TITLE 16.ECONOMIC REGULATION

Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

Subchapter R. CUSTOMER PROTECTION RULES FOR RETAIL ELECTRIC SERVICE

The Public Utility Commission of Texas (commission) adopts the repeal of §25.484, relating to Do Not Call List, and new §25.484, relating to the Texas Electric No-Call List with changes to the proposed text as published in the April 5, 2002 Texas Register (27 TexReg 2671). The rule implements provisions of House Bill 472 (HB 472), 77th Legislature, later codified as the Texas Business and Commerce Code Annotated §43.103 (Bus. & Com. Code) (Vernon 1998 & Supplement 2002) relating to Rules, Customer Information, Isolated Violation. The new section also implements the Public Utility Regulatory Act, Texas Utilities Code Annotated (Vernon 1998 & Supplement 2002) (PURA) §39.1025, relating to Limitations on Telephone Solicitation. This new section is adopted under Project Number 24376.

The creation of the Texas electric no-call list assists electricity customers in limiting the number of telemarketing calls received relating to a customer's choice of retail electric providers (REPs). This rule prescribes how customers will be notified of the availability of the Texas electric no-call list, the procedures for disseminating the list to REPs, and violations of this section. As provided in the Bus. & Com. Code §43.101 relating to Commission to Establish Texas No-call Lists, the state has contracted with a private vendor to maintain and administer the Texas electric no-call database. The no-call program is self-funding in that costs of the vendor contract will be offset by the fees paid by customers to register for the list and telemarketers to subscribe to the list.

After the proposed repeal and new rule were published in the Texas Register , the commission received written comments from the following: the affiliated retail electric providers of American Electric Power Company, Inc. - CPL Retail Energy, WTU Retail Energy, and AEP Retail Energy (AEP REPs); Entergy Solutions Select Ltd., Entergy Solutions Essentials Ltd, and Entergy Solutions Ltd. (Entergy REPs); the Office of Public Utility Counsel (OPC); Reliant Resources, Incorporated (RRI); and TXU Energy Retail Company LP (TXU Energy).

A public hearing on the proposed section was held at commission offices on May 6, 2002 at 1:30 p.m. Representatives from AT&T Communications of Texas, L.P. (AT&T), MCI Worldcom, Inc. (MCI), OPC, the State of Texas - Office of the Attorney General (OAG), Southwestern Bell Telephone Company (SWBT), and TXU Energy attended the hearing and provided comments. To the extent that these comments differ from the submitted written comments, such comments are summarized herein.

General comments

Entergy REPs and OPC indicated they generally support the adoption of the proposed rules. RRI suggested minor changes throughout the rule in order to harmonize the provisions in this section with the provision in §26.37, Texas no-call list. RRI also maintained that the changes would clarify that the Texas no-call list and the Texas electric no-call list are two different lists and are based on two different databases. In general RRI suggested changes such as adding "Texas" before the terms electric no-call database and electric no-call registrant (formerly electric no-call subscriber).

The commission disagrees that adding the word "Texas" before the terms electric no-call database and electric no-call registrant serves to enhance the distinction between the two rules and declines to make that particular change. The rules relating to the Texas no-call list and the Texas electric no-call list are in separate chapters of the commission's substantive rules, and are therefore clearly distinguishable. Furthermore, the definitions contained in subsection (c) of each section clearly distinguish the lists and databases from one another. Accordingly, the commission declines to make the clarifying changes suggested by RRI.

Specific comments to the rule language

Subsection (c) contains definitions of terms used in this rule. TXU Energy asserted that the definition of "established business relationship," as proposed, implies that consumer business relationships are developed only through personal contacts or face-to-face meetings and fails to recognize relationships developed by mail, facsimile or over the Internet. TXU suggested deleting the phrase "between a person and a consumer" in subsection (c)(5). In its reply comments, OPC indicated that it did not find the phrase confusing, and emphasized that the definitions of "person" in the commission's substantive rules (§25.5(42) and §26.5(153), relating to Definitions) are not limited to a natural person. MCI indicated that the definition of person in the substantive rules appears to resolve TXU Energy's concern.

The commission agrees with the reply comments of OPC and MCI and declines to alter the definition of "established business relationship." The definition is neither confusing nor restrictive in the manner purported by TXU Energy.

OPC proposed altering the definition of "telephone call" by adding the phrase "but not limited to" after the word "including." OPC contended that by doing so, the rule would clearly pertain to any other types of telephone contact made with future technological advances.

The commission agrees that the clarification proposed by OPC will better reflect the commission's intent with respect to potential technological advances not specifically contemplated in the rule, and adopts the recommended language.

Subsection (d), relating to the requirement of REPs, establishes the required time frame within which REPs must remove newly-registered telephone numbers on the electric no-call list from their internal telemarketing call lists. Entergy REPs, RRI, AEP REPs and TXU Energy generally disagreed with the time limit of five days set in the proposed rule and indicated it would be difficult to comply. The commenters indicated that the amount of time should be consistent with §26.37, relating to Texas No-Call List, which provides a 60-day grace period for telemarketers. Entergy REPs and RRI asserted that harmonizing this requirement in the two rules is especially important given that REPs will be subject to both rules. They stated that there is no reason that REPs engaged in telemarketing should be held to a harsher standard than other telemarketers. AEP REPs further indicated that incorporating the same timeframe will eliminate unnecessary confusion; thereby facilitating compliance with both rules. RRI suggested the commission distinguish between business or calendar days. In its reply comments, OPC indicated it opposed any additional time allowance.

In former §25.484 relating to Do Not Call List, REPs were required to remove customer names within five calendar days. The Bus. & Com. Code §43.102 relating to Telemarketing of Persons on Texas No-Call List; Enforcement; Penalties, specifically indicates that a telemarketer may not make a telemarketing call to a telephone number that has been published on the Texas no-call list more than 60 days after the telephone number appears on the then-current list. However, PURA §39.1025 does not specify a time limit after which REPs can no longer make telemarketing calls to electric no-call registrants. Therefore, to maintain consistency between proposed §25.484 and proposed §26.37, the commission adopts the suggested revision. The commission also adopts RRI's recommendation by specifying calendar days.

Entergy REPs, RRI, AEP REPs and TXU Energy recommended clarifying the precise date triggering the 60-day, formerly five-day, compliance period addressed in subsection (d). The commenters contended that as proposed, it is unclear as to whether the 60-day compliance period starts when a customer registers a telephone number on the electric no-call list or when the telephone number is published on the list. AEP REPs recommended that the commission clarify that the 60-day compliance period begins after the REP receives the most recent version of the list from the database administrator. RRI suggested that the addition of the word "published" would help clarify this provision.

The commission makes the requested clarification, but disagrees that the 60-day compliance period begins after the REP receives the most recent version of the list from the commission. Such wording implies that the 60-day compliance period would not begin until the REP took the time to obtain the quarterly published list, and would seriously complicate the enforcement process. As noted above, the Bus. & Com. Code §43.102 clearly references a telephone number that has been "published" on the list.

Subsection (e) relating to exemptions excludes certain types of telephone calls from the requirements of this section. In its written comments, TXU Energy suggested that the introductory phrase "In response to a call" be added to subsection (e)(1). TXU Energy contended that the added language is necessary to clarify that telemarketing calls made by a REP at the request of an individual is not a violation of this section even if that individual's telephone number appears on the electric no-call list. Likewise, AEP REPs suggested adding similar language that would accomplish the same result. AEP REPs contend that a telephone call made by the REP responding to a request by an electric no-call registrant would be reasonable, consistent with the requestor's wishes, and not a violation of this section.

The commission disagrees with TXU Energy's characterization that its suggested language does not alter the meaning of the rule. The rule, as published, and in full accord with the enabling statute, specifically refers to a call made by a customer. Furthermore, the definition of telemarketing call specifically references an unsolicited telephone call. The commission is not persuaded that the additional exemption is necessary or serves any clarifying purpose.

TXU Energy also recommended adding a new subsection (e)(4), allowing a REP acting as a telemarketer to call a business, unless the business has previously informed the REP that it does not wish to receive such calls. TXU Energy asserted that the change would be consistent with the language in proposed §26.37(e)(3) relating to exemptions to the Texas No-Call List.

The original legislative authority for placing limitations on telephone solicitation related to a customer's choice of REPs was Senate Bill 7 (SB 7) passed by the 76th legislature. SB 7 was later codified as PURA §39.1025. The statute prohibits the telephone solicitation of an electricity "customer" who has previously advised the commission that he/she does not wish to receive such solicitations. While HB 472 created the general no-call list and specifically exempted business customers from being placed on the list, PURA §39.1025 did not. The commission declines to narrow the scope of applicable customers able to register for the electric no-call database. Pursuant to PURA §39.1025, any customer, residential or business, who objects to receiving telemarketing calls from REPs shall have the opportunity to register for the electric no-call list.

Subsection (f) outlines when the electric no-call list will be updated and published by the administrator. TXU Energy suggested that in subsection (f)(2)(A) the commission should clarify that the administrator must update and publish the "entire" Texas electric no-call list, not merely the most recent additions. TXU Energy asserted that publication of the entire list would lessen the possibility of error when a REP is updating its list. In addition, TXU Energy requested a provision requiring the administrator of the electric no-call database to alert subscribing REPs, via electronic mail, when the updated list is available in order to expedite REP access to the electric no-call list and the updating of REPs' call lists.

TXU Energy also recommended adding new language that clarifies that REPs have 60 days from the publication date to acquire the updated list and incorporate the information into their internal telemarketing databases. Entergy REPs asserted that the electronic internet address for the Texas electric no-call list should be added in order to ease the process of acquiring the electric no-call list for new REPs entering the market.

The commission adopts TXU Energy's suggestion regarding adding the word "entire" to subsection (f)(2)(A). Publication and distribution of the entire electric no-call list each quarter will avoid any variations in the number of names contained on the lists received by subscribing REPs. This precautionary measure will assist in preventing any unintended omissions at the distribution phase. The commission finds that the 60-day compliance period is adequately explained in subsection (d) and declines to reiterate the requirement elsewhere in the rule. Regarding the suggestion that the rule should recite the Internet address for the electric no-call list, the commission disagrees that such information is appropriate for inclusion in the rule. REPs entering the Texas market are likely to obtain §25.484 and other relevant material from the commission's own website, which also prominently displays the current contact information for the no-call lists. While the commission does not anticipate that this contact information will change frequently, it is a matter of prudent resource planning to avoid including in a rule information that is subject to change and is generally available elsewhere. Similarly, the commission declines to require that the database administrator alert subscribing REPs via electronic mail whenever the list has been updated and is available to REPs. The statute prescribes specific dates for publication and distribution of the electric no-call list. The commission finds that placing an added responsibility upon the administrator when the time frame has already been clearly set serves no beneficial purpose.

