### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-10-00111- CV

Com m ission on State Em erge ncy Com m uni cations, Appellan t

v. TracF one Wireless, Inc. and Virgin Mobil e USA, LP , Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 126 TH JUDICI AL DISTRICT NO. D-1 -GN-0 8-0 0303 9, H ONO RAB LE O RLINDA NARANJO , JUDGE P RESIDING

O P I N I O N Appellee s Trac Fone Wireless, I nc. and Vi rgi n Mobile USA, L P (collec tively , “the Prepa id Pr o v id e r s ” ) s u e d th e Co mm is s io n o n St a te E me r g e ncy Communi cations (“the Commi ssion”) for judicial re v i ew of the ag ency ’s final order concluding that the 9-1-1 emer g ency service fee imposed by health and safe ty code section 771.0711 applies t o t h e wi rele ss telecommunica tions

connec tions the Prepaid Providers provide to their customers. See Tex. Hea lth & Safety Code Ann. § 771.0711 (West 2010). The district court reve rsed the Commi ssion’s order , and this appea l followed. We will reve rse the district c ourt’s judg ment.

BACK GR OUND Chapter 771 of the Texas Hea lth and Safety Code g overns the admi n i s t ra t i o n of

emer g ency communications in Texas and provides that the Commi ssion is the State’s authority on

emer g ency communications. See id. § 711.051(a) (We s t 2 0 1 0 ). The Commi ssion has primaryresponsibility for administering the implementation of a statewide sy stem that ensure s that wirele ss

caller s can be identified and located when they dial 9-1-1 for emer g ency assist an ce . Id. §§ 771.051(a) (2)( A), .0711(a)

. To fund the sy stem, section 771.0711 provides that the Commi ssion “shall impose on eac h wirele ss telecommunica tions connec tion a 9-1-1 emer g ency service fee .” Id. § 771.0711(a)

. The statute further provides that a wirele ss service provider must collect the fee “in

an amount equal to 50 cents a month for eac h wirel ess telecommunica tions connec tion from its subscriber s” and must pay the money collecte d to the Comptroller “not later than the 30th day afte r the last day of the month during which the fee s wer e collecte d.” Id. § 771.0711(b). Section 771.073 require s that the service provider “collec t the fee s [] in the same manner it collects those char g es for service ” and that the fee must be “stated separ ately on the customer’ s bill.” Id. § 771.073(a) (West 2010). Customers pay for wirele ss telecommunica tions connec tions and service s using one of two differ ent methods: postpaid and prepai d

. A customer who obtains a connec tion from a
p o s t p ai d p ro v ider ty

pically pay s a set amount monthly for the use of up to a specifie d number of minutes eac h month and pay s additional fee s for any minut es used in excess of that specifie d number. A postpaid provider sends its customers a monthly bill assessing char g es for the connec tion

an d for the service s used during the prec eding month, usually measure d in minutes. The Prep ai d Providers, on the other hand, provide their customers wit h t he wirele ss telecommunica tions

connec tion and service s on a prepa id basis. They do not enter into extended term contra cts with their
customers and, beca

use their customers pay in advanc e, do not send them periodic bills. The Prepaid Providers’ customers pay for their wirele ss telecommunica tions connec tion and service in advanc e

2by purcha sing a handset and a wirele ss car d, which is denominated for either a fix ed dollar amount

of service or a fix ed number of m inutes of service. Cus tomers ty pically purcha se the ha

ndset and wirele ss car d from a third-par ty reta iler such as Wal-Mart or Targ et, althoug h they may also purcha se them direc tly from the Prepaid Providers using the internet. After purcha sing the han d s et and wirele ss car d, the user contac ts the Prepaid Providers by telephone or over the internet to reque st that the handset be activate d. When activate d, eac h handset is assig ned a telephone number with an are a code based on a Z I P code provided by the user, there by establishing a wirele ss telecommunica tions

connec tion. The wirele ss car d allows the customer to use the handset to make calls until either the number o f p urcha sed m inutes or t he doll ar amount of service is used up. The customer may later purcha se additi onal m inutes or dol lar amounts of use f or a Tr acF one or V irg in Mobile handset by purcha sing a

n additional wirele ss car d and ente ring the code printed on that car d. The connec tion

r e p r e s ented by the assig ned telephone number is automatically deac tivated afte r 90 day s (plus a g rac e period) unle ss it is rene wed by the purc hase of

additional minutes.
For the time period betwee n J anuar y 1, 2001 and September 30, 2003, Trac Fone paid the Comptroller $767,515.26 as 9-1-1 emer g ency ser v i ce fee s pursuant to health and safe ty code section 771.0711. For the time period betwee n November 1, 2002 and May 1, 2005, Virg in Mobile paid the Comptroller $1,525,484.07 as 9-1-1 emer g ency service fee s. I n 2005, Trac Fone and Virg in Mobile filed ref

und reque sts with both the Commi ssion and the Comptroller, seeking a ref und of the entire amounts paid. The ref und reque sts wer e based on their contention that section 771.0711 does
not apply to the prepa id wi re l es s products they provide and there fore the wirele ss

3telecommunica tions connec tions obtained by their customers are not subject to the 9-1-1 emer g ency

service fee imposed by

that statute. On rec eiving the ref

und reque sts, the Commi ssion soug ht an opinion from the Texas Attorney Gene ral as to which ag ency —the Commi ssion or the Comptroller—had primary jurisdiction to deter

mine, in the context of a claim for a ref und, “whe ther a 9-1-1 emer g ency service fee imposed on wirele ss telecommunica tions connec tions by Texas Hea lth and Safety Code section 771.0711(a) applies to a service provider’ s s p ec i fi c service .” The Attorney Gene ral issued an

o p i n i o n stating that the Commi ssion had the authority to deter mine whether section 711.07 1 1 (a ) applies to a wire less service provider’ s particula r service, while the Comptroller had the a uthority to order a ref und of fee s collecte d pursuant to tha t se ction. See Op. Tex. Att’y Gen. No. GA-0401 (2006). The Attorney

Gene ral fur

ther stated:

A claim for a ref

und of the fe e i m p o sed under that section must be filed with the Comptroller, but if the claim prese nts issues particula rly within t h e Commi ssion’s expertise, the C omptr o l l er s hould abate the admini strative procee ding to allow t he Commi ssion to make the initial determination of those issues.

