MAINE	SUPREME	JUDICIAL	COURT Reporter	of	Decisions Decision: 2017 ME 204 Docket: BCD

- 17

- 15 Argued : September	12 ,	2017 Decided: October	10,	2017
Panel: SAUFLEY	C.J.,	and ALEXANDER,	MEAD,	GORMAN,	JABAR,	HJELM,	and	HUMPHREY,	JJ.

STATE	OF	MAINE	et	al.

v. BIDDEFORD	INTERNET	CORPORATION

ALEXANDER,	J. [¶1] Biddeford	 Internet	 Corporation,	 doing	 business	 as	 Great	 Works Internet	(GWI),	appeal s ,	and	the	State	of	Maine	and the ConnectME	Authority

cross - appeal,	 from	 an	 amended	 judgme nt	 entered	 in	 the	 B usiness	 and
Consumer	D ocket	( Horton,	J. )	awarding	the	State	and	the	Authority	$406,852 in	unpaid	fees pursuant	to 35

- A	M.R.S

. §	9216	(2014 )

. 1 On	appeal,	all	parties
argue that	 the	 court	 erred	 by	 concluding	 that	 the section	 9216 assessment

was a valid business	excise	tax.		GWI	contends	that the assessment constitutes
either	an	invalid	business	excise	tax	or	an	unco nstitutional	property	tax.		T he

1 Title	 35

- A	 M.R.S.	 §	 9216	 was	 enacted	 by	 P.L.	 2009,	 ch.	 612, § 10	 ( emergency, effective Apr. 6, 2010) (codified	 at 35

- A	M.R.S.	 §	 9216	 (2014)) ,	 and	 has since	 been amended	 by	 P.L.	 2015, ch. 151, §§ 1

- 2 , and	ch.	284,	§	10 (effective Oct. 15, 2015) (codified	at	35

- A	M.R.S.	§	9216	(2016))

. Unless	otherwise	noted,	r eferences to	section	9216 in	 this	opinion	are	 to	 the statute as	originally enacted	and in	effect from	Ap ril	6,	2010 , to	October	14,	2015.2 State	and	the	Authority	contend	that the	assessment	is	not	a	tax but	rather	a
fee. 2 We	agree	with	the	State an d	the	Authority that	the	Legislature properly
characterized this	assessment	as	a	 fee,	and ,	with	 that	clarification, we	affirm the	judgment.
I.		CASE	HISTORY [¶2 ] After	a non - jury trial,	the	court	made	the	following	findings,	which are	supported	by	competent	evidence	in	the	record. [¶3 ] The	Legislature	established	the	Authority “ to	stimulate	investment in	 advanced	 communications	 technology	 infrastructure ” and	 to	 expand	 the
availab ility of	broadband	service	in	unserved	or	underserved	areas	in	Maine

. P.L.	2005,	ch.	665,	§	3	(effective	Aug.	23,	2006)	(codified	at	35

- A	M.R.S.	§ 9203 (2014 ) ) ; see	also 35

- A	M.R.S.	§ §	9202,	9202

- A ,	9204 (2014). 3 [¶4 ] In	 2009,	 private	 telecommunications	 service	 providers	 began meeting	with	representatives	of	the	State,	including	the	Authority,	to	address the	 lack	 of	 broadband	 capacity	 in	 Maine. Broadband	 involves	 the

2 The parties	 make	 additional	 argume nts	 in	 their	 appeals.	 	 GWI challenges	 the	 court’s determination	that	the	State	and	the	Authority	had	standing	to	bring	an	action	to	collect	the	unpaid fees	and argues that	section	9216	violates	its	rights	to	due	process	and equal	protection. The	State contends	 that	 GWI	lacks	 standing	 to	 assert	its	 equal	 protection	 claim.	 	We	 are	 not	 persuaded	 by these arguments	and	do	not	address	them	further.