In order to clarify a potential misinterpretation regarding the intended uses of the electric no- call database, the commission adds clarifying language to subsection (f)(3)(A). The added language clarifies that a subscribing REP cannot share a purchased electric no-call list with its affiliates. Instead, each affiliate of a parent company that chooses to make telemarketing calls to Texas electric customers must purchase the list; just as each customer that wishes to register more than one telephone number must pay a registration fee for each number. However, the commission notes that this does not preclude a parent company from purchasing numerous copies of the electric no-call list and then disbursing the lists to its affiliates, as long as each affiliate has separately subscribed to, and paid the appropriate fee for, the Texas electric no-call list and agrees to comply with the requirements of this section. The commission also makes other minor clarifications to this subsection.

Subsection (g) relating to notice outlines the requirements for the customer notice provided by REPs. Entergy REPs contended that the notice requirements proposed are burdensome and will cause REPs to incur unnecessary costs. Energy REPs indicated that the only information that should be provided to the customer is the contact information for registration. RRI asserted that the amount of information required for the notice will not fit in the space allowed in a bill message, which is typically limited to three lines of text.

AEP REPs proposed adding clarifying language to subsection (g)(1)(B) by adding the words "from Retail Electric Providers" to the end of the sentence. AEP REPs asserted that the added language is important so that customers are not misled to believe that registering for the electric no-call list will put an end to all telemarketing calls. OPC agreed with the clarification but proposed slightly different language.

RRI also suggested additional language to subsection (g)(1) in order to inform an electric customer how to remove a telephone number from the Texas Electric No-Call List and that a telephone number may be automatically removed if that number changes. OPC also supported this addition.

The commission accepts AEP REPs and OPC's suggested clarification, but notes that subsection (g)(1)(H) is also specifically targeted to alert registrants to the fact that registering for the electric no-call list may not stop other telemarketing calls. The commission rejects RRI's suggested language regarding Internet information because the addition is not necessary to a customer's initial decision to register for the electric no-call list.

Subsection (g)(2) addressed publication of the notice. RRI raised several questions regarding the intent of the proposed provisions and suggested reorganizing the information for the sake of clarity.

Entergy REPs contend that REPs are already required to distribute the Your Rights as a Customer disclosure annually. REPs electing to provide notification of the Texas electric no-call list to customers in the Your Rights as a Customer disclosure should not be required to provide additional notice.

TXU Energy recommended adding clarifying language outlining that if a REP chooses to include notice in either the Terms of Service document or Your Rights as a Customer disclosure, the notice should be distributed when those documents are normally distributed in compliance with commission rules. TXU Energy suggested the addition of an explicit statement in this subsection indicating that inclusion of the notice in the Terms of Service document does not constitute a material change to that document; thus, would not require an additional distribution. OPC objected to the latter request by TXU stating that if the change is not deemed to be a material change, then existing customers would not receive notice under this rule.

TXU Energy recommended deletion of subsection (g)(2)(B) relating to annual notice to individual customers. Instead, TXU Energy recommended allowing notice via the Terms of Service document, which would be given to all new customers and to all current customers whenever a material change in terms or conditions of service occurs; and in the Your Rights as a Customer document, which would be provided to new customers and annually to all customers thereafter.

OPC responded to TXU Energy's comments. OPC agreed to annual notice in the Your Rights as a Customer disclosure only if the annual notice is distributed to all of the REP's customers (as opposed to only the new customers) and the distribution occurs between June 1 and August 31 of each year. This would allow customers to be alerted to the right to register for the electric no-call list twice per year. OPC contended that because customers may be added to the electric no-call list four times per year, requiring notice twice per year is not unreasonable.

Subsection (g)(3) relates to the timing of the annual notice and requires REPs to provide such notice between June 1 and August 31 of each year, beginning in 2002. OPC recommended minor clarifying changes adding the words "each of" and "individual" to subsection (g)(3).

Entergy REPs recommended that those REPs who have previously notified or will notify customers through the Your Right as a Customer disclosure should be exempt from this specific provision.

TXU Energy asserted that customer education goals regarding the electric no-call list can be achieved without an annual bill message or insert. However, should annual notice remain a requirement, TXU Energy recommended modifying the deadline for the annual notice so that initial notification is not required until 2003. AEP REPs and TXU Energy contended that the current requirements in subsection (g)(3) and (4) pose a problem with respect to how REPs are to comply during the first year the rule is in effect. AEP REPs are concerned that the proposed time lines allow an insufficient amount of time for REPs to formulate a notice, submit it to the commission for review, and disburse it to customers. AEP REPs indicate that REPs must plan and schedule their bill messages and inserts months in advance.

Furthermore, TXU suggested and RRI supported, that instead of requiring annual notification during specific months, the rule should allow each REP to determine the month in which the notice is sent. OPC opposed this suggestion indicating it would make it more difficult to monitor REP compliance. The deletion of a uniform time for distribution would also reduce the potential for public awareness groups or the media to report on the notice and alert the public.

Regarding subsection (g)(4), Entergy REPs and TXU Energy recommended deleting the requirement regarding commission review of the notice. Entergy REPs assert that the notice requirements have been sufficiently addressed in the rule and further commission review of the notice is unnecessary. In the alternative, TXU Energy suggested that the commission might want to develop a notice template for use by REPs. TXU Energy asserted that developing a template would eliminate the time and work involved in commission staff's review of notices. OPC did not oppose the creation of a template and indicated it would actively participate in any workshop held for such purpose. However, OPC strongly opposed Entergy's suggestion of deleting the commission review requirement.

The commission agrees with the commenters that argued that objectives for customer notification can be reasonably met by requiring annual notification through each REP's Your Rights as a Customer disclosure. Because mention of the Electric No-Call List in the Your Rights as a Customer disclosure is currently required by §25.475(f)(4)(K) (relating to Information Disclosures to Residential and Small Commercial Customers), the notice requirements in proposed §25.484 would not constitute a material change to that disclosure. Given that the Your Rights as a Customer disclosure is already subject to review by the commission, a separate requirement is not necessary. The commission notes that placement of the notice required by subsection (g)(2) in a REP's Terms of Service document is also acceptable, if the REP's Your Rights as a Customer disclosure complies with §25.475(f)(4)(K).

Subsection (g)(4)(B) requires REPs to retain customer notification records and provide such records to the commission. OPC requested that the commission require REPs to provide copies of customer notification records to OPC in addition to the commission. OPC contended that such a requirement would serve to inform OPC of the status of REP compliance and highlight the level of priority afforded this issue. At the public hearing, OPC clarified its written comments and stated that OPC did not intend to suggest that it is a regulatory body, but that it is charged by the Legislature with representing the public interest of small commercial and residential customers. OPC stated that this gives it the jurisdiction to look at the notices supplied by companies to their customers. OPC further stated that allowing it to look at the notices would not place a burden on companies and that no companies have asserted that the notice information is confidential. OPC also stated that that agency would pay any copying costs associated with supporting its request. OPC stated that, if it was not allowed to view all notices, the agency would have to file open records requests for the materials and this would be administratively burdensome.

RRI objected indicating that there is no justification for the added expense and time of providing copies to OPC and that any records required by OPC are better dealt with on a case-by- case basis rather than through a general requirement.

The commission agrees with RRI and declines to implement OPC's suggested language. There is no statutory authority for requiring OPC receipt of REP customer notification records.

TXU Energy and RRI recommended adding the introductory language "Upon commission request" to subsection (g)(4)(B) in order to clarify when a REP is required to provide copies of records maintained under the requirements of this rule.

The commission finds that the language requested by TXU Energy and RRI is contained in §25.491 (relating to Record Retention and Reporting Requirements) and declines to make the recommended change.

Subsection (h) relates to violations and delineates that it is an affirmative defense to this section that a telemarketing call made to a telephone number on the Texas electric no-call list is not a violation if the telemarketing call is an isolated occurrence made by a REP who has in place adequate procedures to comply with this section. Entergy REPS generally supported the provisions in this subsection, but suggested clarifying language regarding the term "isolated occurrence." Entergy REPs explained that a situation might arise in which several telephone numbers might be called in error; therefore, the number of telephone calls made in error should not be the determining factor as to what constitutes an isolated occurrence. Entergy recommended specifying in the rule that an isolated occurrence may involve more than one incident "or separate occurrence."

The commission modifies the proposed language in subsection (h)(2)(A) to provide clarity to the meaning of isolated occurrence. The commission inserts the "separate occurrence" language suggested by Entergy REPs, but the commission deletes the word "incident" because it is not necessary to the definition. This clarifying change is also made for consistency with §26.37(h)(2)(A), relating to the Texas no-call list.

Subsection (i) relating to Enforcement and Penalties specifies commission authority for investigating alleged violations of this section. Entergy REPs proposed revising the wording to clarify that violations are "alleged."

The commission disagrees with Entergy REPs and declines to make the suggested change. The provisions of §25.485 (relating to Customer Access and Complaint Handling) apply to customer complaints regarding REP actions. The purpose of this subsection is to specify the entity responsible for enforcement actions beyond the initial complaint resolution process. The commission does, however, delete the word "exclusive" from this subsection because the word is not necessary to the meaning of the sentence.

All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purposes of clarifying its intent and consistency with proposed §26.37. For example, the commission changes the term electric no-call "subscriber" to electric no-call "registrant" to distinguish an electric no-call "registrant" as a telephone customer that has registered to be on the Texas electric no-call list, from a "subscribing REP" which denotes a REP that has "subscribed," through application and payment of fees, to receive the quarterly published electric no-call list.

16 TAC §25.484

This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §39.1025 which provides the commission with the authority to operate the no-call database and prohibits the telephone solicitation of an electricity customer who has previously advised the commission that he/she does not want to receive such solicitations. In addition, this repeal is adopted under the Texas Business & Commerce Code Annotated §43.103 (Vernon 1998 & Supplement 2002) (Bus. & Com. Code) which grants the commission the authority to adopt rules to administer the no-call list.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and §39.1025; Texas Business & Commerce Code Annotated §§43.002, 43.003, and 43.101 - 43.103.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on May 28, 2002.

TRD-200203260

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: June 17, 2002

Proposal publication date: April 5, 2002

For further information, please call: (512) 936-7308

16 TAC §25.484

This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §39.1025 which provides the commission with the authority to operate the no-call database and prohibits the telephone solicitation of an electricity customer who has previously advised the commission that he/she does not want to receive such solicitations. In addition, this repeal and new section are adopted under the Texas Business & Commerce Code Annotated §43.103 (Vernon 1998 & Supplement 2002) (Bus. & Com. Code) which grants the commission the authority to adopt rules to administer the no-call list.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and §39.1025; Texas Business & Commerce Code Annotated §§43.002, 43.003, and 43.101 - 43.103.

§25.484.Texas Electric No-Call List.

(a) Purpose. This section implements the Public Utility Regulatory Act (PURA) §39.1025, relating to Limitations on Telephone Solicitation, and the Texas Business & Commerce Code Annotated (Bus. & Com. Code) §43.103 relating to rules, customer information, and isolated violations of the Texas no-call list.