Id. Following the iss u an ce o f t his opinion by the Attorney Gene ral, the Commi ssion initiated a contested case ag ainst the Prep aid Providers and ref err ed the case to the State Offic e of Administrative Hea

ring s (SOAH) to deter

mine whether section 7 7 1.0711 applies to the prepa id wirele ss telecommunica tions conn ec t i ons they provide. The Comptroller abate d the ref und
proce eding s pending resolution of the c ontested ca se by SOAH. After a hear ing befor e a SOAH administrat i ve law judge (AL J ), the AL J issued a proposal for

decision (PFD ) in w hich she conclude d that section 771.0711’s provision imposing a

49-1-1 emer g ency service fee on “ea ch wirele ss telecommunica tions connec tion” appl i ed t o the

wirele ss telecommunica tions connec tions used by the Prepaid Providers’ customers. I n a final order issued in J une 2008, the Commi ssion adopted the PFD, including the proposed finding s of fac t and conclusions of law

.

I n Aug ust 2008, the Prepaid Providers filed in Travis County district court a petition for judicial revie w of the Commi ssion’s order

. After full briefing and a hear ing befor e the court, the district court rende red judgme nt reve rsing the Commi ssion’s order

. I n its judgme nt, the court stated that the Commi ssion “er

roneously concl u d ed t hat Texas Hea lth & Safety Code §§ 771.0711 and
771.073 ap p l y t o T rac Fone Wireless, I nc. and Virg in Mobile, L .P. and their end users during the periods at issue.” This appea l f ollowed. I n two issues, the Commi ssion c ontends that: (1) the fee imposed on wirele ss telecommunica tions connec tions by health and safe ty code section 771.0711(a) applies eq u al ly to all users of those connec tions reg ardle ss of whether they wer e purcha sed on a postpaid or prepa id basis, and (2) the Commi ssion’s final order did not violate the Prepaid Providers’ constitutional rights, including their rig hts to due proce ss and equa l protection.

STANDARD OF REVIEW The primary issue befor e this Court involves construction of a statute: whether the C ommissi on corr ectly conclude d that health and safe ty code section 771.0711applies to th e wirele ss telecommunica tions connec tions obtained by the Prepaid Provide rs’ customers. Statutory construction prese nts a question of law t h at we review de novo. See State v. Shumake , 199 S.W .3d 279, 284 (Tex. 2006)

. Our primary objective in c onstruing statutes is to g ive eff ect to the leg islature’s intent. Galbraith Eng’g Consultant s, Inc. v. Pochuc ha , 290 S.W .3d 863, 867 (Tex.

52009). The plain meaning of t h e t ex t i s the best expression of l eg islative intent unless a differe nt

meaning is supp l i ed by leg islative definition or is appar ent from the context, or unless the plain meaning leads to absurd or nonsensical results. City of Rock wall v. Hughes , 246 S.W .3d 621, 625-26 (Tex. 2008) ; see Tex. Gov’ t Code Ann. § 311.011 (West 2005) (“Words and phrase s shall be rea d in c ontext and construed acc ording to the rules of g rammar and common usag e.”)

. We look to the entire act in deter

mining t he leg islature’s intent with respe ct to a specific provision. Upjohn Co. v. Ry lander , 38 S.W .3d 600, 607 (Tex. App.—Austin 2000, pet. denied). We are require d to give
“ser ious considera

tion” to the construction of a statute by t h e ad m i nistrative age ncy char g ed with its enfor ceme nt, Railroad Comm’n v. Texas Citi zens for a Safe Future & Clean W ater , No. 08-0497, 2011 WL 836827, at *4 (Tex. Mar. 11, 2011), and will g ener ally uphold the ag ency ’s interpre tation
“so long as the construction is rea sonable and does not contra dict the plain lang uag e of the statute.”
First Am. Titl e Ins. Co. v. Combs , 258 S.W

. 3 d 6 2 7 , 6 3 2 (Tex. 2008) (quoting Tarrant Appraisal
Dist. v. Moore , 845 S.W .2d 820, 823 (Tex. 1993)); see also Fiess v. S t a t e Farm Lloyds , 202 S.W .3d 744, 747-48 (Tex. 2006) (cour ts g ive some defe renc e to ag ency reg ulation containing

rea sonable interpre tation of ambig uous statute). I f, afte r ap p ly ing these dominant rules of construction, doubt about a tax statute’s application still rema ins, we g ive the stat u t e a “s t ri cter construction,” Calvert v. Texas Pipe Line Co. , 517 S.W .2d 777, 781 (Tex. 1974) , meaning that we resolve ambig uities in fav o r o f the taxpay er and ag ainst the taxi ng authority , Gables Realty L.P. v. Travis Cent. Appraisal Dist

. , 81 S.W .3d 869, 872 n.3 (Tex. App.—Austin 2002, pet. denied).

6DISCUSSIO N At issue is whether se ction 771.0711(a) of the health and saf ety code a pplies to the
p re p ai d wirele ss telecommunica tions connec tions obtained by the Prepaid Providers’ customers. Section 771.0711(a) provides:

To provide for automatic number identification and automatic location identification of wirele ss 9-1-1 calls, the commission shall impose on eac h w i reless telecom munica tions connec tion a 9-1-1 emer g ency service fee

. A political subdivision may not impose another fee on a wirele ss service provider or subscriber for 9- 1-1 eme rg ency

service

.

