and thus 

‘market competition,’ in any sense of the word, does not exist for 

incarcerated users. No competitive forces within incarceration 

facilities constrain providers from charging rates that far exceed 

the cost such providers incur in offering service. Incarcerated 

people must purchase communications services from the facility’s 

IPCS provider and face rates far higher than those charged to 

other Californians or forego the service.” (Footnotes omitted.) The 

PUC concluded these market dynamics “ha[ve] resulted in highly 

unequal and in some cases exorbitant rates for IPCS across 
35

incarceration facilities and as compared to current commercial 

markets.”

Securus asserts the PUC erred in concluding IPCS 

providers operate locational monopolies and possess market 

power. It appears to raise three arguments in support of its 

position, which we address in turn. 

First, Securus contends the PUC selected the wrong 

market for its market power analysis. According to Securus, the 

PUC should have focused on the bidding market in which 

providers compete for IPCS contracts, and concluded they do not 

have market power based on “evidence that providers compete 

‘vigorously’ for the right to serve different facilities[,]” and

“evidence showing [a] decline in [IPCS] rates[.]”

We do not agree with Securus’s argument. As discussed 

above, the PUC appropriately relied on the findings from the 

FCC’s May 2021 order to conclude that although providers

compete amongst themselves to obtain IPCS contracts with

individual facilities, the nature of that competition does not drive 

rates downward. Against the backdrop of those findings, the PUC 

reasonably inferred declining IPCS rates were not attributable to

competition in the provider bidding market. Under these 

circumstances, we discern no abuse of discretion in the PUC’s 

decision to focus on the IPCS consumer market—rather than the 

provider bidding market—in analyzing whether providers have 

market power. 

Next, Securus argues that even if the IPCS consumer 

market were the relevant market, the PUC erroneously found 

providers exercise market power because the record shows: 

(1) providers cannot unilaterally raise prices after their bids are

accepted; and (2) the commercial telecommunications market is 
36

an improper market for comparison in evaluating whether 

providers have market power.

We are not convinced by this argument. Even if IPCS 

providers cannot unilaterally raise rates once their bids have 

been accepted, they control the rates they offer to charge in those 

bids at the outset. Thus, post-contractual restrictions on their 

ability to change rates have no bearing on whether providers 

exercise market power by creating bids with rates “above those a 

competitive market would produce[ ]” (footnote omitted), which, 

once accepted, are locked in via long-term contracts. And, while 

Securus refers us to evidence showing IPCS providers must

implement security-related features not required in the 

commercial telecommunications market, it did not cite—and we 

could not locate—any evidence showing how the additional costs 

incurred in implementing those features render the calling rates 

between the IPCS market and commercial market incomparable 

for purposes of ascertaining whether IPCS providers have market 

power.

Lastly, Securus contends the PUC “erred by finding that 

IPCS providers operate as ‘locational monopolies.” On this point, 

it argues: “[T]he record demonstrates that neither facilities nor 

IPCS providers are locational monopolies, and site commission 

payments are not locational rents or shared profits. Rather, at 

least some components of site commissions are ‘costs of doing 

business incurred by [IPCS] providers.’” In addition, Securus 

contends “the competitive bidding process used to set rates and 

terms of services” will “remedy [the] harm from locational 

monopolies where they exist.” 

Again, we are not persuaded by these arguments. Securus’s

contention on the PUC’s treatment of site commissions as 
37

locational rents is conclusory and unaccompanied by citations to 

the record. Moreover, based on the findings in the FCC’s May 

2021 order discussed above, the PUC could reasonably find the 

competition in the provider bidding market does not prevent 

providers from charging “prices at levels above those a 

competitive market would produce” (footnote omitted), and 

therefore will not “cure any locational monopoly[,]” as Securus 

contends.

In sum, for the reasons discussed above, we conclude 

Securus has not shown the PUC erred by finding providers 

operate locational monopolies and exercise market power.

IV. Constitutional Challenges 

A. Standard of Review

“Where a PUC decision is challenged on the ground it 

violates a constitutional right, the reviewing court must exercise 

independent judgment on the law and the facts, and the PUC’s 

findings or conclusions material to the constitutional question are 

not final.” (Ponderosa, supra, 36 Cal.App.5th at pp. 1013-1014.) 