(b) Application. This section applies to retail electric providers (REPs) as defined in §25.5 of this title (relating to Definitions). A REP acting as a telemarketer, as defined by §26.37 of this title (relating to Texas No-Call List), is also subject to the provisions of §26.37 of this title.

(c) Definitions. The following words and terms, when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

(1) Consumer good or service--For purposes of this section, consumer good or service has the same meaning as Bus. & Com. Code §43.002(3) relating to Definitions.

(2) Electric no-call database--Database administered by the commission or its designee that contains the names, addresses, telephone numbers and dates of registration for all Texas electric no-call registrants. Lists or other information generated from the electric no-call database shall be deemed to be a part of the database for purposes of enforcing this section.

(3) Electric no-call list--List that is published and distributed as required by subsection (f)(2) of this section.

(4) Electric no-call registrant--A telephone customer who has registered, by application and payment of accompanying fee, for the Texas electric no-call list.

(5) Established business relationship--A prior or existing relationship that has not been terminated by either party, and that was formed by voluntary two-way communication between a person and a consumer regardless of whether consideration was exchanged, regarding consumer goods or services offered by the person.

(6) Telemarketing call--An unsolicited telephone call made to:

(A) solicit a sale of a consumer good or service;

(B) solicit an extension of credit for a consumer good or service; or,

(C) obtain information that may be used to solicit a sale of a consumer good or service or to extend credit for sale.

(7) Telephone call--A call or other transmission that is made to or received at a telephone number, including but not limited to:

(A) a call made by an automatic dial announcing device (ADAD); or,

(B) a transmission to a facsimile recording device.

(d) Requirement of REPs. A REP shall not make or cause to be made a telemarketing call to a telephone number that has been published for more than 60 calendar days on the Texas electric no-call list.

(e) Exemptions. This section shall not apply to a telephone call made:

(1) By an electric no-call registrant that is the result of a solicitation by a REP or in response to general media advertising by direct mail solicitations that clearly, conspicuously, and truthfully make all disclosures required by federal or state law;

(2) In connection with:

(A) An established business relationship; or,

(B) A business relationship that has been terminated, if the call is made before the later of:

(i) the date of publication of the first Texas electric no-call list on which the electric no-call registrant's telephone number appears; or

(ii) one year after the date of termination; or,

(3) To collect a debt.

(f) Electric no-call database.

(1) Administrator. The commission or its designee shall establish and provide for the operation of the electric no-call database.

(2) Distribution of database.

(A) Timing. Beginning on April 1, 2002, the administrator of the electric no-call database will update and publish the entire Texas electric no-call list on January 1, April 1, July 1, and October 1 of each year;

(B) Fees. The no-call electric list shall be made available to subscribing REPs for a set fee not to exceed $75 per list per quarter;

(C) Format. The commission or its designee will make the no-call list available to subscribing REPs by:

(i) electronic internet access in a downloadable format;

(ii) Compact Disk Read Only Memory (CD-ROM) format;

(iii) paper copy, if requested by the REP; and,

(iv) any other format agreed upon by the current administrator of the no- call database and the subscribing REP.

(3) Intended use of the electric no-call database and electric no-call list.

(A) The electric no-call database shall be used only for the intended purposes of creating an electric no-call list and promoting and furthering statutory mandates in accordance with PURA §39.1025 and the Bus. & Com. Code, Chapter 43 relating to Telemarketing. Neither the electric no-call database nor a published electric no-call list shall be transferred, exchanged or resold to a non-subscribing entity, group, or individual, regardless of whether compensation is exchanged.

(B) The no-call database is not open to public inspection or disclosure.

(C) The administrator shall take all necessary steps to protect the confidentiality of the no-call database and prevent access to the no-call database by unauthorized parties.

(4) Penalties for misuse of information. Improper use of the electric no-call database or a published electric no-call list by the administrator, REPs, or any other person, regardless of the method of attainment, shall be subject to administrative penalties and enforcement provisions contained in §22.246 of this title (relating to Administrative Penalties).

(g) Notice. A REP shall provide notice of the electric no-call list to its customers as specified by this subsection. In addition to the required notice, the REP may engage in other forms of customer notification.

(1) Content of notice. A REP shall provide notice in compliance with §25.473 of this title (relating to Non-English Language Requirements) that, at a minimum, clearly explains the following:

(A) Beginning January 1, 2002, customers may add their name, address and telephone number to a state-sponsored electric no-call list that is intended to limit the number of telemarketing calls received relating to the customer's choice of REPs;

(B) When a customer who registers for inclusion on the electric no-call list can expect to stop receiving telemarketing calls on behalf of a REP;

(C) A customer must pay a fee to register for the electric no-call list;

(D) Registration of a telephone number on the electric no-call list expires on the fifth anniversary of the date the number is first published on the list;

(E) Registration of a telephone number on the electric no-call list can be accomplished via the United States Postal Service, Internet, or telephonically;

(F) The customer registration fee, which cannot exceed five dollars per term, must be paid by credit card when registering online or by telephone. When registering by mail, the fee must be paid by credit card, check or money order;

(G) The toll-free telephone number, website address, and mailing address for registration; and,

(H) A customer that registers for inclusion on the electric no-call list may continue to receive calls from telemarketers other than REPs, and a statement that the customer may instead or may also register for a no-call list that is intended to limit telemarketing calls regarding consumer goods and services in general, including electric service.

(2) Publication of notice. A REP shall include notice in its Terms of Service document or Your Rights as a Customer disclosure. The notice shall be easily legible, prominently displayed and comply with the requirements listed in paragraph (1) of this subsection.

(3) Records of customer notification. A REP shall provide a copy of records maintained under the requirements of this subsection as specified by §25.491 of this title (relating to Record Retention and Reporting Requirements).

(h) Violations.

(1) Separate occurrence. Each telemarketing call to a telephone number on the electric no-call list shall be deemed a separate occurrence.

(2) Isolated occurrence. A telemarketing call made to a number on the electric no-call list is not a violation of this section if the telemarketing call is determined by the commission to be an isolated occurrence.

(A) An isolated occurrence is an event, action, or occurrence that arises unexpectedly and unintentionally, and is caused by something other than a failure to implement or follow reasonable procedures. An isolated occurrence may involve more than one separate occurrence, but it does not involve a pattern or practice.

(B) The burden to prove that the telemarketing call was made in error and was an isolated occurrence rests upon the REP who made the call. In order for a REP to assert as an affirmative defense that a potential violation of this section was an isolated occurrence, the REP must provide evidence of the following:

(i) The REP has adopted and implemented written procedures to ensure compliance with this section and effectively prevent telemarketing calls that are in violation of this section, including taking corrective actions when appropriate;

(ii) The REP has trained its personnel in the established procedures; and,

(iii) The telemarketing call that violated this section was made contrary to the policies and procedures established by the REP.

(i) Enforcement and penalties. The commission has jurisdiction to investigate REP violations of this section, as specified in §25.492 of this title (relating to Non-Compliance with Rules or Orders; Enforcement by the Commission).

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on May 28, 2002.

TRD-200203261

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: June 17, 2002

Proposal publication date: April 5, 2002

For further information, please call: (512) 936-7308

Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS

Subchapter B. CUSTOMER SERVICE AND PROTECTION

16 TAC §26.37

The Public Utility Commission of Texas (commission) adopts new §26.37, relating to the Texas No-Call List with changes to the proposed text as published in the April 5, 2002 Texas Register (27 TexReg 2674). The rule implements House Bill 472 (HB 472), 77th Legislature, later codified as the Texas Business and Commerce Code Annotated §43.103 (Bus. & Com. Code) (Vernon 1998 & Supplement 2002) relating to Rules, Customer Information, Isolated Violation. The rule sets forth procedures whereby certificated telecommunications utilities (CTUs) must notify customers of the availability of the Texas no- call list. The rule also provides for quarterly publication and dissemination of the no-call list in formats commonly used by persons making telemarketing calls, and addresses violations of the no-call list. This new section is adopted under Project Number 24376.

The creation of the Texas no-call list assists residential telephone customers in limiting the number of telemarketing calls received. As provided in the Bus. & Com. Code §43.101 relating to Commission to Establish Texas No-Call Lists, the state has contracted with a private vendor to maintain and administer the Texas no-call database. The no-call program is self- funding in that costs of the vendor contract will be offset by the fees paid by customers to register for the list and telemarketers to subscribe to the list.

After the proposed rule was published in the Texas Register, the commission received written comments from the following: AT&T Communications of Texas, L.P. (AT&T); Entergy Solutions Select Ltd., Entergy Solutions Essentials Ltd, and Entergy Solutions Ltd. (Entergy REPs); MCI Worldcom, Inc. (MCI); the Office of Public Utility Counsel (OPC); Reliant Resources, Incorporated (RRI); the State of Texas - Office of the Attorney General (OAG); Southwestern Bell Telephone Company (SWBT); Sprint Communications Company LLP, United Telephone Company of Texas, Inc. doing business as Sprint, Central Telephone Company of Texas doing business as Sprint (Sprint); Texas Statewide Telephone Cooperative, Inc. (TSTCI); TXU Energy Retail Company LP (TXU Energy); and Verizon Southwest (Verizon).

A public hearing on the proposed section was held at commission offices on May 6, 2002 at 1:30 p.m. Representatives from AT&T, MCI, OAG, OPC, SWBT, and TXU Energy attended the hearing and provided comments at the hearing. To the extent that these comments differ from the submitted written comments, such comments are summarized herein.

General comments

Prior to publication of the proposed rule, State Representative David Farabee filed a letter on behalf of a blind constituent who works as a telemarketer and asked that the commission consider reducing the quarterly fee charged to telemarketers who are disabled, self-employed or a small business. Representative Farabee also asked that the commission ensure that the format of the no-call list software is compatible with the blind voice system.

The commission notes that the fee charged by the administrator of the no-call database is presently $45 per quarter, which is less than the amount authorized by statute. The database administrator has agreed to provide the no-call list to subscribing telemarketers in a variety of formats, including a format compatible with the blind voice system. The commission believes that in setting a lower quarterly rate for all subscribing telemarketers and allowing for a number of formats, including any format agreed to by the administrator and the subscribing telemarketer, Representative Farabee's concerns have been addressed.

Customer, Nancy Basham, wrote a letter expressing her concern that the law contained too many loopholes. Consumer's Union also filed a similar letter.

The commission acknowledges these concerns; however, the purpose of this rulemaking is to implement the law as written and as a result, the commission must work within the confines of the applicable law.

In response to the proposed rule, AT&T commended the commission for drafting a proposed rule that was generally consistent with HB 472. OPC also noted its general support for the rule. RRI suggested some minor changes throughout the rule in order to harmonize the provisions in this section with the provisions in §25.484, Texas Electric No-Call List. RRI also made changes to clarify that the Texas no-call list and the Texas electric no-call list are two different lists and are based on two different databases. RRI, in general, suggested such changes as adding the word "Texas" before the terms no-call registrant (formerly no-call subscriber) and no-call database.