Tex. Hea lth & Safety Code Ann. § 771.0711(a) (empha sis added)

. A “wire less telecommunica tions

connec tion” is define d as “any wirele ss c o mmunication mobile station assig ned a number containing

an are a code assig ned to Texas by the North Americ an Numbering Plan Administrator that connec ts

a wirele ss service provider to the local exchang e service provider.” Id. § 771.001(13) (West 2010). Thus, the plain lang uag e of section 771.0711(a) impose s a 9 -1 -1 emerg ency service fee on each wirele ss telecommunica tions connec tion and contains no lang uag e limiting its scope base d on the

manner in which the wirele ss user purcha ses that connec tion. I t is undisputed that customers of the Prepaid P roviders obtain a “wireless telecommunications conn ec t i o n ” throug h their purchase and activation of a handset. We ag ree with the Commi ssion, there fore , that the plain lang uag e of section
7 71.0711(a) require s that the fee be imposed on all wirele ss telecommunica tions conn ec t i o n s , including those provided by the Prepa id Providers to their customers on a prepa id basis.
We must, howeve r, consider the statute as a whole and not any provision in isolation. See Continental Cas. Co. v. Downs , 81 S.W .3d 803, 805 (Tex. 2002). The Prep ai d P ro v i d ers

7contend that the statute’s specific fee assessment and collection me th o ds evidenc e a leg islative intent

that their customers, who pay for their wirele ss telecommunica tions connec tions in advanc e, are not subject to the 9-1- 1 emer g ency service fee

. See Tex. Health & Safety Code Ann. §§ 771.0711(b) ; .073. They arg ue that these separ ate statutory provisions de fine section 771.0711’s true scope and d em o n s trate that the fee was never intended to apply to wirele ss telecommunica tion connec tions provided on a

prepa id basis. We address e ach of their ar g uments below.

Mann er of Assessing and C ollecting th e Fee The statute provides that “[a] wirele ss service provider shall coll ect the fee in an
amount equal to 50 cents a m o n t h fo r eac h wirele ss telecommunica tions connec tion from its subscriber s and shall pay the money collecte d to the comptroller not later than the 30th day afte r the last day of the month during which the fee s wer e collecte d.” See id. § 771.0711(b). Section 771.073
presc ribes the method f

or collec ting the f

ee:

A customer on which a fee or surcha rg e is imposed under this subchapte r is liable for the fee or surcha

rg e in the same manner as the customer is liable for the char g es for service s provided by the service provider. The service provider shall collect the fee s and surcha

rg es in the same manner it collects those char g es for service s, except that the service pro v ider is not require d to take leg al action to enfor ce the collection of the fee s or surcha

rg es. A fee or surcha

rg e must be stated separ at el y o n t he customer’ s bill.

Id. § 771.073(a)

. The Prepaid Providers contend that these require ments, rea d in h ar m o n y with section 771.0711(a) , ref

lect the leg islature’s intent to impose the fee only on teleco mmunications

connec tions provided u s i ng the postpaid wirele ss service business model and not on those telecommunica tions connections that ar e obtained on a prepaid basis.

8We do not ag ree that the statutory provisions addre ssing the method of assessing and

collecting the fee demonstrate a clea r intent to limit the fee t o wirele ss telecommunica tions

connec tions paid for in any particula r manner . The Prepaid Providers char acte rize these provisions

as requiring monthly billing, a prac tice they do not eng ag e in. Nothing in th e statute, howeve r, require s that the fee b e as s es s ed i n a monthly bill or collecte d on a monthly basis. Rather, the provision direc ts the provider to assess and collect a fee “in an amount equal to 50 cents a month.” Although assessing a fee of exactly 50 cents due eac h month is one method that would acc omplish the statutory direc tive, it is not appar ent that it is the only way . And the provider is not require d to

re m i t t h e fe es on a mont hly basis; it is simply require d to remit to the C omptroller any fee s i t h as collecte d in a par

ticular month no later tha n 30 day s after

the last day

of that month. The Prepaid Providers next asser t that the statute’s mandate that the fee be collecte d “in the same manner [t he service provider] collects those char g es for service s” and that the fee “must be stated separ ately on the customer’ s bill” is incompatible with their business model. They rely on this a ll e g ed incompatibility to support their position that the statute contemplates imposing a fee only

on the customers of wirele ss service providers that send out a monthly bill and there fore , they arg ue, demonstrates that “the sole object of the e911 fee contemplated by the leg islature was the traditional model of monthly post-paid wirele ss service. ” The statute does not, howeve r, require that the 1
The Washing ton Supreme Court reje cted a simil ar argument advanc ed by Trac Fone that 1 challeng ed the application of that state’s enhanc ed 911 excise tax to prepa id wirele ss service

. The court noted that the statute does not itself require that Trac Fone send its customers a bill, only that if a billing statement is sent, the tax must be stated separ ately

. The court further noted that, “the fac t t h at Trac Fone does not send monthly billing statements is a conseque nce of the way i n wh i ch i t chooses to conduct its business,” and “does not relieve Trac Fone of its obliga tions under the taxi ng statute, nor does it conver

t a plainly taxable event into a nontaxable event.” TracFone W ireless, Inc. v. De partment of Reve nue , 242 P.3d 810, 819 (Wash. 2010). 9service provider send its customers bills or char g e for its product in any particula r manner . Rather, the statute eff

ectively direc ts the provider to collect the fee in whateve r manner it employ s to collect other char g es from its customers and to apprise the customer of the amount of that fee

. The rec ord does not show that it would be impossibl e for the Prepaid Providers’ business prac tices to be

rec onciled with the statute. I ndeed, in the P FD , t he AL J descr ibed various way s in which the 2 Prepaid Providers could meet the assessment and collection proce dures under their prepa id business model. Whil e their chosen business model may make it more difficult for them to assess and collect the fee , such a difficulty does not itself evince a leg islative intent to exclude the telecommunica tions
connect i o n s t h ey provide from the rea ch of section 711.0711. A wirele ss telecommunica tions 3

The Washington Supreme Court addre ssed Trac Fone ’s contention that it could not comply 2 with that state’s statute imposing a 20 cent per month fee on “all radio acc ess lines.” Trac Fone asser ted that this fee could not be uniformly calc ulated on p re p ai d wi rele ss service beca use the service is sold in bloc k airtime and not by the month. The court observe d that the statute define s a “ra dio acc ess line” as “the telephone number assigned to or used by a subscriber for two-wa y local wirele ss voice ser

vice” and continued: [TracF one’s a

rg ument] m isapprehe nds what is being taxed. . .

. I f a subscriber ha s a cell phone number assig ned to the subscriber or used by the subscriber , the tax must be paid. The tax is not imposed on the s ale of airtime m inutes nor i s the t ax based upon the number or rate of minutes purcha s ed o r used in a month.

. . . Trac Fone ’s arg uments, which are focuse d on numbers of minutes purcha sed and the rate at which they are used, do not ref lect the s t at u t e’s taxation of telephone numbers for the months that they are active.

