No ‘Evidentiary Support’ for CPUC Rate Cap for Incarcerated: Securus

The California Public Utilities Commission imposed a 7 cents-per-minute cap on incarcerated person calling service rates “without first obtaining evidence on which to set a reasonable ceiling,” Securus Technologies counsel Russell Blau of Morgan Lewis told the California 2nd District Court of Appeals in oral argument Thursday on Securus’ petition to set aside the CPUC’s order (see 2205120037). One judge confronted him about why the company didn’t insist on submitting evidence, or demand that the CPUC hold an evidentiary hearing.

The CPUC adopted a decision “that lacked any evidentiary support for many of the key assumptions and inferences it used to set the ceiling,” said Blau. It also “ignored its own procedural rulings in the case,” he said. The agency also shunned its “statutory requirement” to hold a hearing before setting rates, he said.

Contrary to the CPUC’s mischaracterizations of Securus’ position, the company never argued that costs were the only factor the agency should consider when setting rates, said Blau. “But the commission is taking the extreme opposite position that costs are not even relevant,” he said. “This suggests an agency that has completely lost sight of its statutory responsibility.”

The CPUC ignored Section 728 of the California Public Utilities Code requiring a public hearing before setting rates, said Blau. Section 728 also has a “substantive element” that rates must be just, reasonable and sufficient, he said: “It’s simply impossible for the commission to determine whether rates are sufficient without even considering the costs of providing the service.”

The CPUC defends its rate-cap decision as having been based on what it calls “substantial evidence,” said Blau. “But the record shows that there was no evidence at all underlying many crucial findings,” he said. The commission agreed it would hold a public evidentiary hearing, but in “phase 2" of the proceeding, he said. “Then they wondered why companies didn’t submit evidence in phase 1.”

Associate Justice Audrey Collins interrupted Blau to ask if there was anything stopping Securus from submitting evidence in phase 1. He responded “there was no procedural step at which we had the opportunity to do that.” Collins said if Securus didn’t ask for an evidentiary hearing in phase 1, “then that would be forfeiture.” She added: “I don’t know that you’ve shown that 728 required a hearing before adopting the interim relief here.”

The commission initiated its proceeding “over demonstrated concerns over incarceration communications, with phase 1 of the proceeding specifically focusing on what just and reasonable rates the incarcerated and their families should pay in the interim,” said CPUC attorney Elena Gekker. “Having been given by the commission ample opportunity at every step of the proceeding” to submit cost data and other evidence, Securus didn't do so, she said.

Petitioner Securus is in “sole possession” of the cost data it espouses for decrying the CPUC’s rate ceiling, said Gekker. “So unless petitioner introduces that data, the commission and other parties do not have access to it,” she said. “On the other hand, multiple stakeholders did present evidence in support of their arguments for a lower interim rate. That evidence has been repeatedly set out.”

Gekker said she “frankly” doesn't recall Securus “weighing in on interim rates, the relief or whether evidentiary hearings for phase 1 were appropriate.” She also said she doesn’t think there’s anything in the record where Securus “requested to have evidentiary hearings within phase 1.” Blau in his brief rebuttal didn’t contest any of Gekker’s assertions.