3 T hese	 statutes	 have since	 been amended ,	 or	 repealed	 and	 replaced, by P.L.	 2015, ch.	 284, §§ 2

- 7 (effective	Oct.	15,	2015)	(codified	at	35

- A	M.R.S. § 9202	to	9204

- A (2016) )

.3 transmission	 of	 data

— generally	 associated	 with	 the i nternet

— through	 both fiber	optic	and	digital	subscriber	line	 (DSL)	 technology,	among	other	means. Fiber	 optic	 transmission	is	 currently	 the	 fastest	means	 of	 data	 transmission and	 is	 accomplished	 via optical	 fiber cable,	 which	 is	 essentially	 a	 group	 of pla stic	or	glass	strands	that	can carry light pulses to	transmit	data.		The	term “dark	 fiber”	applies	to	the	unlit	 fiber	optic	strands within	a	cable .		Dark	 fiber providers	 lease	 or	 sell	 strands	 of	 dark	 fiber	 to	 telecommunications	 service providers	 who	 then	 u se ,	 “light,” the	 strands	 to	 transmit	 data for their

customers. [¶5 ] During	the meetings involving	the	State,	the	Authority,	and	private telecommunications	 service	 providers , an	 initiative,	 called the	 “Three	 Ring
Binder , ” was	 developed	 to	 serve	 as	 a	 new	 ro ute	 for	 fiber	 optic	 cable	 in
unserved	and	underserved	areas. The	purpose of	the	project	was	to	put	dark
fiber	in	areas	where	t here	was	no	dark	fiber	at	all. [¶6 ] GWI,	 one	 of	 the telecommunications service	 providers	 that participated	 in	 the	 meetings,	 app lied	 for	 a	 federal	 grant	 to	 subsidize construction	of	the	Three	Ring	Binder.		The	application	required	GWI	to	assign the	 project	 to	 a	 new	 entity,	 Maine	 Fiber Company ,	 Inc. ,	 that	 would	 own	 the Three	Ring	Binder	and	be	responsible	for its	construction .		Main e	Fiber	would4 make	 the	Three	Ring	Binder	available	 on	an	 “open	access”	 basis	 so	 that	any telecommunications	 service	 provider	 could	 purchase	 or	 lease	 dark	 fiber	 to
extend	service	to	its	resi dential	or	business	customers. [¶7 ] The	 grant	 was	 approved	 in	 Dece mber	 2009	 in	 the	 amount	 of $25,402,904. 4 The	 grant	 required	 GWI	 to	 transfer	 the	 right	 to	 receive	 the funds	 to	 Maine	 Fiber	 and	 required Maine	 Fiber	 to	 complete construction	 of the	Three	Ring	Binder	within	three	years.		Maine	Fiber	now	holds	title	to	the
Th ree	 Ring	 Binder,	 which	 was	 completed	 in	 2012,	 and	 is	 a	 “dark	 fiber provider”	 within	 the	 meaning	 of 35

- A	 M.R.S. § 102(4

- A) (2014)	 and	 section
9216. [¶8 ] When	Maine	F iber	was	created, it	lacked	legal	authority	to	attach dark	 fiber	 and	 equipment	 to	 utility	 p oles	 that	were	 owned	 by	 other	 entities and	to	construct	the	Three	Ring	Binder	within	public	rights	of	way.		Because
of	 the narrow timeline	 for	 completion	 of	 the	 project,	 emergency	 legislation was	introduced	 to	 provide	Maine	 Fiber	 the	 necessary	 authority	 to	 build	 the Three	Ring	Binder. See L .D. 1778 (124th	Legis.	2009). [¶9 ] I n	February	2010,	 the	Legislature	held	a	public	hearing at	which GWI,	Maine	Fiber,	and	the	Authority	testified	in	favor	of	L

. D

. 1778. FairPoint

4 The	grant	provided eighty	percent of	the	cost	for	construction	but	required	a twenty	percent match	from	p rivate	individuals	or	entities.5 Communications ,	 the	largest	 provider	 of	 dark	 fiber	and	 telephone	 service	in Maine,	 opposed	 the	 legislation , asserting that	 the	 Three Ring	 Binder	 would
overbuild the ex isting	 network.	 	 A	 working	 group	 was	 formed	 to	 reach	 a compromise	that	wou ld	be	agreeable	to	both	sides. [¶1 0 ] The	 resulting	 compromise	 granted	 pole	 attachment	 rights	 and the	 right	 to	 construct	 within the public	 right s of	 way to	 Maine	 Fiber	 and
authorized a dedicated broadband	 sustainability	 fund ,	 supported	 by a b roadband s ustainability f ee	 (BSF)	 to	 be	 collected	 from	 us ers	 of	 the	 Three Ring	Binder