. . . Uniformity , as with the tax itself, is [] conce rned with acc ess lines, not with how many minutes are used or the rate at which they are used.

. . . As thus define d, uniformity is not the insurmountable prob l em that Trac Fone claims.

. . . As explained, Trac Fone knows whether an acc ess line with a zip code in this state is active in any g iven month. Trac Fone can there fore rea dily calc ulate the tax for any

g iven month.
TracFone W

ireless, Inc. , 242 P.3d at 816-18. Simi lar arg uments by Trac Fone have failed in other jurisdictions. See TracFone W ireless, 3 Inc. v . Nebraska Public Serv. Comm’n , 778 N.W.2d 452, 459 (Ne b. 2010) (“ Trac Fone ’s choice of 10co n n ec t i o n rema ins such reg ardle ss of the manner in which it is marke ted and sold, and secti o n

771.0711(a) imposes a fee on “ea ch” wirele ss telecommunica tions connec tion. The fac t that the 4 leg islature appar ently tailored the manner of assessing and collecting the fe e t o fi t the thenpredominant business model does not nece ssarily ind i ca t e an intent to exclude wirele ss telecommunica tions connec tions marke ted us ing a differ ent business model, particula rly if, as t he Prepaid Providers claim, that differ ent business model was novel at the time the statute was enac ted.
I t is too g rea t a leap for us to infer that, when draf ting the statute, the leg islature intended to exclude this sector of the industry from the 9- 1-1 eme rg ency service fee

. Def init ion of “Su bscribers” The Prepaid Providers also arg ue that the plain statutory lang uag e apply ing the 9-1-1

emer g ency service fee to “ea ch” wireless telecommunication connec tio n is overc ome because the
statute elsewhe re dire cts wirele ss service providers to c ollect the fee from their “subscr ibers” and,

acc ording to the Prepaid Providers, their customers are not “subscr ibers” as that term is used in the
statute. See id. § 771.0711 (b). The leg islature has not define d the term “subscr iber,” so we construe i t acc ording to its plain and common meaning unless a contra ry intention is appar en t fr o m t h e

business model does not g ive it license to throw up its hands and pay nothing.” ); TracFone W ireless, Inc. , 242 P.3d at 815 (obser ving that “Tra cF one’s arg uments are premised chi ef l y o n the way in which it conducts its business” and “[i] n eff ect, Trac Fone is seeking a decision that whether the tax i s o we d d ep ends upon how a company decide s to marke t and char g e for its service or, to pu t it another way , whether the tax must be paid depends en t i re ly upon the individual company ’s business model”). See TracFone W

ireless, Inc. , 242 P.3d at 818 (“We do not ag ree that the manner in which 4 a clea rly taxable event (an assig ned cell phone number) is marke ted can neg ate a tax that is otherwise clea rly pay able.” ). 11context, or unless such a construction leads to nonsensical or absurd results. See FKM P’ship, Ltd.

v. Board of

Rege nts of Univ. of

Houston Sys. , 255 S.W .3d 619, 633 (Tex. 2008); see also Tex. Gov’t Code Ann. § 311.011. The Prepaid Providers contend that, apply ing a rea sonable construction based

on co m m o n u s ag e, one must incur a “per iodic and rec urre nt” obliga tion to be considere d a “subscr iber.” They asser t that their customers, who pay for their wirele ss telecommunica tion

connec tions in advanc e, are not “subscri b er s ” beca use t he service they rec eive is not “pursua nt to
a per iodic contra ct.” The Prepaid Providers rely on a dictionary definition of the verb “subscr ibe”
to support their position, but they include only a portion of that definition. The complete definition

rea ds: “to enter one’s name fo r a p u b lication or service ; also : to rec eive a periodica l or service
reg ularly on order .” See Merr iam-Webster Collegia te Dictionary 1244 (11th ed. 2008). Thus, even if it wer e controlling , this dictionary definition of the term “subscr ibe” does not compel the narr ow construction urg ed by

the Prepa id Providers.
Moreove r, their own ma

rketing materia ls belie their claim t hat t he ter m’s common meaning encompa sses only one who “incur s a reg ular and periodic obliga tion in exchang e for an
ong oing or periodic p ro vision of service .” The AL J noted in her PFD that “[o] n its website,
T ra cF o n e states that it has over 6.5 milli on subscriber s,” and at least one version of a document setting forth Virg in Mobile’s terms and conditions of service ref ers to purcha sers of its products as both “customer s” and “subscr ibers.” Rather than infer from the statute’s use of the term “subscr iber”

a leg islative intent to exclude an entire subset of wirele ss telecommunica tions connec tions from the
9-1-1 emer g ency service fee , it is more rea sonable to conclude that, like Trac Fone and Virg in Mobile themselves, the leg islature used the terms intercha ng eably

. An intent to exclude a particula r subset

12of wirele ss service users from the fee is even more unlikely if, as the Prepaid Providers contend, that

cate g ory of user s was not widely

rec og nized when the statute wa s draf ted. Our construction of the term “subscr iber” comports with the object the leg i s l ature
soug ht to obtain in enac ting the statute—to fund a sy stem to provide enhanc ed 9-1-1 emer g ency service s to all

wirele ss users. See Tex. Gov’ t Code Ann. § 311.023(1) (West 2005)

. By requiring all wirele ss users who can acc ess the benef its of the 9-1-1 sy stem to contribute to the funds neede d
to provide automatic number and l o ca t i on identification, this construction also honors the
p resumpti on that the leg islature intended the statute to eff ect a just and rea sonable result. See id

. § 311.021(3) ( West 2005).

Subs equent Legislation (Health and S afety Code Section 771.0712)
I n 2009, t h e l egi slature enac ted health and safe ty code section 771.0712, which expressly applies to “pre paid wire less telecommunica tions service” and provide s in part:
[A] prepa id w ireless 9-1-1 service s fee of two perc ent of the purcha se price of eac h prepa id wirele ss telecommunica tions ser v i ce purcha sed by any method, shall be collecte d by the seller from t he consumer at the time of eac h reta il transac tion of prepa id wireless tele communications servic e occ urring in this st ate . . . .

