Court Opinion

ID: 9367839
Source: CourtListenerOpinion
Date Created: 2023-02-01 22:03:29.216506+00
Date Added: 2024-06-11T17:16:03.692373
License: Public Domain

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     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
            SECOND APPELLATE DISTRICT
                   DIVISION FOUR

   SECURUS TECHNOLOGIES,                                        B320207
   LLC,
                                                                Commission Decision No.
             Petitioner,                                        21-08-037
             v.

   PUBLIC UTILITIES
   COMMISION,

             Respondent;

   THE UTILITY REFORM
   NETWORK et al.,

          Real Parties in Interest.

       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.
                            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.)

                                   2
                         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.

                                 3
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.

                                  4
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.

                                 5
       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.

                                 6
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.

                                  7
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

                                  8
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 per-
minute-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.

                                  9
       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.”

                                10
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.

                                  11
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

                                 12
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.”

                               13
      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

                                  14
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.

                                15
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

                                16
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

                                  17
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

                                 18
[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)

                                19
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

                                20
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

                                21
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.)

                                  22
                  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

                                23
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 CDCR-
GTL 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 . . .

                                  24
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[.]”

                                 25
       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.

                                 26
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.

                                27
       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.”

                                 28
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

                                29
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

                                 30
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].)

                                31
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

                                 32
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.)

                                 33
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

                                34
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

                                35
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

                                36
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.”

                                  37
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

                                 38
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)

                                 39
“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

                                40
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

                                 41
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.)

                                  42
                         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.

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