. The	purpose	of	the	BSF	was	two

- fold: to	support	improvements to	 expand	 broadba nd	 access,	 and	 to	 reduce	 the	 competitive	 advantage	 to those	 utilizing	 federally	 supported	 dark	 fiber	 over	 those	who	 had	 expanded
broadband and	dark	fiber access	using	private	resources. Although	GWI	was not	part	of	the	working	group,	it	did	not	oppose	the agreement	reached. [¶1 1 ] The	Legislature	amended	L

. D

. 1778,	which	was	later codified	at
35

- A	 M.R.S.	 § 9216. See House Amend. B to C omm.	 Amend.	 A	 to	 L.D.	 1778,
No. H

- 807	(124th	Legis.	2009). [¶1 2 ] Section	 9216(2)	 imposed	 the	 BSF	 on	 any	 entity	 that leased, purchased,	or	otherwise	obtained	 federally	supported	dark	 fiber	 from	Maine
Fiber. See 35

- A	M.R.S.	§	102(4

- B)	(2014). Maine	Fiber	was	required	to	collect6 the	 BSF	 from	 those	 entities	 and	 to	 remit	 the	 collected	 amounts	 to	 the Authority. Id. §	9216( 3). T he	Authority	was	required	to	deposit	five	percent
of	the	fun ds	received	into	the	ConnectME	F un d, which	was	used	to	support	its
activities pursuant	 to	 sections	 9204	 and	 9216

. Id. §	 9216(4)(A)

. The remaining	 ninety

- five	 percent	 was	 deposited	 into	 the b roadband sustainability	fund

. Id. §	9216(4)(B ). Pursuant	to	the	statute,	certain	carriers, including	 FairPoint,	 received	 a right	 of	 first	 refusal	 to	 use the b roadband sustainability	 fund to	 financ e	 the	deployment	of	broadband	infrastructure	in unserved	 or	 underserved	 areas	 within	 the	 carrier’s	 service	 territory

. Id. § 9216(6). Any	 remaining	 money	 in	 the b roadband	 sustainability	 fund was then	tran sferred	to	the	ConnectME	Fund. Id. [¶1 3 ] In	 2015,	 the	 Legislature	 repealed	 the statute	 creating	 the BSF,
which	 otherwise	would	 have expired	 on	December	 31, 2017. See P.L.	 2015, ch.	 151,	 § § 1

- 2 (effective	 Oct. 15,	 2015) (codified	 at 35

- A	 M.R.S.	 § 9216 (2016))

. [¶1 4 ] Since	2010,	GWI	has	accessed and	utilized	dark	fiber	in	the	Three Ring	Binder. The	 terms	under	which	Maine	Fiber	granted	GWI	access	 to	 the Three	 Ring	 Binder	 were	 stated in	 a	 series	 of	 Dark	 Fiber	 Use	 Agreements (DFUA s ). In the	parties’	original	DFUA,	GWI	expressly	agreed	that	it	“sha ll	be7 responsible	for	any	taxes	or	fees	.	.	.	including	.	.	.	the	‘broadband	sustainability
fee.’” Although	 GWI	 and	Maine	 Fiber	 amended	 the	 DFUA	 several	 times and
later	entered	into a Dark	Fiber	Use	and	Settlement	Agreement ,	 the	provision regarding	GWI’s responsibility	for	paying	any	taxes	or	fees,	inclu ding	the	BSF,
remained	intact. [¶1 5 ] From	approximately	May	2010	until	May	2012, while	 the	Three Ring	 Binder	 was	 being	 constructed, GWI	 paid approximately	 $15,000 of the
BSF	to	Maine	Fiber .		GWI then	stopped	paying	the	BSF	but did	not	reduce	the fees	 charged	 to	 its	 customers	 to	 reflect	 the	 amount it saved	 by the nonpayment	of	the	BSF.		Calculated	from	when	GWI	stopped	payin g	the	BSF	in June	2012	until	the	statute’s repeal	in	October	2015,	the	tot al	amount	of fees
collected	but not	paid	by	GWI was	$406,852. 5 [¶1 6 ] On	 September	 9 ,	 2014,	 the State	 and	 the Authority	 filed	 a complaint	against	GWI	in the Superior	Court	(Kennebec	County) to collect the unpaid fee s.	 	 The	 case	 was	 subsequently	 transferred to	 the	 Business	 and
Consumer	Docket.		The	court held	a non - jury trial	on	April	27