13Tex. Health & Safety Code Ann. § 771.0712 (West 2010). The Prepa id Providers asser t tha t this 5 subsequent ame ndment to the health and safety code suppor

ts their position t hat sec tion 771.0711 does not apply to the wirele ss products they provide beca use if, by virtue of section 771.0711, their
prepa id business model wer e al re ad y s ubject to the 9-1-1 emer g ency service fee , then passag e of section 771.0712 would have been unnece ssary . The Prepaid Providers arg ue that the leg islature’s
passag e of section 771.0712 is persua sive evidenc e that section 771.0711 was not intended to apply
to them. See State Highway Dep’ t v. Gorham , 162 S.W .2d 934, 937 (Tex. 1942); W illiamson Pointe
Venture v. City of Austin , 912 S.W .2d 340, 345 (Tex. App.—Austin 1995, no writ) (“O n e leg islature’s interpre tation of a prior leg islature’s enac tment may be persua sive but does not control the i nterpre tation of the prior a ct.”) . Howeve r, other c ases state that one session of t he legislature does not have the power to decla re the intent of a past session. See Rowan Oil Co. v. T exas Employme nt Comm’n , 263 S.W .2d 140, 144 (Tex. 1953); Ex parte Schroete r , 958 S.W .2d 811, 813 (Tex. Crim. App. 1997) (“[O]ne session of the leg islature does not have the power to decla re the intent of a past session, and a leg islative construction of an act of another l eg islature i s u n i formly

We note that section 771.0712 imposes a fee on “pre paid wirele ss tel ec o m m unications 5 service ,” whe rea s 771.0711(a) imposes a fee on “ea ch wireless telec ommunications connec tion .” The tax code defin es “telec ommunications service s” as “the elec tronic or elec trical transmission, convey ance , routing , or rec eption of sounds, signa ls, data, or information utiliz ing w ires, cable , radio wave s, microwa ves, s at el l i tes, fiber optics, or any other method now in exis tence or that may be devised, including but not limit ed to long- dis t an ce t elephone service .” Tex. Tax Code Ann. § 151.0103 (West 2008). I t is not clea r that the leg islature nece ssarily intended the two provisions to tax th e s am e el em en t of wirele ss telecommunica tions. See Tex. Hea lth & Safety Code Ann. § 771.001(13) (def

ining “wire less telecommunica tions connec tion”); Tex. Tax C o d e Ann. § 151.0103 (def

ining “telec ommunication service s”); see also Robertson v. Odom , 296 S.W .3d 151, 157 (Tex. App.—Houston [14t h Dist.] 2009, no pet.) (“[W] hen const ru i n g a statutory word or phrase , we may consider the m eaning assig ned to the t erm . . . in another act of simil ar nature.” ). Be cause we are not here construing section 771.0712, we express no opinion as to the signific ance , if any , of the leg islature’s use of diffe rent ter ms in the two provisions. 14h el d to be entitled to littl e weig ht.”); Strayhorn v. W illow Creek Res., Inc. , 161 S.W .3d 7 1 6 , 722 (Tex. App.—Austin 2005, no pet.) (“[T]he intent or understanding of the 78t h L egi slature offe rs no insight into the intent of previous leg islatu re s . ”) ; A d a ms v. Baxter Healthcare Corp. , 998 S.W .2d 349, 355 (Tex. App.—Austin 1999, no pet.).

Even if we consider section 711.0712 in c onstruing 711.0711, howeve r, it doe s not support the Prepaid Providers’ position bec ause there is a n equally plausible alterna tive rea son for the leg islature to have added section 771.0712: that it may have r ecog nized that the then-existi ng fee assessment and co l l ec tion proce dures were unwieldy as applied to service providers who sold wirele ss telecommunica tions connec tions on a prepa id basis and there fore amende d the statute to permit those provider s to collect the 9-1- 1 emer g ency service fee in a manner m ore suited to their business model.

The Prepaid Providers also claim that when the leg islature enac ted section 771.0712, it changed the law and cre ated a new fee on prepa id wirele ss. They arg ue that this leg islative act is
persua sive evidenc e that prepa id wirele ss is not within the scope of section 771.0711 and ag ain
contra d i ct s , rathe r t han supports, a construction of section 771.0711 as i mposing a fee on prepa id wirele ss telecommunica tions connec tions. The Prepai d P ro viders asser t that if later leg islation differ s signific antly from exis ting law, the later leg islation must be construed as ch ang ing, rathe r than clarify ing, exi sting law. See W illiamson Pointe Venture , 912 S.W .2d at 345. I n t h e absenc e of some showing , either by leg islative history or otherwise, that the intent of the leg islature in adopting the amendment was to clar ify rathe r than chang e the st at u te in question, we g ener ally
presume that leg islative amendments are desig ned to change rathe r than clarify the exis ting statute.

15See Public Util. Comm’n v. Citi es of Harlingen , 311 S.W .3d 610, 620 n.7 (Tex. App.—Austin 2010,

no pet.). “Howe ver, the time and circ umstances surrounding the enac tment of the amendment may indicate that the chang e wroug ht by the amendment was formal only —that the leg islature intended

mere ly to interpre t the orig inal act.” 1A Norma n J

. Singer , Sutherland Statutory Construction § 22.30 (6th ed. 2002). 6

Even employ ing the presumption of chang e, howeve r, does not lead to the conclusion that the new provision here nece ssarily h ad the eff ect of imposing a new fee

. The new provision addre sses the manner of assessing and collecting the exis ting 9-1-1 emer g ency service fee specific ally with respe ct to the prepa id wirele ss service

. The change , then, arg uably g oes only to the

manner in which prepa id wirele ss service providers assess and collect the 9-1-1 emer g ency service fee

. I t is at least equally rea sonable that the new provision resulted from t he leg islature’s 7

rec og nition of the need to acc ommodate the g rowing prepa id wirele ss business model. I n response , the leg islature may have draf ted and passed a statute that presc ribes a differ ent and more suitable method for providers of prepa id service s to calc ulate and co l l ect the exis ting 9-1-1 emer g ency

For example, if an amendment “wa s enac ted soon afte r controv er s i es arose as to the 6 interpre tation of the orig inal act, it is logic al to reg ard the amendment as a leg islative interpre tation of the orig inal act.” 1A Norman J

. Singer , Sutherland Statutory Construction § 22.31 (6th ed. 2002).