The commission disagrees that adding the word "Texas" before the terms no-call database and no-call registrant serves to enhance the distinction between the two rules and declines to make that particular change. The rules relating to the Texas No-Call List and the Texas Electric No-Call List are in separate chapters of the commission's substantive rules, and are therefore clearly distinguishable. Furthermore, the definitions contained in subsection (c) of each section clearly distinguish the lists and databases from one another. Accordingly, the commission declines to make the clarifying changes suggested by RRI.

Specific comments to the rule language

Subsection (c) contains definitions of terms used in this rule. MCI suggested changing the definition of established business relationship to mirror the definition in the law. TXU Energy asserted that the definition of established business relationship, as proposed, implies that customer business relationships are developed only through personal contacts or face-to-face meetings, and fails to recognize relationships developed by mail, facsimile or over the Internet. TXU Energy suggested that in order to resolve the issue, the phrase "between a person and a consumer" should be deleted from the definition. In its reply comments, OPC indicated that it did not find the phrase confusing and noted that the definitions of "person" in the commission's substantive rules, §25.5(42) and §26.5(153) relating to Definitions, are not limited to a natural person. AT&T indicated that TXU Energy's suggested revision could possibly create more ambiguity rather than provide clarification. AT&T recommended that the definition be altered by adding the words "or entity" after the phrase "between a person." MCI indicated that the definitions of "person" in the substantive rules appear to resolve TXU Energy's concern.

The commission declines to modify the definition of an established business relationship in subsection (c)(2). As published, the commission slightly altered the definition from the definition in the statute for clarification purposes only; however, the change was not intended to alter the meaning. The commission finds the definition as proposed, neither confusing nor restrictive in the manner purported by TXU Energy.

OPC proposed modifying the definition of telephone call by adding the phrase "but not limited to" after the word "including." OPC contended that by doing so, the rule would clearly pertain to any other types of telephone contact made with future technological advances.

The commission agrees that the clarification proposed by OPC will better reflect the commission's intent with respect to potential technological advances not specifically contemplated in the rule. The commission makes the change to the definition of telephone call in subsection (c)(8).

OPC recommended deleting the phrase "including a telemarketing call made by an ADAD" in the definition of telemarketer in subsection (c)(9). OPC explained that the phrase does not enhance the rule in any way and is already addressed within the definition of a telemarketing call.

The commission adopts the change recommended by OPC for the reasons stated.

Subsection (d) relating to the requirement of telemarketers establishes the required time frame within which telemarketers must remove newly-registered telephone numbers on the no- call list from their internal telemarketing call lists. RRI and Entergy REPs contended that as proposed, subsection (d) is unclear as to whether the 60-day compliance period starts when a customer registers a telephone number on the no-call list or when the telephone number is published on the list. Commenters recommended that the commission clarify the precise date triggering the 60-day compliance period. In its reply comments MCI supported RRI's and Entergy REPs' proposed change of adding the word "published" to help clarify this provision.

The commission agrees with the suggested change clarifying the deadline set in this subsection and modifies the rule accordingly.

MCI also indicated in its initial comments to the commission that the definition of "established business relationship", discussed in subsection (c)(2), does not permit calls to numbers on the Texas no-call list unless the communication is voluntary. Therefore, MCI contended that in a monopoly setting, calls made to customers by the monopoly provider of a service or good are not voluntary. MCI suggested that the definition of "established business relationship" in the statute already reflects the restriction and that the commission should also reflect the restriction in subsection (d). Specifically, MCI suggested that a CTU shall not make telemarketing calls in an area where it has a market share of 90% or greater and in which if offers telecommunications services under a specific schedule of exchange rates. In reply comments, SWBT and Verizon objected to MCI's proposed restriction on CTU telemarketing. SWBT and Verizon stated that neither HB 472 nor the Federal Communications Commission's (FCC's) telemarketing rule (47 C.F.R. §64.1200, U.S.C. §227) prohibits an incumbent local exchange company (ILEC) from contacting customers with whom it has an "established business relationship."

The commission disagrees with MCI's interpretation of the "established business relationship" definition and the proposed restriction on ILEC telemarketing. The commission agrees with SWBT's and Verizon's contention that such a limitation is not included in the Bus. & Com. Code, Chapter 43 relating to Telemarketing, nor in the FCC's telemarketing rule. Both sections contain definitions of an "established business relationship" and neither definition suggests that ILECs are not part of the established business relationship exemption. Accordingly, the commission declines to make the change to subsection (d) suggested by MCI.

Subsection (e) relating to exemptions excludes certain types of telephone calls from the requirements of this section. In its written comments, TXU Energy suggested that the introductory phrase "In response to a call" be added to subsection (e)(1). TXU Energy contended that the added language is necessary to clarify that telemarketing calls made by a telemarketer at the request of an individual is not a violation of this section even if that individual's telephone number appears on the Texas no-call list.

The commission disagrees with TXU Energy's characterization that its suggested language does not alter the meaning of the rule. The rule, as published, and in full accord with the enabling statute, specifically refers to a call made by a customer. Furthermore, the definition of telemarketing call specifically references an unsolicited telephone call. The commission is not persuaded that the additional exemption is necessary or serves any clarifying purpose.

Subsection (f)(2)(A) outlines when the no-call list will be updated and published by the administrator. MCI challenged the basic authority of the commission to implement this subsection until an issue regarding the national no-call list has been resolved. MCI referenced Bus. & Com. Code §43.101 which provides the commission with the authority to contract with a private vendor to maintain the Texas no-call database. MCI contended that the "provision clearly permits persons making telemarketing calls to update the national no-call list by adding to the national list those names on the Texas no-call list." MCI asserted that according to this provision, the vendor must publish the Texas portion of the national no-call list in an electronic format for subscribing telemarketers. Therefore, MCI asserted that the commission is not authorized to provide for the operation of the Texas no-call database until the pending national no-call list issue has been resolved.

OAG indicated that MCI's argument that the Texas vendor must provide the Texas no-call list to the Direct Marketing Association (DMA) for inclusion in DMA's national no-call list was in error. OAG indicated that such a requirement would allow telemarketers to comply with the Texas no-call statute by acquiring the DMA's national no-call list. OAG asserted that Bus. & Com. Code §43.101(b) addresses the requirements the contracted vendor must meet; the first being that the vendor must have previously maintained a national no-call list for more than two years. Therefore, OAG contended that rather than requiring the vendor to provide the Texas no- call list to the DMA as suggested by MCI, the statute requires the vendor to provide the Texas portion of its national no-call list to telemarketers so that telemarketers may include those Texas residents on their list of persons not to call.

The commission rejects the claim that the commission does not have the authority to provide for the operation of the Texas no-call database. Furthermore, the commission agrees with OAG's interpretation of the statute. Texas Bus. & Com. Code §43.101 specifically grants the commission authority to establish and provide for the operation of the database. In addition, Bus. & Com. Code §43.103(a) grants the commission the authority to adopt rules to administer Bus. & Com. Code Subchapter C, relating to the Texas No-Call List. The commission finds that in adopting this rule, it is acting within its statutory authority.

TXU Energy suggested that the commission clarify that the administrator of the database must update and publish the "entire" Texas no-call list, not merely the most recent additions. TXU Energy asserted that publication of the entire list would lessen the possibility of error when a subscribing telemarketer is updating its own list. In addition, TXU Energy suggested that the administrator of the no-call database should be required to alert subscribing telemarketers who have previously received a copy of the no-call list of the availability of the updated list in order to expedite telemarketer access to the list.

The commission accepts TXU Energy's suggestion of adding the word "entire" to subsection (f)(2)(A). Publication and distribution of the entire no-call list rather than just the updated portions of the list will assist in avoiding any variation in the number of names contained on each list received by a subscribing telemarketer. This precautionary measure will assist in preventing any unintended omission at the distribution phase.

The commission declines to accept TXU Energy's suggested modification requiring the database administrator to alert telemarketers, via electronic mail, of the availability of an updated list. The legislature has already prescribed very specific time frames for publication and distribution of the no-call list. The commission finds that placing an added requirement upon the administrator when the time frame has already been clearly set serves no beneficial purpose.

TXU Energy also recommended new language to subsection (f)(2)(C), which specifies that a telemarketer has 60 days from the quarterly database publication date to acquire the updated list and incorporate the information into its own telemarketing database.

The commission finds that the 60-day compliance period is adequately explained in §26.37(d) and declines to reiterate the requirement elsewhere in the rule.

Subsection (f)(3)(A) specifies the intended use of and prohibited uses of the no-call database. The OAG, in its written comments, specifically cited its support of this portion of the rule. AT&T suggested that the commission make a clarifying change that specifies that the database cannot be resold or transferred to any other "non-affiliated" person or entity. By adding the term "non-affiliated," AT&T indicated the change will clarify that the purchased list can be shared amongst company affiliates. AT&T asserted that allowing the internal distribution of the no-call list amongst all affiliates of a company will promote timely compliance with this section. Both MCI and Verizon supported AT&T's position on this issue.

The commission declines to insert the suggested language into subsection (f)(3). It was not the commission's intention to allow sharing amongst a parent company and its affiliates. Each affiliate that chooses to make telemarketing calls to Texas residential customers must purchase the list; just as each customer that wishes to register more than one telephone number must pay a registration fee for each number. In order to clarify this requirement, the commission adds language to subsection (f)(3)(A) to specify that a subscribing telemarketer cannot share a purchased no-call list with its affiliates. Instead, affiliates must pay a separate fee for each individual list. However, the commission notes that this does not preclude a parent company from purchasing numerous copies of the no-call list and then disbursing the lists to its affiliates, as long as each affiliate has separately subscribed to, and paid the appropriate fee for, the Texas no-call list and agrees to comply with the requirements of this section. This should resolve AT&T's concern regarding timely compliance with this section. The commission also makes other minor clarifying changes to this subsection.

Subsection (g) relating to notice outlines the requirements for the customer notice provided by CTUs. OPC recommended that the commission spell out the acronym CTU in recognition of the fact that persons who are unfamiliar with the acronym will be referring to the rule.

The commission notes that the acronym is defined at its first occurrence, in subsection (b).

Subsection (g)(1) details the contents of the CTU-provisioned customer notice. AT&T indicated that the level of information required in the customer notice is excessive and recommended deletion of subparagraphs (B), (F) and (H). AT&T asserted that the information can be obtained by the customer when registering for the no-call list. In its reply comments, OPC and OAG disagreed with the deletion of any of the notice content requirements. OPC contended that each method of notice provided by CTUs should contain all of the required information. OAG indicated the commission has achieved a good balance between essential information to make a purchasing decision and supplying too much non-material information. OAG stated the disclosures proposed are necessary to prepare a customer for initial contact with the Texas no- call list. At the public hearing, AT&T supported its written comments indicating that the notice should be short in length and general in nature. In response, OPC stated it would be more convenient for customers if the information was readily available in the notice produced by CTUs.