B. Analysis 

1. Contracts Clause 

“‘Both the United States and California Constitutions 

contain provisions that prohibit the enactment of laws effecting a 

“substantial impairment” of contracts[

16] . . . .’ [Citation.] This 

16 Article I, section 10 of the United States Constitution 

states: “No State shall . . . pass any . . . Law impairing the 

Obligation of Contracts[.]” Similarly, article I, section 9 of the 

California Constitution provides: “A . . . law impairing the 

obligation of contracts may not be passed.”
38

constraint applies to public contracts, as well as those between 

private parties. As suggested by the reference to a substantial

impairment, not every legislative impairment of contractual 

relations triggers the contract clause. [Citations.] ‘[T]he 

prohibition is not an absolute one and is not to be read with 

literal exactness like a mathematical formula.’” (Alameda County 

Deputy Sherriff’s Assn. v. Alameda County Employee’s Retirement 

Assn. (2020) 9 Cal.5th 1032, 1074-1075 (Alameda County), italics 

in original.) 

When deciding whether legislation unconstitutionally 

impairs contractual rights, the United States Supreme Court

“applies what it characterizes as a ‘two-step test.’ [Citation.] As a 

threshold question, the court must determine ‘“whether the state 

law has, in fact, operated as a substantial impairment of a 

contractual relationship.” [Citations.] The severity of the 

impairment is said to increase the level of scrutiny to which the 

legislation will be subjected.’ [Citation.] In making this 

determination, ‘the Court has considered the extent to which the 

law undermines the contractual bargain, interferes with a party’s 

reasonable expectations, and prevents the party from 

safeguarding or reinstating his rights.’” (Alameda County, supra, 

9 Cal.5th at p. 1075.)

On this step, the Supreme Court has also stated: “[S]tate 

regulation that restricts a party to gains it reasonably expected 

from the contract does not necessarily constitute a substantial 

impairment. [Citations.] In determining the extent of the

impairment, we are to consider whether the industry the 

complaining party has entered has been regulated in the past. 

[Citations.] The Court long ago observed: ‘One whose rights, such 

as they are, are subject to state restriction, cannot remove them 
39

from the power of the State by making a contract about them.’”

(Energy Reserves Group, Inc. v. Kansas Power & Light Co. (1983) 

459 U.S. 400, 411 [103 S.Ct. 697, 74 L.Ed.2d 569].) Consequently, 

a party’s reasonable expectations are not impaired where the 

party is involved “in a heavily regulated industry[ ]” (id. at p. 

413, fn. omitted) and “[p]rice regulation existed and was 

foreseeable as the type of law that would alter contract 

obligations.” (Id. at p. 416.) 

“If the state law is found to create a ‘substantial’ 

impairment, ‘the inquiry turns to the means and ends of the 

legislation.’ [Citation.] To justify the legislation, the state ‘must 

have a significant and legitimate public purpose behind the 

regulation, [citation], such as the remedying of a broad and 

general social or economic problem. [Citation] . . . The 

requirement of a legitimate public purpose guarantees that the 

State is exercising its police power, rather than providing a 

benefit to special interests.’ [Citation.] If the legislation survives 

that scrutiny, ‘the next inquiry is whether the adjustment of the 

“rights and responsibilities of the contracting parties [is based] 

upon reasonable conditions and [is] of a character appropriate to 

the public purpose justifying [the legislation’s] adoption.”’”

(Alameda County, supra, 9 Cal.5th at p. 1075.) In this final 

inquiry, however, “[a] different, more searching analysis occurs 

when the state legislates an impairment of its own contractual 

obligations because ‘the government’s self-interest is at stake.’” 

(Ibid, italics in original.) “In general terms, a state’s impairment 

of its own obligations ‘may be constitutional if it is reasonable 

and necessary to serve an important public purpose.’” (Ibid.)