A Kentucky fede ra l d i s trict court rea ched this conclusion when addre ssing a simil ar 7 arg ument advanc ed by Trac Fone . The c ourt noted that “the amendment only chang ed the method of collection, not the g ener al collection obliga tion of cell phone providers.” The court continued: “[T] he amendments do eff ect a chang e in the law; they chang e the permissible method of collection, adding new options to make it ea sier for prepa id providers to comply with the law while r etaining the s ame business model.” See Commonwealth of Kentucky Commercial Radio Serv. Em er g ency Bd. v. TracFone W

ireless, Inc. , 735 F. Supp. 2d 713, 724 n.12 (W.D. Ky . 2010). 16service fee

. We do not ag ree that the leg islature’s enac tment of section 771.0712 is incons istent 8
with our construc tion of section 771.0711.

The P re p ai d Providers also claim that section 771.0712 repr esents a logic al
prog ression of taxation, which natura lly lag s behind emer g ing technolog ies. They arg ue that just as 771.0711 was a new fee cre ated to tax a new technolog y (wire less telecommunica tions connec tions

as opposed to local exchang e acc ess l i n es , s ee Tex. Hea lth & Safety Code Ann. § 771.071,

com m o n ly ref

err ed to as “land lines”), section 771.0712 is a new fee cre ated to tax another

n ew technolog y

—prepa id wirele ss telecommunica tions connec tions as opposed to postpai d wirele ss connec tions. But prepa id wirele ss telecommunica tion connec tions do n o t d i ffer technolog ically from post paid wireless telecommunica tion connec tions; the o n l y d i fferenc e is the business model employ ed by th e P repaid Providers. The fee imposed by section 771.0711 is imposed on the connec tion itself, without reg ard to the manner in which that connec tion is marke ted and sold to the user.
Effec t of Texas Tax Code

The P repa id Providers also contend that cer tain provisions of t he tax code prohibit the assessment of a 9 -1 -1 emer g ency service fee on their prepa id customers’ wirele ss telecommunica tions connec tions. Specifica lly , they p o int to tax code section 151.061, which contains a provision prohibiting the imposit ion of taxes, char g es, or fees o n m o b i l e

I f, as the Prepaid Provide rs insist, section 771.0712 imposes a new fee , it is not entirely 8 clea r that the leg islature intended the new fee to be simply the “pre paid wirele ss” equivalent of the fee alre ady

imposed in se ction 771.0711. As previously noted, section 771.0712 imposes a fee on “pre paid wirele ss telecommunica tions service ” as opposed to the “wire less tel ecommunica tions connec tion” that is the subject of the f ee imposed by

section 771.0711. 17telecommunica tions services pr ovided to a customer in a taxi ng jurisdiction unless the customer’s

“plac e of primary use” is encompa ssed by the territoria l limit s of that taxi ng jurisdiction. See Tex.
Tax Code Ann. § 151.061(c) (West 2008). Section 151.061 implements the fe d era l Mobile Telec ommunications Sourcing A ct, 4 U.S.C.A. §§ 116-126 (West 2005) , and establishes sourcing rules for state and local taxation of mobile telecommunica tions service s. The bill analy sis explains the bac kg round and pur

pose of se ction 151.061 as follows:

As a result of some mobile telecommunica tions customers (customer ) using service in various locations, sever al differ ent state and local tax laws may apply

. Fe dera l law provides that a customer’ s place of primary use is the single source for deter mining tax reve nue, reg ardle ss of where the c all orig inates, passes throug h, or t erminate s. Conforming state l aw to fe dera l law ensures t hat Tex as l imits the determination of tax reve nue to a single source for a customer. Senate Bill 1497 confor ms Texas law to fede ral law

. House Comm. on Way s & Me ans, B ill Analy sis, Tex . S.B. 1497, 77th L eg ., R.S. (2001).

Thus, section 151.061 (i) provides a fra mework for identify ing the “plac e of primary
use” of mobile telecommunica tions service s, and (ii) permi t s taxes, fee s, and char g es on those service s to be imposed only by the taxi ng authority whose jurisdiction enc ompasses that “pla ce of primary use.” See Tex. Tax Code Ann. § 151.061(c ). Signific antly , the sourcing rules apply only
to “mobile telecommunica tions service s.” Id. The Prepaid Providers asser t that users of the service s they provide have no “plac e of primary use” beca use their service s are excluded from the definition of “telec ommunications service s” and beca use the statute expressly define s “plac e of primary use” in terms of wher e a customer uses a “mobile telecommunica tions service .” The statute define s “plac e of pr imary

use” a s

18the street addre ss that is repr esenta tive of wher e the customer’ s use of the mobi le

telecom munications service primarily occur s. That location must be the residential street addre ss or the primary business street addre ss of the customer that is within the licensed se rvice are a of the home servic e provide r.

Id. § 151.061(a) (2) (empha sis added)

. The Prepaid Providers claim t h at t h e mobile telecommunica tions prod u c ts th e y p r o v id e d o n ot fall within “telec ommunications service s” beca use the wirele ss car d that acc ompanies the handset they sell to their customers constitutes a “telephone
prepa id calling car d,” which is ex p re s s l y excluded from the definition of “telec ommunications service s.” See id. §§ 151.0103(a) (2), .01032. Since their customers ar e n o t using

“ te le c o mm

u n ic a ti o n s s e r v ices,” they asser

t, the statute does not assig n them a “plac e of primary use.” Acc ording to the Prepa i d P roviders, it follows that the Commi ssion cannot impose the 9-1-1

emer g ency

service fee on these c ustomers bec ause their “plac e of primary use” is not in Texas, or
appar ently any

wher e else. As s u m ing without deciding that the wirele ss car ds they sell constitute “telephone prepa id calling car ds” within the meaning of the tax code, we disag ree with the Prepaid Providers’ a

rg ument for the f

ollowing r easons.
(1) The Prepaid Providers’ Argum ent Depe nds on Sel ec tive Application of Statu tory Def init ions The statute plainly

states that t he sourcing rules gover n the s ourcing of charg es for “mobile te le c o mm

unications service s.” Id

. § 151.061(c)

. Be cause the statute limit s only the taxation of the service s it covers, if, a s the Prepaid Providers contend, the products they provide do not fall within the tax code’ s definition of “tele communications servic es,” the sourcing rules do not a pply
to those products at all and cannot opera te t o prohibit their taxation. The Prepaid Providers’