The commission agrees with OPC and OAG and declines to make any substantive changes to the notice content requirements. The commission finds that the level of information required in the notice is not excessive as asserted by AT&T The content requirements offer the customer basic information in order to make a determination about whether or not to pursue registration.

In its reply comments, AT&T also requested clarification regarding the first sentence in subsection (g)(1), relating to content of notice. AT&T asserted that as currently proposed, subsection (g)(1) would require a CTU's notice to be printed in both English and Spanish on the same notice.

The commission deletes the proposed language and adds clarifying language to subsection (g)(1) in response to AT&T's observation that the notice publication requirement in both English and Spanish is confusing. The commission does not require a CTU to provide notice of the no- call list to customers in both English and Spanish on the same form. Instead, through the reference to §26.26 of this title (relating to Foreign Language Requirements), the commission requires a CTU to inform Spanish-speaking customers how to obtain notice of the no-call list in Spanish. As suggested by §26.26(a), this may be accomplished by an informational sentence in English and Spanish indicating that the information is available in Spanish upon request. Furthermore, consistent with §26.26(c), the commission requires a CTU that advertises, promotes, or markets a service or product in any language other than English and Spanish, to provide the no-call list notice in that language upon customer request.

OPC recommended additional language to inform customers that they may only register residential phone numbers (one per fee) on the Texas no-call list. RRI suggested an additional requirement informing a customer how to remove a telephone number from the Texas no-call list and that a telephone number may be automatically removed if that number changes. OPC and MCI supported RRI's addition.

The commission finds the additions proposed by OPC and RRI are not necessary to a customer's initial decision to register for the no-call list and therefore, declines to implement the changes.

Subsection (g)(2) relates to publication of the no-call list notice and outlines the allowable methods through which CTUs may accomplish customer notification. AT&T contended that requiring CTUs to provide both directory notice and bill inserts or bill messages is an onerous requirement that far exceeds what is required by statute. Furthermore, it fails to recognize any other appropriate means of notice. AT&T requested that the commission require only one type of CTU-provisioned customer notice and add language allowing the option of "other direct notification in writing." AT&T asserted that other means of appropriate notice include other direct notice in writing, such as a postcard, and notice in the Customer Rights disclosure that a CTU must provide at the initiation of service and at least annually thereafter.

MCI, SWBT, Sprint, TSTCI, and Verizon also maintained that requiring CTUs to provide customer notice in more than one manner is contrary to the law. SWBT suggested that the publication of the notice in the telephone directory should be an option in lieu of the other types of required notice. AT&T supported these commenters' position, but referred the commission to AT&T's recommended revisions in order to amend the provisions in subsection (g)(2).

OPC opposed the parties' challenge to the publication requirements and commented that publication of the notice in the directory and in a bill message or insert should not be an either/or proposition. OPC noted that the statute is the minimum standard for notice, but in no way restricts the commission from requiring additional forms of notice. OPC supported the requirement as proposed because it helps ensure that the notice reaches customers. OPC argued that requiring notice by more than one method increases the chances that a person will see it. AT&T opposed OPC's suggestions regarding CTU-provisioned customer notice.

TSTCI contended that the law intended to afford CTUs some latitude as to the type of notice they provide to customers and that other means, such as company newsletters, should be an option. OPC did not oppose TSTCI's suggestion allowing notice to be accomplished through a separate direct mailing or within a regularly published newsletter.

In response to the commenters' suggestion requesting that the commission allow more flexibility in the options available for CTU-provisioned customer notice, the commission agrees and modifies the rule accordingly. In removing the telephone directory requirement, the commission encourages, but does not require, CTUs to provide basic information regarding the Texas no-call list in the consumer information pages of the telephone directory. Although the commission, in subsection (g)(2)(B), does not allow a CTU to satisfy the notice publication requirement by publishing the notice in the telephone directory only, the commission has expanded the number of notification methods available to CTUs in order to allow the flexibility that the commenters requested. The commission finds that its objective regarding customer notification will best be met by requiring CTU-provisioned notice to each individual residential customer.

In response to other suggested methods of notice, the commission has incorporated TSTCI's suggestion regarding notification via newsletter, given that the newsletter is provided to each residential customer. The commission has also accepted AT&T's recommendations regarding the Customer Rights disclosure and other direct notification. However, regardless of the method of notification selected by a CTU, the first notification to residential customers must be completed before the end of 2002.

Subsection (g)(3) relates to the timing of notice. AT&T disagreed with the commission's requirements in this subsection as to the timing of the notice. Both AT&T and TSTCI indicated that the proposed 60-day timeframe for initial notice narrows the options available to CTUs to provide notice. AT&T elaborated that due to the short timeframe allowed for the initial notice and the narrow timeframe of subsequent annual notices, a CTU would not be able to provide notice of the no-call list in the telephone directory or Customer Rights disclosure. AT&T and TSTCI suggested increasing the initial notice requirement timeframe to 90 days. AT&T further requested that the commission only require notice in telephone directories produced after an appropriate period of time. AT&T maintained that as evidenced by the current number of registrants on the no-call list to date, lack of CTU-provisioned notice has not created a lack of program awareness. Therefore, the commission should avoid the imposition of unreasonable expenses upon CTUs.

The commission notes that as a result of the changes made to subsection (g)(2), AT&T's request regarding the allowable timeframe for customer notice in the telephone directory is no longer applicable. The commission agrees that as evidenced by the number of registrants that have requested to be included on the no-call database to date, lack of CTU-provisioned notice has not created any obstacles to enrollment. Accordingly, the commission relaxed the 60-day initial notice requirement and instead allows notification to occur anytime before the end of the year 2002. The commission also removes the specific time period requirement during which subsequent notification must occur. A CTU must still provide annual notice of the no-call list to customers, but may do so anytime during the year. These changes should allow CTUs full flexibility in their chosen method of customer notice and avoid the imposition of unreasonable costs.

AT&T incorrectly stated that §26.31(a)(4) of this title (relating to Disclosures to Applicants and Customers) requires a CTU to provide the Customer Rights disclosure at the initiation of service and at least annually thereafter. Instead, it requires a CTU to provide the Customer Rights disclosure at the initiation of service, and at least every other year thereafter OR a printed statement on the bill or a billing insert referencing the location of the Customer Rights information. The printed statement must be sent to customers every six months. Because the commission included the Customer Rights disclosure as a viable option through which a CTU may provide notice of the no-call list, the commission sees no benefit in straying from the timing requirements already outlined in §26.31(a)(4). Doing so would be counterproductive to allowing the Customer Rights disclosure as an option. However, the commission notes that the no-call list notice provided in the Customer Rights disclosure must be in compliance with §26.37(g)(1), relating to the content of the notice. Should a CTU provide subsequent notice through a printed statement on a customer bill or a bill insert distributed to customers every six months as outlined in §26.31(a)(4)(B)(ii), then the CTU must identify on the bill or bill insert, the location of the no-call list notice; a specific reference to the no-call list notice is required. A CTU that chooses an allowable notification method other than the Customer Rights disclosure must provide such notice on an annual basis and the notice must comply with the content requirements listed in subsection (g)(1).

Regarding subsection (g)(4), relating to commission review of notice, AT&T asserted that rather than the commission micromanaging the notice development process, the appropriate approach would be to require CTUs to provide a copy of the notice text to the commission upon request. SWBT echoed the concerns stating that a commission review requirement will only serve to delay the notification process. However, in the event a CTU chooses to obtain notice approval from the commission, SWBT believes that prior approval should create a "safe harbor," barring future disputes regarding the notice. MCI and Verizon supported SWBT's position on this issue.

OPC opposed the comments made by AT&T and SWBT. OPC asserted that the approval process acts as an important customer protection tool. Additionally, with commission review, a company can avoid the expense of having to re-run the notice due to defects in the publication.

The commission deletes what was formerly subsection (g)(4)(A), commission review of the notice. The commission has explicitly detailed the notice requirements in subsection (g)(1) and relies upon CTU compliance with this section. Should the commission have any concerns regarding the content, method or timing of CTU-provisioned notice, the commission has reserved the right to request the records.

TSTCI urged the deletion of subsection (g)(4)(B) indicating that the Public Utility Regulatory Act (PURA) already grants the commission the authority to review and inspect the records of public utilities, thus this provision is not necessary. OPC strongly opposed TSTCI's suggestion to delete this provision because the requirement to provide records is not unique to this rule and should not be eliminated merely because it is an inconvenience.

OPC requested that the commission require CTUs to provide copies of customer notification records to OPC, in addition to the commission. OPC contended that such a requirement would serve to inform OPC of the status of CTU compliance and highlight the level of priority afforded this issue. At the public hearing, OPC clarified its written comments and stated that OPC did not intend to suggest that it is a regulatory body, but that it is charged by the Legislature with representing the public interest of small commercial and residential customers. OPC stated that this gives it the jurisdiction to look at the notices supplied by companies to their customers. OPC further stated that allowing it to look at the notices would not place a burden on companies and that no companies have asserted that the notice information is confidential. OPC also stated that the agency would pay any copying costs associated with supporting its request. OPC stated that, if it is not allowed to view all notices, the agency will have to file open records requests for the materials and this would be administratively burdensome. AT&T, MCI, SWBT, RRI, and Verizon opposed this requirement citing that there is no statutory basis for granting OPC regulatory review authority. AT&T suggested that if OPC has concerns regarding CTU compliance with notice requirements, OPC should raise the concerns with the commission.

Given that the commission removed the commission review of the notice requirement in former subsection (g)(4)(A), the commission declines to delete the record retention requirement as suggested by TSTCI. However, the commission notes that a CTU must provide a copy of records to the commission only upon request.

Regarding OPC receipt of customer notification records, the commission agrees with the majority of the commenters and declines to require CTUs to provide copies of such records to OPC. There is no statutory authority for requiring OPC receipt of CTU-provisioned customer notification records.

MCI recommended that the commission set a 24-month time limit on the retention of records. OPC does not oppose such a time limitation, but asserted it would not support any period less than 24 months. SWBT recommended a retention period of one year since notification must occur on an annual basis.

In response to MCI's recommendation, the commission finds a record retention requirement of 24 months sufficient, and therefore adds language to that effect to subsection (g)(4).

Subsection (h) relates to violations and explains that it is an affirmative defense to this section that a telemarketing call made to a telephone number on the Texas no-call list is not a violation if the telemarketing call was an isolated occurrence made by a telemarketer who has implemented adequate procedures to comply with this section. MCI, OAG and OPC generally supported §26.37(h)(2). OAG suggested adding the phrase "or by a court of competent jurisdiction" to the initial sentence in subsection (h)(2). Verizon disagreed, explaining that the inclusion of the OAG's suggested phrase does not have any bearing on a court's jurisdiction.