- 28,	2016. [¶1 7 ] By	a	judgment	entered	on	October	5,	2016,	the	court	awarded	the
State	and	the	Authori ty	$406,852	in	unpaid	fees, concluding	that the	State	and

5 Maine	 Fiber billed the	 BSF	 to	 every	 entity

— approximately	 two dozen	 broadband	 service providers

— that	 purchased,	 leased,	 or	 licensed dark	 fiber from	 Maine	 Fiber	 as	 required	 by	 the statute ,	but	GWI	was	the	only	entity	that	did	not	pay	the	BSF	as	required

.8 the	 Authority	 had	 standing	 to	 sue	 GWI	 directly,	 that section 9216	 did	 not violate	 GWI’s	 constitutional	 rights	 to	 due process	 and	 equal	 protection, and
that	the	B SF	was	a	valid	business	excise	tax	rather	than	a fee. [¶1 8 ] GWI	 timely	 filed	 motions	 for	 addit ional	 findings	 of	 fact	 and	 to alter	or	amend	the	judgment. See M.R.	Civ.	P.	52(b),	59(e). After	a	hearing,	the court	issued	an	amended	decision	and	judgment,	but	otherwise	denied	GWI’s motions.		GWI	appealed,	and	the	State	and the	Authority	cross

- appeale d. [¶1 9 ] GWI	 argues	 that,	 while	 the	 court	 correctly	 determined	 that	 the BSF	is	a	 tax	rather	 than	a	 fee,	 the	court	erred	in	concluding	 that	 the	BSF	is	a valid	business	excise	tax	rather	than	a	property	tax	that	violates	Me.	Const.	art IX,	 § 8.		The	State	and	 the	Aut hority agree	with the	court’s	award,	but	argue that	the	court	erred	in	concluding	that	the	B SF	is	a	tax	rather	than	a	fee.
II.		LEGAL	ANALYSIS [¶20 ] We	 review questions	 of	 law de	 novo. Blue	 Yonder,	 LLC	 v.
State Tax Assessor ,	2011	ME	49,	¶	7,	17	A.3d	667

. “Because	both	a	 fee	and	a tax	raise	monies	for	governmental	use,	the	distinction	between	the	two	is	one of	 purpose	 and	 of	 degree	 of	 particularity.” Butler	 v.	 Supreme	Judicial	 Court , 611 A.2d	987,	990	(Me.	1992)

. When determining	whether	an	assessment	is	a fee	or	a	 tax, we	consider four	 factors: (1)	whether	 the	primary	purpose	is	 to9
raise	 revenue or to	 further	 regulatory	 goals , (2)	 whether	 the	 assessment	 is paid	in	exchange	 for	benefits	not	received	by	the	general	p ubl ic, (3)	whet her the	 assessment	 is	 voluntary, and	 (4)	 whether	 the	 assessment	 is	 a	 fair approximation	of	 the	cost	 to	 the	government	and of the	benefit	 to	 the party

. See	 i d. ; City	 of	 Lewiston	 v.	 Gladu, 2012	 ME	 42 , ¶ ¶	 12

- 26 ,	 40 A.3d	 964

. In
review ing	an assessment ,	we	will	respect	the	Legislature’s	characterization	of an	assessment,	unless	that	characterization	is	inconsistent	with	the	law. [¶ 2 1] Regarding	 the	 first	 factor, we	 have	 recognized	 that	 fees	 can	 be
used	 to	 fund the	 construction	 of capital	 imp rovements	 and	 infrastructure when	 that	 construction	 supports	 recognized	 regulatory	 goals