19arg ument depends on their char acte rization of the products they provide as “telec ommunicati o n s

s er v i ces” for one purpose (applica tion of the sourcing rules) but not for another (desig nati o n o f primary p l ac e o f u s e). Acc epting their asser tion that their products are not “mobile telecommunica tions service s” leads to the conclusion that the sourcing rules are not applicable and there fore do not prohibit a particula r taxi ng authority from imposing taxes, fee s, or char g es on them.
(2) The Prepaid Providers’ Argum ent Would Avoid Taxation By Any Taxing Jurisdi ction
Moreove r, if the statute opera ted in a manner that resulted in their customers’ having

no “plac e of primary use,” then no tax ing jurisdiction would have authority to impose taxes, fee s, or cha rg es on them. Ye t the Prepaid Provider s insist that tax code section 151.061 and he alth and safe ty code 771.0735 toge ther embody just such a policy decision. But if, as the Prepaid Providers contend, section 771.0735 prec ludes imposit ion of a fee under 771.0711, then it must also prec lude the imposit ion of a fee under 771.0712. Such a result cannot be square d with the Prepaid Providers’

own asser

tions reg arding the p u rp o s e of health and safe ty code section 771.0712 or with that section’s leg islative history

. I t is undisputed that section 771.0712 require s s el l er s o f prepa id wirele ss telecommunica tions service s to collect a 9-1-1 emer g ency service fee from their customers. We decline to rea d th e s o u rc i n g ru les in a manner that evisce rate s 771.0712 and so plainly
contra dicts the leg islature’s intent.
(3) “Connection” v. “Service” The sourc ing r

ules apply

to and re g ulate the taxation of mobile telecommunica tion
service s rathe r than to wirele ss telecommunica t i o n s co n n ections

. Compare Tex. Tax Code Ann. § 771.0561(c) with Tex. He alth & Safety Code Ann. § 771.0711(a)

. As stated above, the tax code 20define s “ telecommunica tions service ” as “ele ctronic or elec trical transmission, convey ance , routing ,
or rec eption of sounds, signa ls, data, or information utiliz ing wires, cable , radio wave s, microwa ves, satellites, fiber optics, or

any other method now in e x istence or that may be devised, including but
not limit ed to long- distance telephone service .” See Tex. Tax Code Ann. § 151.0103. Application of the sourcing rules to service s, rathe r than connec tions, is consistent wi t h t h e g oal of avoiding multipl e taxation of sound or data transmissions that fre quently orig inate in one taxi ng jurisdiction, terminate in anothe r, an d p as s throug h others along the way . By contra st, a wirele ss telecommunica tions connec tion is a “wire less communication station assig ned a number containing

an are a code.” See Tex. Hea lth & Safety Code Ann. § 771.001(13). A connec tion is, by definition, fix ed in one taxi ng jurisdiction. When there is only one potential taxi ng jurisdiction, sourcing rules

are unnece ssary and serve no purpose. T h e 9 -1 -1 emer g ency service fee contained in section 771.0711(a) i s i m p osed on telecommunica tions connec tions rathe r t han service s. Thus, it appea

rs that the sourcing rules, by their own terms, do not apply to the fee on connec tions imposed by section
771.0711. I t is also logic al to conclude that the sourcing ru l es do not apply to a fee on a telecommunica tions connec tion be cause conce rns about multipl e taxation are absent. I n that case , the Prepaid Providers’ relianc e on the sourcing rules is wholly misplaced, as those rules simply have no application her e.

Fr om th e foreg oing, it appea rs sensible to conclude that the sourcing rules do not apply here

. We note, however, that health and safe ty code se ction 771.0735(3) pr ovides that “the fee imposed on wirele ss telecommunica tions bills shall be administered in acc ordanc e with Section 151.061, Tax Code,” i.e., the sourcing rules. W h i l e t h i s perple x ing provision speaks to a “fe e

21imposed on wirele ss telecommunica tions bills” rathe r than a fee on connec tions or service s, it could

be construe d as a dire ctive that the sourc ing r ules be a pplied to the 9-1-1 emer g ency service fee at issue here

. Alterna tively , it could rea sonably be construed to mean that a fee fo r s er vices that is “imposed on a wirele ss te lecommunications bill” is g overne d by the sourcing rules, but a f ee f or a

connec tion is not. Be cause this issue is not direc tly befor e us, we need not decide today whether the sourcing rules ap p l y t o t he 9-1-1 emer g ency service fee

. Suffice it to say that the sourcing rules contained in section 151.061 of the tax code provide no basis for disreg arding t h e plain statutory lang uag e imposing that fee on “ea ch wirele ss telecommunica tions connec tion.” See T ex. Hea lth & Saf ety Code Ann. § 771.0711(a ).
Threat of Double Taxation

The Prepaid Providers next complain that interpre ting the statute as urg ed by the Commi ssion will result in their service s bei n g t ax ed twice, i.e., under both section 771.0711 and section 771.0712. Although the prec ise scope and eff ect of section 771.0712 is not before us, the Commi ssion does not arg ue in thi s case that both taxi ng provisions would apply to the Prepaid Providers. The Prepaid Provide rs ’ concern arises, ag ain, out of their assumption that section
771.0712 cre ates a new fee , when it is not at all clea r that it does. The hy

pothetical threa t of double taxation does not alter our ana ly sis of the scope of section 771.0711.
Section 771.0711 Appl

ies to All W

ireless Telec om m uni cations Con nections Having considere d the plain lang uag e of the statute and employ ed the dominant rules

o f statutory construction, we conclude that section 771.0711 unambig uously imposes a 9-1-1

emer g ency service fee on all wirele ss telecommunica tions connec tions, reg ardle ss of whether they 22are marke ted and sold using a prepa id or post paid business model. We are not persua ded that the

provisions ad d re s s i n g the amount of the fee and the collection proce dures manifest a leg islative intent that the 9-1-1 emer g ency service fee not apply t o wirele ss telecommunica tions connec tions that are sold through the prepa id business model employ ed by the Prepa id Providers.
Even if we co n sidered the statutory lang uag e to cre ate an ambig uity as to that question, howeve r, the result would be the same. When a statute is ambig uous, we must “g ive serious consideration” to the “[ c]onstruction of [ the] statute by the admini strative age ncy char g ed with its enfor ceme nt,” Texas Citi zens , 2011 WL 83 6 8 2 7 , at *4, and uphold that ag ency ’s interpre tation if it is rea sonable and does not contra dict the plain lang uag e of the statute. See First Am. Titl e Ins. Co. , 258 S.W .3d at 632. Section 711.0711(a) states that “the Commi ssion sh all impose” the 9-1-1 emer g ency service fee , and the Attorney Gene ral has deter mi n ed that “the authority to resolve a claim about the applicability of section 771.071(a) to a wirele ss telecommunica tions connec tion based on the nature of the provider’ s service is [] clea rly within the Commi ssion’s purview.” See Op. Tex. At t ’y Gen. No. GA-0401 (2006)