OPC commented that §26.37(h), as published, does not seem to address businesses that do not engage in telemarketing full-time, and suggested adding a different set of requirements for such businesses.

In lieu of the OAG's suggested language regarding a determination by a court of competent jurisdiction, the commission simply deletes the phrase "by the commission" from subsection (h)(2). The commission also rejects OPC's suggestion that the commission create a different type of affirmative defense claim for telemarketers who do not make telemarketing calls on a full-time basis or employ a "low-tech" approach to telemarketing. The main intent of this section is to protect customers from unwanted telemarketing calls. It makes no difference to the recipient of the unwanted telemarketing call what category of telemarketer initiated the call. Accordingly, the commission refuses to incorporate any further exemptions other than what is explicitly provided for by statute.

Subsection (h)(2)(A) defines an isolated occurrence. SWBT recommended deleting the term "or follow," and replacing the word "incident" with "separate occurrence." AT&T supported the wording changes.

The commission agrees to replace the word "incident" with "separate occurrence" for clarification purposes, but declines to delete the term "or follow." Deleting the term "or follow" is not a clarifying change but a substantive one that would significantly change the meaning of the provision.

Subsection (h)(2)(B) addresses violations of the no-call list and specifically places the burden to prove that a telemarketing call was an isolated occurrence made in error upon the telemarketer that made the call. SWBT stated that this subsection, as published, requires an alleged violator to prove a negative, in that, the violator must prove that the violation had rarely occurred. SWBT suggested deleting the first sentence relating to burden of proof. At the public hearing, SWBT reiterated its position on this issue and stated that forcing a telemarketer to prove something that is impossible to prove would raise due process concerns. In its reply comments, AT&T concurred with SWBT's recommended changes but provided additional clarifying language to that offered by SWBT. AT&T suggested replacing the word "claim" with the phrase "assert as an affirmative defense" and also deleting the word "first" in subsection (h)(2)(B). OAG and OPC opposed SWBT's recommendation, with OPC adding that the subsection as published has a deterrent value. OAG pointed out that the statute specifically contemplates a telemarketer proving both that an alleged violation is an isolated occurrence and that the telemarketer has adequate procedures in place. OAG asserted that the defense has two prongs and the burden of proof for both prongs should rest with the telemarketer.

The commission rejects SWBT's and AT&T's recommended changes regarding burden of proof. Bus. & Com. Code §43.103(a)(2) provides that a telemarketing call made to a number on the Texas no-call list is not a violation of Bus. & Com. Code §43.102 if the telemarketing call was an isolated occurrence made by a person who has adequate procedures in place. As stated by OAG, the statute expressly requires that both criteria are met. The commission does, however, make the clarifying changes to subsection (h)(2)(B) suggested by AT&T The commission deletes the words "claim" and "first" and inserts the phrase "assert as an affirmative defense."

Subsection (i), relating to enforcement and penalties, delineates the commission's authority for investigating violations of this section. The OAG proposed that subsection (i)(3) be modified to reflect that the commission does not have exclusive jurisdiction to investigate violations of the no-call list made by retail electric providers (REPs).

The commission agrees and modifies the rule accordingly. The commission also removes the word "exclusive" from subsection (i)(2) which relates to the commission's jurisdiction to investigate violations made by telecommunications providers. The commission finds that the word is not necessary, as the commission simply wanted to affirm that it has jurisdiction to investigate violations of this section.

All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purposes of clarifying its intent and consistency with §25.484. For example, the commission changes the term no-call "subscriber" to no-call "registrant" to distinguish a no-call "registrant" as a telephone customer that has registered to be on the Texas no-call list, from a "subscribing" telemarketer which denotes a telemarketer that has "subscribed," through application and payment of fees, to receive the quarterly published no-call list.

This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. In addition, this section is adopted under the Texas Business and Commerce Code Annotated §43.103 which grants the commission the authority to adopt rules to administer the no-call list.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002; Texas Business & Commerce Code Annotated §§43.002, 43.003, and 43.101 - 43.103.

§26.37.Texas No-Call List.

(a) Purpose. This section implements the Texas Business & Commerce Code Annotated §43.103 (Bus. & Com. Code) relating to rules, customer information, and isolated violations of the Texas no-call list.

(b) Application. This section is applicable to:

(1) Certificated telecommunications utilities (CTUs), as defined by §26.5 of this title (relating to Definitions), that provide local exchange telephone service to residential customers in Texas; and,

(2) Telemarketers, as defined in subsection (c)(9) of this section including, but not limited to, retail electric providers as defined in §25.5 of this title (relating to Definitions).

(c) Definitions. The following words and terms, when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

(1) Consumer good or service - For purposes of this section, consumer good or service has the same meaning as Bus. & Com. Code §43.002(3) relating to Definitions.

(2) Established business relationship - A prior or existing relationship that has not been terminated by either party, and that was formed by voluntary two-way communication between a person and a consumer regardless of whether consideration was exchanged, regarding consumer goods or services offered by the person.

(3) No-call database - Database administered by the commission or its designee that contains the names, addresses, non-business telephone numbers and dates of registration for all Texas no-call registrants. Lists or other information generated from the no-call database shall be deemed to be a part of the database for purposes of enforcing this section.

(4) No-call list - List that is published and distributed as required by subsection (f)(2) of this section.

(5) No-call registrant - A telephone customer who has registered, by application and payment of accompanying fee, for the Texas no-call list.

(6) State licensee - A person licensed by a state agency under a law of this state that requires the person to obtain a license as a condition of engaging in a profession or business.

(7) Telemarketing call - An unsolicited telephone call made to:

(A) solicit a sale of a consumer good or service;

(B) solicit an extension of credit for a consumer good or service; or,

(C) obtain information that may be used to solicit a sale of a consumer good or service or to extend credit for sale.

(8) Telephone call - A call or other transmission that is made to or received at a telephone number, including but not limited to:

(A) a call made by an automatic dial announcing device (ADAD); or,

(B) a transmission to a facsimile recording device.

(9) Telemarketer - A person who makes or causes to be made a telemarketing call.

(d) Requirement of telemarketers. A telemarketer shall not make or cause to be made a telemarketing call to a telephone number that has been published for more than 60 calendar days on the Texas no-call list.

(e) Exemptions. This section shall not apply to a telephone call made:

(1) By a no-call registrant that is the result of a solicitation by a seller or telemarketer or in response to general media advertising by direct mail solicitations that clearly, conspicuously, and truthfully make all disclosures required by federal or state law;

(2) In connection with:

(A) An established business relationship; or,

(B) A business relationship that has been terminated, if the call is made before the later of

(i) the date of publication of the first Texas no-call list on which the no- call registrant's telephone number appears; or,

(ii) one year after the date of termination;

(3) Between a telemarketer and a business, other than by a facsimile solicitation, unless the business informed the telemarketer that the business does not wish to receive telemarketing calls from the telemarketer;

(4) To collect a debt;

(5) By a state licensee if:

(A) The call is not made by an ADAD;

(B) The solicited transaction is not completed until a face-to-face sales presentation by the seller, and the consumer is not required to pay or authorize payment until after the presentation; and,

(C) The consumer has not informed the telemarketer that the consumer does not wish to receive telemarketing calls from the telemarketer; or,

(6) By a person who is not a telemarketer, as defined in subsection (c)(9) of this section.

(f) No-call database.

(1) Administrator. The commission or its designee shall establish and provide for the operation of the no-call database.

(2) Distribution of database.

(A) Timing. Beginning on April 1, 2002, the administrator of the no-call database will update and publish the entire Texas no-call list on January 1, April 1, July 1, and October 1 of each year;

(B) Fees. The no-call list shall be made available to subscribing telemarketers for a set fee not to exceed $75 per list per quarter;

(C) Format. The commission or its designee will make the no-call list available to subscribing telemarketers by:

(i) electronic internet access in a downloadable format;

(ii) Compact Disk Read Only Memory (CD-ROM) format;

(iii) paper copy, if requested by the telemarketer; and,

(iv) any other format agreed upon by the current administrator of the no- call database and the subscribing telemarketer.

(3) Intended use of the no-call database and no-call list.

(A) The no-call database shall be used only for the intended purposes of creating a no-call list and promoting and furthering statutory mandates in accordance with the Bus. & Com. Code, Chapter 43 relating to Telemarketing. Neither the no-call database nor a published no-call list shall be transferred, exchanged or resold to a non-subscribing entity, group, or individual regardless of whether compensation is exchanged.

(B) The no-call database is not open to public inspection or disclosure.

(C) The administrator shall take all necessary steps to protect the confidentiality of the no-call database and prevent access to the no-call database by unauthorized parties.

(4) Penalties for misuse of information. Improper use of the no-call database or a published no-call list by the administrator, telemarketers, or any other person regardless of the method of attainment, shall be subject to administrative penalties and enforcement provisions contained in §22.246 of this title (relating to Administrative Penalties).

(g) Notice. A CTU shall provide notice of the no-call list to each of its residential customers as specified by this subsection. In addition to the required notice, the CTU may engage in other forms of customer notification.

(1) Content of notice. A CTU shall provide notice in compliance with §26.26 of this title (relating to Foreign Language Requirements) that, at a minimum, clearly explains the following:

(A) Beginning January 1, 2002, residential customers may add their name, address and non-business telephone number to a state-sponsored no-call list that is intended to limit the number of telemarketing calls received;

(B) When a customer who registers for inclusion on the no-call list can expect to stop receiving telemarketing calls;

(C) A customer must pay a fee to register for the no-call list;

(D) Registration of a non-business telephone number on the no-call list expires on the third anniversary of the date the number is first published on the list;

(E) Registration of a telephone number on the no-call list can be accomplished via the United States Postal Service, Internet, or telephonically;

(F) The customer registration fee, which cannot exceed three dollars per term, must be paid by credit card when registering online or by telephone. When registering by mail, the fee must be paid by credit card, check or money order;

(G) The toll-free telephone number, website address, and mailing address for registration; and,

(H) A customer that registers for inclusion on the no-call list may continue to receive calls from groups, organizations, and persons who are exempt from compliance with this section, including a listing of the entities exempted as specified in subsection (e) of this section.

(2) Publication of notice.

(A) Telephone directory. A CTU that publishes, or has an affiliate that publishes, a residential telephone directory may include in the directory a prominently displayed toll-free number and Internet mail address, established by the commission, through which a person may request a form for, or request to be placed on, the Texas no-call list in order to avoid unwanted telemarketing calls.

(B) Notice to individual customers. A CTU shall provide notice of the Texas no- call list to each of its residential customers in Texas by one or more of the methods listed in clauses (i)-(v) of this subparagraph.

(i) an insert in the customer's billing statement. Electronic notification is permissible for a customer who, during the notification period, is receiving billing statements from the CTU in an electronic format;

(ii) a bill message;

(iii) separate direct mailing;

(iv) customer newsletter; or

(v) Customer Rights disclosure as provided in §26.31(a)(4) of this title (relating to Disclosures to Applicants and Customers).