. See Gladu , 2012 ME 42,	 ¶¶ 15

- 16 ,	 40 A.3d	 964. Here, section 9216	 required that ninety

- five	percent	of	the	BSFs remitted	to	the	Authority	be	deposited	into	the
b roadband	sustainability	 fund to	support	 the	regulatory	goal	of	expansion of
broadband	infrastructure	in to unserved	and	underserved	areas. Thus,	nearly
all	 of	 the	 collected	 fees	 were us ed to further	 the specific regulatory goals
defined in section 9202

- A and to	carry	out	the	Authority’ s regulatory duties as defined	in	section 9204 (2)

. [¶22 ] A s	to the	second	factor, the	BSF provided both dire c t	and	indirect
benefits to	 GWI	 as	 a	 user	 of the	 Three	 Ring	 Binder. Th e	 expan sion	 of10 broadband	 infrastructure	 funded	 by the	 BSF benefitted GWI	 by	 providing

access	 to more	 potential	 customers of	 its service s
. See Gladu, 2012 ME	 42 , ¶ 12 ,	 40	 A.3d	 964 (“[A]lthough	 some jurisdictions have	 held	 that	 benefits
must	 be	 direct	 and	 exclusive [,] the	 trend	 seems	 to	 be	 in	 favor	 of	 upholding fees	that	confer	intangible	benefits	on	both	those	who	are	assessed	and those who	are	not.”	(alteration omitted))

. Furthermore,	GWI	requested	and Maine
Fiber agreed	to build	the	initial	segments	of	the	Three	Ri ng	Binder	in	locations that	 would	 benefit	 GWI’s	 important	 commercial	 customers

— a	 request th at uniquely	benefited	GWI

. [¶23 ] Turning	 to	 the	 third	 factor,	we observed	in Butler that	 fees	 are voluntary	 “in	 the	sense	 that	an	individual	may	avoid	 the	charge	by	choosing
not	to	utilize	the	service.”		611	A.2d at 990. In Gladu ,	w e also	stated that “[t]he fact	 that	 the	costs	of	avoiding	 [an]	assessment	are	quite	high	does	not	make
the assessment	involuntary.”		2012	ME	42,	¶ 23,	40	A.3d	964. Here,	the	Three Ring	Binder	was	available on	an	open	access	basis,	and	GWI’s decision	to	use
it was voluntary. [¶24 ]		Finally, an	assessment	need be	only	a	“fair	approximation”	of	the respective	co st to	the	government or the benefit to	the	party to	be	considered
a	 fee. Id. ¶ 24. Here, only five	 percent	 of	 the	 collected	 fees	 were	 used	 to11 defray the costs incurred	by	the	Authority	in implementing	section	9216 , but
in	 return	GWI and	its	 customers received	 significant tangible	 and	intan gible
benefits from	the	BSF

. [¶25 ] After evaluating all four factors , we conclude that the Legislature properly characterized the BSF a s a fee and not a tax. Accordingly, the arguments advanced by GWI asserting that the BSF is a tax fail, as do GWI’s arguments that there is some inequity in utilizing the BSF to support further
broadband expansion and to level the playing field with providers that have supported broadband expansion with their own and their customers’

resources rather than relying on the federal subsidy. Although the trial court erred in concluding that the assessment was a tax, the error is harmless
because , whatever the assessment may be called, GWI is required to pay it

. Therefore, after recognizing that the assessment is a fee, we affirm the
decision of the Superior Court awarding the State and the Authority $406,852 in	unpaid	fees ,	plus	interest	and	cost s
. The	entry	is: Judgment	affirmed.12 David	P.	Silk,	Esq.,	Benjamin	M.	Leoni,	Esq. (orally) ,	and	Rebecca	Gray	Klotzle, Esq.,	 Curtis	 Thaxter	 LLC,	 Portland,	 for	 appellant	 Biddeford	 Internet Corporation Janet	 T.	 Mills,	 Attorney	 General,	 and	 Thomas	 A. Knowlton,	 Asst.	 Atty.	 Gen. (orally) ,	Office	of	 the	Attorne y	General,	Augusta,	 for	cross

- appellants State	of Maine and	ConnectME	Authority

Business	and	Consumer	Docket	docket	number	CV

- 2014

- 56 F OR C LERK R EFERENCE O NLY