. After apply ing the dominant ru le s o f s ta

tu to r y c o nstruction, including g iving serious considera tion to the Commi ssion’s

rea sonable interpr etation, we c onclude that no doubt rema ins a bout the statute’s application to the wirele ss telecommunica tions connec tions sold by the Prepa id Providers. Acc ording ly , we are not authorized to use the statutory construction aid of “stricter construction” in favor of the taxpay er and
ag ainst the taxi ng authority :
[A] lthough we have applied a “stricter construction” to tax statutes in the past, we have done so only when “doubt about [ t h e statute’s] application rema ins afte r dominant rules of construction have been applied.” One of those “dominant rules of

23construction” require s us to g ive “ser ious c onsideration” to the “[c]onst ruction of a

statute by the administrative ag ency char g ed with its enforc ement.”

First Am. Tit le Ins. Co. , 258 S.W .3d at 632 (c itations omi tted).

Nonetheles s , the P repa id Providers contend that there are a number of “procedur al

err ors” that vitiate the Commi ssion’s decision and prec lude any defe renc e to its decision. First, they

asser t that the Commi s s i o n “i m proper ly shifted the burden of proof” to the Prepaid Providers to show that section 711.0711 did not apply to them. Howeve r, the issue befor e the Commi ssion was

one of statutory const ruction, a purely leg al question that does not involve evidentiar y issues or burdens of

proof. The Commi ssion did not assume the s tatute’s applica bility and then r equire the Prepaid Providers to prove they were en t i t led to an exemption from that statute; rathe r, the Commi ssion considere d wheth er or not the Prepaid Providers’ wirele ss telecommunica tions

connec tions wer e subject to the 9-1-1 emer g ency service fee in the first instance. I n rea ching its conclusion reg arding the proper construction of the statute, the Commi ssion considere d the Prepaid Providers’ arg ument that their inability to comply with the as s es s m ent and collection provisions contained in the statute demonstrated that the leg islature intended for the service s they provided to be outside the scope of section 711.0711. But the Commi ssion did not require the Prepaid Providers
to prove that compliance was impossibl e in order to av o i d ap p l i ca tion of the statute. The Commi ssion’s conclusion that prepa id wirele ss telecommunica tions are subject to t h e 9 -1-1

emer g ency service fee in section 711.0711 resulted from its application of rules of statutory construction, not on any failure by the Prepaid Providers to provide evidenc e of any particula r fac ts.

24We also reje ct the Prepaid Providers’ bare asser tions that (1) the Commi ssion “paid substantial and undue defe renc e” to the pos itions of i ts st aff and outs ide counsel, (2) the outcome of the case was “pre deter mined,” and (3) the Commi ssion failed to provide sufficie nt analy sis to support its position, there by depriving them of due proce ss. The AL J issued a detailed proposal for decision, and the C ommissi on’s final order adopted, with some modifica tions, the AL J ’s findi ng s of fac t and conclusions of law. The proposal for decision and final order re fl ec t a balanc ed considerat i o n of t he arg uments advanc ed by both parties and supply sufficie nt analy sis to support the Commi ssion’s con clusion, a conclusion that this Court too has rea ched afte r conducting a de novo revie w of the district c ourt’s orde r. Althoug h the Prepaid Providers disag ree with the result, the Commi ssion explained the rationale for the decision it rea ched afte r providing the parties notice and an opportunity to be hear d at a meaning ful time and in a meaning ful manner . See Mat h ew s v. Eldridge , 424 U.S. 319, 333 (1976).

Finally , the Prepaid Providers asser t that the Commi ssion’s decision apply in g s ection
771.0711 to t h e wi re less telecommunica tions connec tions of their customers violates the Texas Constit ution’s g uara

ntee of equal and uniform taxation, see Tex. Const. art. VI I I , § 1, beca use it eff ectively require s them to “shoulder the bur den of pa y ing the ir users’ e911 fe e amounts bec ause they cannot collect the fee in compliance with § 771.073(a) .” Although the Prepaid Providers have
arg ued that, beca

use of their prepa id business model, they cou l d n o t comply with the statutory provisions presc ribing the manner of assessing and collecting the 9-1-1 emer g ency service fee , the

reco rd d o es not show that they wer e unable to collect the fee from their users. Nor did the Commi ssion “sing le[] out Trac Fone and Virg in Mobile as the only prepa id wirele ss rese llers subject

25to the e911 fee during the refund period.” This proce eding was initiated by the P repa id Providers when they soug ht a ref

und of taxes they had voluntarily paid the Comptroller. The contested- case hear ing arose out of the Comptroller’s and the Commi ssion’s eff orts to resolve t he Prepaid
Pro v i d er s ’ cl aim s for a tax ref und, not out of the Comptroller’s or the Commi ssion’s attempts to selec tively

apply or enf orce a tax statute ag ainst cer tain providers.
For the fore g oing rea sons, we hold that health and safe ty co d e s ec t ion 771.0711 applies to the wirele ss telecommunica ti o n s connec tions the Prepaid Providers provide to their customer s.

CONCLUSION

We reve rse the district court’s judgme nt and rende r judgme nt that Texas Hea lth and Safety Code section 771.0711 applies to the prepa id wirele ss telecommunica tions connec tions that
Trac Fone and Virg in Mobile provide to their customer s.

__________________________________________ J . Woodfin J ones, Chief Just ice
Be fore Chief J ustice Jones, J ustices Henson a nd Goodwin
Reverse d and Rende red Filed: May

5, 2011

26