(3) Timing of notice. Beginning in 2002, a CTU shall provide notice of the Texas no- call list to its residential customers using one of the methods listed in paragraph (2)(B)(i)-(v) of this subsection.

(A) A CTU that uses a notification method listed in paragraph (2)(B)(i)-(iv) of this subsection, shall provide the notice annually beginning in 2002. The annual notice shall be easily legible, prominently displayed, and comply with the requirements listed in paragraph (1) of this subsection.

(B) A CTU that elects the Customer Rights disclosure as its notification method as allowed in paragraph (2)(B)(v) of this subsection shall comply with the timing of distribution requirement in §26.31(a)(4) of this title. The no- call list information provided in the Customer Rights disclosure shall comply with paragraph (1) of this subsection.

(4) Records of customer notification. Upon commission request, a CTU shall provide a copy of records maintained under the requirements of this subsection to the commission. A CTU shall retain records maintained under the requirements of this subsection for a period of two years.

(h) Violations.

(1) Separate occurrence. Each telemarketing call to a telephone number on the no-call list shall be deemed a separate occurrence.

(2) Isolated occurrence. A telemarketing call made to a number on the no-call list is not a violation of this section if the telemarketing call is determined to be an isolated occurrence.

(A) An isolated occurrence is an event, action, or occurrence that arises unexpectedly and unintentionally, and is caused by something other than a failure to implement or follow reasonable procedures. An isolated occurrence may involve more than one separate occurrence, but it does not involve a pattern or practice.

(B) The burden to prove that the telemarketing call was made in error and was an isolated occurrence rests upon the telemarketer who made the call. In order for a telemarketer to assert as an affirmative defense that a potential violation of this section was an isolated occurrence, the telemarketer must provide evidence of the following:

(i) The telemarketer has adopted and implemented written procedures to ensure compliance with this section and effectively prevent telemarketing calls that are in violation of this section, including taking corrective actions when appropriate;

(ii) The telemarketer has trained its personnel in the established procedures; and,

(iii) The telemarketing call that violated this section was made contrary to the policies and procedures established by the telemarketer.

(i) Enforcement and penalties.

(1) State licensees. A state agency that issues a license to a state licensee may receive and investigate complaints concerning violations of this section by the state licensee.

(2) Telecommunications providers. The commission has jurisdiction to investigate violations of this section made by telecommunications providers, as defined in the Public Utility Regulatory Act (PURA) §51.002.

(3) Retail electric providers. The commission has jurisdiction to investigate violations of this section made by retail electric providers (REPs) as specified in §25.492 of this title (relating to Non-Compliance with Rules or Orders; Enforcement by the Commission).

(4) Other Telemarketers. A telemarketer, other than a state licensee or telecommunications provider, that violates this section shall be subject to administrative penalties pursuant to §22.246 of this title.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on May 28, 2002.

TRD-200203259

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: June 17, 2002

Proposal publication date: April 5, 2002

For further information, please call: (512) 936-7308

Subchapter P. TEXAS UNIVERSAL SERVICE FUND

16 TAC §26.420

The Public Utility Commission of Texas (commission) adopts amendments to §26.420 relating to the Administration of Texas Universal Service Fund (TUSF) with changes to the proposed text as published in the January 25, 2002 Texas Register (27 TexReg 549). The amendments implement House Bill 1351, 77th Legislature (HB 1351), later codified as the Public Utility Regulatory Act, Texas Utilities Code Annotated §56.022 (Vernon 1998 & Supplement 2002) (PURA) relating to the exemption of pay telephone services from TUSF assessment. These amendments are adopted under Project Number 24520.

A hearing regarding HB 1351 was held before the Senate Committee on Business and Commerce on May 8, 2001. HB 1351 was proposed as a means to exempt pay telephone services from TUSF assessment. At the hearing, it was noted that the provision of pay telephone services is dependent upon the purchase of services from a telecommunications provider. In other words, a provider of pay telephone services, while providing pay telephone service, is also a customer of another telecommunications provider. Also at the hearing, it was noted that upon enactment of HB 1351, telecommunications providers provisioning services to providers of pay telephone services would assess TUSF fees on these services as they would to any retail customer.

Consistent with the above, the commission initiated this rulemaking making substantive changes to §26.420(f) with a twofold purpose: (1) to exempt pay telephone service revenues from TUSF assessment; and (2) to clarify that telecommunications providers should contribute directly into the TUSF based upon the revenue received from provisioning telecommunications services to pay telephone providers, and the telecommunications providers may pass-through the TUSF assessment fees to the pay telephone providers.

The commission also proposed deleting references to §26.413, relating to Tel-Assistance Service, from §26.420(b), (e), (f) and (g). However, the commission declines to adopt the proposed changes relating to Tel-Assistance Service at this time and will open a subsequent proceeding to amend this section.

The commission received comments on the proposed amendments from Southwestern Bell Telephone Company (SWBT) and Verizon Southwest (Verizon).

Preamble question

In addition to general comments, the commission sought specific comment on the following:

Should the commission address the issue of the implementation timeframe for §26.420(f)(2)(C) and (f)(5)? If so, should the issue be addressed via a provision in §26.420 even though the issue only applies to specific amended portions of the rule, or should affected local exchange companies (LECs) be required to seek a good cause waiver from the rule, which would allow the timeline of the waivers to be individualized according to the specific needs of the carrier?

SWBT commented that it had resolved the implementation issues raised in the preamble question and as a result, the commission may not need to address the issue of good cause waivers in this project. SWBT indicated that it placed this project on an accelerated implementation timetable and immediately began making all required programming changes to its system. SWBT estimated that it would be able to fully implement the required billing system modifications by June 2002; a date which currently coincides with the estimated effective date of this section. Accordingly, SWBT anticipated that it would not need to seek a good cause waiver from the new requirements. SWBT cautioned that this presumption is based upon the commission adopting the amended rule as proposed and adhering to the current project schedule.

Verizon suggested that the commission address the implementation timeframe by allowing 60 days after the effective date of the rule for compliance. Verizon also proposed that if a company needs time beyond the 60 days, then that company should be required to seek a good cause waiver.

The commission declines to insert into the proposed rule a blanket time period for allowing telecommunications providers to come into compliance with the requirements of subsection (f), relating to assessments for the TUSF. HB 1351 became effective September 1, 2001. Any additional time allowed for implementing the requirements delineated in the amended rule means a loss of revenue for the TUSF. Although that loss is minimal, the commission declines to further delay contributions into the fund. At the January 10, 2002 open meeting approving the proposed amendment for publication, the commission advised telecommunications providers that they should not wait until §26.420 was approved for adoption to begin making the required programming changes to their billing systems. The commission warned that any waivers submitted regarding this issue would be evaluated utilizing high standards. Accordingly, as established in the Administrative Procedure Act, Texas Government Code Annotated §2001.036 relating to the Effective Date of Rules; Effect of Filing With Secretary of State, the proposed amendments to §26.420 will be effective 20 days after the date this rule is filed with the Secretary of State.

No other comments were received regarding the proposed amendment.

In adopting this section, the commission also makes a minor modification for purposes of clarification and consistency. The commission changes the word "telephone" to "telecommunications" in subsection (f)(2)(C).

This amendment is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §56.021 which provides the commission with the authority to adopt and enforce rules requiring local exchange companies to establish a universal service fund; and §56.022 regarding the statewide uniform charge upon which the TUSF is based and requiring the commission to exempt pay telephone services from the assessment.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 17.051-17.053, 56.021 and 56.022.

§26.420.Administration of Texas Universal Service Fund (TUSF).

(a) Purpose. The provisions of this section establish the administration of the Texas Universal Service Fund (TUSF).

(b) Programs included in the TUSF.

(1) Section 26.403 of this title (relating to the Texas High Cost Universal Service Plan (THCUSP));

(2) Section 26.404 of this title (relating to the Small and Rural Incumbent Local Exchange Company (ILEC) Universal Service Plan);

(3) Section 26.406 of this title (relating to the Implementation of the Public Utility Regulatory Act §56.025);

(4) Section 26.408 of this title (relating to Additional Financial Assistance (AFA));

(5) Section 26.410 of this title (relating to Universal Service Fund Reimbursement for Certain IntraLATA Service);

(6) Section 26.412 of this title (relating to Lifeline Service and Link Up Service Programs);

(7) Section 26.413 of this title (relating to Tel-Assistance Service);

(8) Section 26.414 of this title (relating to Telecommunications Relay Service (TRS));

(9) Section 26.415 of this title (relating to Specialized Telecommunications Assistance Program (STAP));

(10) Section 26.417 of this title (relating to Designation as Eligible Telecommunications Providers to Receive Texas Universal Service Funds (TUSF));

(11) Section 26.418 of this title (relating to Designation of Common Carriers as Eligible Telecommunications Carriers to Receive Federal Universal Service Funds); and

(12) Section 26.420 of this title (relating to Administration of Texas Universal Service Fund (TUSF)).

(c) Responsibilities of the commission. The commission is the official governing agency for the TUSF, but may delegate the ministerial functions of TUSF administration to another entity (the TUSF administrator) through contractual agreement.

(1) Monitoring, and supervising TUSF administration. The commission reserves the exclusive power to revise rules related to the operation and administration of the TUSF and to monitor and supervise such operation and administration.

(2) Annual audit. The commission annually shall provide for an audit of the TUSF by an independent auditor. The costs of the audit are costs of the commission that are incurred in administering the TUSF, and therefore shall be reimbursed from the TUSF.

(3) Inquiry into administration of the TUSF. The commission may, upon its own motion, upon the petition of the commission staff or the Office of Public Utility Counsel, initiate an inquiry into any aspect of the administration of the TUSF. Any other party may initiate a complaint proceeding pursuant to the commission's procedural rules.

(4) Selection of the TUSF administrator.

(A) The commission shall have the sole discretion in the selection of the TUSF administrator. The selection of the TUSF administrator shall be based on a competitive bidding process.

(B) The TUSF administrator must meet the technical qualifications as provided in subsection (d)(1) of this section as well as other requirements as determined by the commission.

(5) Contract term of the TUSF administrator. The commission shall determine the duration of the TUSF administrator's contract. Prior to expiration of the contract term, the commission may discharge the TUSF administrator of its duties upon 60-days written notice.

(d) TUSF administrator. The TUSF administrator serves at the discretion of the commission.

(1) Technical requirements of the TUSF administrator. The TUSF administrator shall:

(A) be neutral and impartial, not advocate specific positions to the commission in proceedings not related to the administration of the universal service support mechanisms, and not have a direct financial interest in the universal service support mechanisms established by the commission;

(B) possess demonstrated technical capabilities, competence, and resources to perform the duties of the TUSF administrator as described in this section; and

(C) be bonded or bondable.