In its petition, Securus argues the Decision 

unconstitutionally impairs contractual obligations because: (1) 
40

“The Decision unreasonably impairs obligations under existing 

government contracts by requiring IPCS providers and governing 

entities to change all intrastate rates billed and site commissions 

paid under their existing contracts[ ]”; and (2) “the Decision’s 

impairment of California IPCS contracts is not ‘necessary to 

serve an important public purpose[ ]’” since, as an alternative to 

adopting its interim rate cap, the PUC could have considered “a 

waiver process[ ]” or “examined . . . providers’ actual costs and 

IPCS market bidding dynamics in California before adopting any 

rate caps.” In so doing, Securus does not address the multi-step

test above, let alone explain how the test applies here to establish 

its constitutional rights have been violated. Nor does it argue or 

otherwise demonstrate that a different test ought to apply in this 

case. “It is not our place to construct theories or arguments” on 

Securus’s behalf to “defeat the presumption of correctness[ ]” of a 

decision by the PUC. (Benach v. County of Los Angeles, supra, 

149 Cal.App.4th at p. 852; Ponderosa, supra, 36 Cal.App.5th at p. 

1012 [the PUC’s “decisions are presumed valid”].) We therefore

conclude Securus has not met its “burden of proving . . . 

prejudicial error” on constitutional grounds. (Ponderosa, supra, at 

p. 1012.) 

We acknowledge that, for the first time in its reply brief, 

Securus contends “[t]he PUC substantially impaired [its] 

contracts.” (Bolded text omitted.) Securus also argues that even 

assuming the PUC’s interim rate cap “was justified by a public 

purpose,” it was not “based upon reasonable conditions[.]” In 

support of both arguments, Securus largely reiterates the PUC’s 

adoption of its interim rate cap and prohibition on certain 

ancillary fees was arbitrary, capricious, and procedurally 

improper. We addressed Securus’s arguments on these points in 
41

sections II and III above and, having determined they are 

meritless, cannot conclude Securus has shown a constitutional 

violation based thereon. 

2. Confiscatory Rates Amounting to a Taking 

The Takings Clause of the Fifth Amendment to the United 

States Constitution, made applicable to states under the 

Fourteenth Amendment, “‘protects utilities from being limited to 

a charge for their property serving the public which is so ‘unjust’ 

as to be confiscatory.’” (Ponderosa, supra, 36 Cal.App.5th at p. 

1015.) “The burden is on [the utility] to show the rate of return 

(or cost of capital) established by the PUC was clearly 

confiscatory. That is, there must be a clear showing the rate of 

return was ‘so “unjust” as to be confiscatory,’ such as by 

demonstrating the rate is so unreasonably low it will threaten 

the utility’s financial integrity by impeding the utility’s ability to 

raise future capital or adequately compensate current equity 

holders. [Citations.] A rate of return lower than the utility 

asserts is necessary may nevertheless be reasonable or within a 

range of reasonableness, constitutionally speaking, if it is ‘“higher 

than a confiscatory level.”’” (Id. at p. 1016, italics in original.) 

“Moreover, the facts presented must clearly show the PUC’s 

decision denied [the utility] [its] constitutional rights. ‘[M]erely 

asserting in general language that rates are confiscatory is not 

sufficient . . . . [I]n order to invoke constitutional protection, the 

facts relied on must be specifically set forth and from them it

must clearly appear that the rates would necessarily deny to [the 

utility] just compensation and deprive it of its property without 

due process of law.’” (Id. at p. 1017, italics in original.) 

Securus contends the PUC’s interim rate cap of $0.07 per 

minute is confiscatory. In support of its argument, Securus relies 
42

on the following facts: (1) the interim rate cap is lower than the 

rate caps adopted by the FCC in 2021; and (2) over 60% 

California jails currently charge rates higher than $0.05 per 

minute for IPCS. We reject this contention. The facts above 

simply do not—as Securus contends—demonstrate Securus 

“cannot recover its costs (including a reasonable rate of return)”

under the interim rate cap and do not amount to a “clear 

showing” that a rate of $0.07 per minute “is so unreasonably low” 

that “it will threaten [Securus’s] financial integrity[.]” 

(Ponderosa, supra, 36 Cal.App.5th at p. 1016.) Thus, Securus has 

again failed to satisfy its “burden of proving . . . prejudicial error” 

on constitutional grounds. (Id. at p. 1012.)
43

DISPOSITION

We affirm PUC Decision No. 21-08-037. Respondent PUC

and real party in interest Prison Policy Initiative shall recover 

their costs in this proceeding. (Cal. Rules of Court, rule 

8.493(a)(1)(A).)

CURREY, J. 

We concur: 

COLLINS, Acting P.J.

SCADUTO, J.*

* Judge of the Los Angeles Superior Court, assigned by the 

Chief Justice pursuant to Article VI, section 6, of the California 

Constitution.