(2) Duties of the TUSF administrator. The TUSF administrator will administer the TUSF in accordance with the rules set forth in this section and in accordance with the guidelines established by the commission in its contract with the TUSF administrator. The TUSF administrator's general duties shall include, but not be limited to:

(A) managing the daily operations and affairs of the TUSF in an efficient, fair and competitively neutral manner;

(B) taking steps necessary to ensure that all eligible telecommunications providers (ETPs) are in compliance with the relevant sections of this title under which they are receiving universal service support;

(C) calculating and collecting the proper assessment amount from every telecommunications provider and verifying that all telecommunications providers are in compliance with the Public Utility Regulatory Act §56.022;

(D) disbursing the proper support amounts, ensuring that only eligible recipients receive funds, and verifying that all recipients are in compliance with the section or sections of this title under which they are eligible to receive support;

(E) taking steps necessary, including audits, to ensure that all telecommunications providers that are subject to the TUSF assessment are accurately reporting required information;

(F) taking steps necessary, including audits, to ensure that all recipients of TUSF funds are accurately reporting required information;

(G) submitting periodic summary reports to the commission regarding the administration of the TUSF in accordance with specifications established by the commission;

(H) notifying the commission of any telecommunications providers that are in violation of any of the requirements of this section, §26.417 of this title and any reporting requirements; and

(I) performing other duties as determined by the commission.

(e) Determination of the amount needed to fund the TUSF.

(1) Amount needed to fund the TUSF. The amount needed to fund the TUSF shall be composed of the following elements.

(A) Costs of TUSF programs. The TUSF administrator shall compute and include the costs of the following TUSF programs:

(i) Texas High Cost Universal Service Plan, §26.403 of this title;

(ii) Small and Rural ILEC Universal Service Plan, §26.404 of this title;

(iii) Implementation of the Public Utility Regulatory Act §56.025, §26.406 of this title;

(iv) Additional Financial Assistance, §26.408 of this title;

(v) Reimbursement for Certain IntraLATA Service, §26.410 of this title;

(vi) Lifeline Service and Link Up Service, §26.412 of this title;

(vii) Tel-Assistance Service, §26.413 of this title;

(viii) Telecommunications Relay Service (TRS), §26.414 of this title; and

(ix) Specialized Telecommunications Assistance Program (STAP), §26.415 of this title.

(B) Costs of implementation and administration of the TUSF. The TUSF implementation and administration costs shall include appropriate costs associated with the implementation and administration of the TUSF incurred by the commission (including the costs incurred by the TUSF administrator on behalf of the commission), any costs incurred by the Texas Department of Human Services caused by its administration of the Tel-Assistance program, and any costs incurred by the Texas Commission for the Deaf and Hard of Hearing caused by its administration of the STAP and TRS programs.

(C) Reserve for contingencies. The TUSF administrator shall establish a reserve for such contingencies as late payments and uncollectibles in an amount authorized by the commission.

(2) Determination of amount needed. After the initial determination, the TUSF administrator shall determine, on a periodic basis, the amount needed to fund the TUSF. The determined amount shall be approved by the commission.

(f) Assessments for the TUSF.

(1) Providers subject to assessments. The TUSF assessments shall be payable by all telecommunications providers having access to the customer base; including but not limited to wireline and wireless providers of telecommunications services.

(2) Basis for assessments. Assessments will be based upon the following:

(A) Assessments shall be made to each telecommunications provider based upon its monthly taxable telecommunications receipts reported by that telecommunications provider under Chapter 151 of the Tax Code.

(B) Pay telephone service revenues received by providers of pay telephone services are exempt from the TUSF assessment pursuant to the Public Utility Regulatory Act §56.022(c)(2).

(C) Revenue received by telecommunications providers from telecommunications services supplied to pay telephone providers for the provision of pay telephone services is subject to TUSF assessment.

(3) Assessment. Each telecommunications provider shall pay its TUSF assessment each month as calculated using the following procedures.

(A) Calculation of assessment rate. The TUSF administrator shall determine an assessment rate to be applied to all telecommunications providers on a periodic basis approved by the commission.

(B) Calculation of assessment amount. Payments to the TUSF shall be computed by multiplying the assessment rate determined pursuant to subparagraph (A) of this paragraph by the basis for assessments as determined pursuant to paragraph (2) of this subsection.

(4) Reporting requirements. Each telecommunications provider shall be required to report taxable telecommunications receipts under Chapter 151 of the Tax Code as required by the commission or the TUSF administrator.

(5) Recovery of assessments. A telecommunications provider may recover the amount of its TUSF assessment only from its retail customers who are subject to tax under Chapter 151 of the Tax Code, except for Lifeline, Link Up, and Tel-Assistance services. For purposes of the recovery of the TUSF assessment, pay telephone providers are considered retail customers subject to Chapter 151 of the Tax Code. The commission may order modifications in a telecommunications provider's method of recovery.

(A) Retail customers' bills. In the event a telecommunications provider chooses to recover its TUSF assessment through a surcharge added to its retail customers' bills;

(i) the surcharge must be listed on the retail customers' bills as "Texas Universal Service"; and

(ii) the surcharge must be assessed as a percentage of every retail customers' bill, except Lifeline, Link Up, and Tel-Assistance services.

(B) Commission approval of surcharge mechanism. An ILEC choosing to recover the TUSF assessment through a surcharge on its retail customers' bills must file for commission approval of the surcharge mechanism.

(C) Tariff changes. A telecommunications provider choosing to recover the TUSF assessment through a surcharge on its retail customers' bills shall file the appropriate changes to its tariff and provide supporting documentation for the method of recovery.

(D) Recovery period. A single universal service fund surcharge shall not recover more than one month of assessments.

(6) Disputing assessments. Any telecommunications provider may dispute the amount of its TUSF assessment. The telecommunications provider should endeavor to first resolve the dispute with the TUSF administrator. If the telecommunications provider and the TUSF administrator are unable to satisfactorily resolve their dispute, either party may petition the commission to resolve the dispute. Pending final resolution of disputed TUSF assessment rates and/or amounts, the disputing telecommunications provider shall remit all undisputed amounts to the TUSF administrator by the due date.

(g) Disbursements from the TUSF to ETPs, ILECs, other entities and agencies.

(1) ETPs, ILECs, other entities, and agencies.

(A) ETPs. The commission shall determine whether an ETP qualifies to receive funds from the TUSF. An ETP qualifying for the following programs is eligible to receive funds from the TUSF:

(i) Texas High Cost Universal Service Plan;

(ii) Small and Rural ILEC Universal Service Plan;

(iii) Lifeline Service and Link Up Service; and/or

(iv) Tel-Assistance Service.

(B) ILECs. The commission shall determine whether an ILEC qualifies to receive support from the following TUSF programs:

(i) Implementation of the Public Utility Regulatory Act §56.025; and/or

(ii) Additional Financial Assistance program.

(C) Other entities. The commission shall determine whether other entities qualify to receive funds from the TUSF. Entities qualifying for the following programs are eligible to receive funds from the TUSF:

(i) Telecommunications Relay Service; and/or

(ii) Specialized Telecommunications Assistance Program.

(D) Agencies. The commission, the Texas Department of Human Services, the Texas Commission for the Deaf and Hard of Hearing, and the TUSF administrator are eligible for reimbursement of the costs directly and reasonably associated with the implementation of the provisions of PURA Chapters 56 and 57.

(2) Reporting requirements.

(A) ETPs. An ETP shall report to the TUSF administrator as required by the provisions of the section or sections under which it qualifies to receive funds from the TUSF.

(B) Other entities. A qualifying entity shall report to the TUSF administrator as required by the provisions of the section or sections under which it qualifies to receive funds from the TUSF.

(C) Agencies. A qualifying agency shall report its qualifying expenses to the TUSF administrator each month.

(3) Disbursements.

(A) The TUSF administrator shall verify that the appropriate information has been provided by each ETP, local exchange company (LEC), other entities or agencies and shall issue disbursements to ETPs, LECs, other entities and agencies within 45 days of the due date of their reports except as otherwise provided.

(B) If an electing LEC, as defined in §26.5 of this title (relating to Definitions), reduces rates in conjunction with receiving disbursements from the TUSF, the commission may not reduce the amount of those disbursements below the initial level of disbursements upon implementation of the TUSF, except that:

(i) if a local end user customer of the electing company switches to another local service provider that serves the customer entirely through the use of its own facilities and not partially or solely through the use of unbundled network elements, the electing LEC's disbursement may be reduced by the amount attributable to that customer under PURA §56.021(1); or

(ii) if a local end user customer of the electing company switches to another local service provider, and the new local service provider serves the customer partially or solely through the use of unbundled network elements provided by the electing LEC, the electing LEC's disbursement attributable to that customer under PURA §56.021(1) may be reduced according to the commission established equitable allocation formula for the disbursement as described in §26.403(e)(3)(C) of this title (relating to Texas High Cost Universal Service Plan (THCUSP)).

(h) True-up. The assessment amount determined pursuant to subsections (e) and (f) of this section shall be subject to true-up as determined by the TUSF administrator and approved by the commission. True-ups shall be limited to a three year period for under-reporting and a one year period for over-reporting.

(i) Sale or transfer of exchanges.

(1) An ETP that acquires exchanges from an unaffiliated small or rural ILEC receiving support for those exchanges pursuant to §26.404 of this title, shall receive the per-line support amount for which those exchanges were eligible prior to the sale or transfer.

(2) An ETP that acquires exchanges from an unaffiliated ETP receiving support for those exchanges pursuant to §26.403 of this title, shall receive the per-line support amount for which those exchanges were eligible prior to the transfer of the exchanges.

(j) Proprietary information. The commission and the TUSF administrator are subject to the Texas Open Records Act, Texas Government Code, Chapter 552. Information received by the TUSF administrator from the individual telecommunications providers shall be treated as proprietary only under the following circumstances:

(1) An individual telecommunications provider who submits information to the TUSF administrator shall be responsible for designating it as proprietary at the time of submission. Information considered to be confidential by law, either constitutional, statutory, or by judicial decision, may be properly designated as proprietary.

(2) An individual telecommunications provider who submits information designated as proprietary shall stamp on the face of such information "PROPRIETARY PURSUANT TO PUC SUBST. R. §26.420(j)".

(3) The TUSF administrator may disclose all information from an individual telecommunications provider to the telecommunications provider who submitted it or to the commission and its designated representatives without notifying the telecommunications provider.

(4) All third party requests for information shall be directed through the commission. If the commission or the TUSF administrator receives a third party request for information that a telecommunications provider has designated proprietary, the commission shall notify the telecommunications provider. If the telecommunications provider does not voluntarily waive the proprietary designation, the commission shall submit the request and the responsive information to the Office of the Attorney General for an opinion regarding disclosure pursuant to the Texas Open Records Act, Texas Government Code, Chapter 552, Subchapter G.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on May 28, 2002.

TRD-200203262

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: June 17, 2002

Proposal publication date: January 25, 2002

For further information, please call: (512) 936-7308