Legal Alerts and Articles
CA PUC Adopts New Registration and Bond Rules
In a Decision effective on September 3, 2010, the California Public Utilities Commission (CA PUC) established new requirements applicable to all companies registered as Non-Dominant Interexchange Carriers (NDIECs) as well as new applicants for NDIEC registration. The requirements, among other things, require NDIEC registered companies to obtain and submit a copy of an executed performance bond by December 3, 2010.
According to the Decision, NDIEC registered companies are now required to post a continuous performance bond of $25,000 or 10% of intrastate revenues (reported to the CA PUC during the previous calendar year), whichever is greater. Existing authorized providers must submit an Information-only Advice Letter to the Director of the Communications Division by December 3, 2010 containing a copy of the performance bond. The bond must be continuous (i.e., it must not have a termination date) and must be issued by a corporate surety company authorized to transact surety business in the State of California. In addition, not later than March 31st of each year, authorized providers must submit a copy of their executed bond. The purpose of the performance bond requirement is to facilitate the collection of fines, penalties and restitution. The bond amount for new registrants that have not yet reported annual intrastate revenues to the CA PUC is $25,000. In addition, the ruling establishes a minimum annual user fee of $100 for registrants, including those registrants that report no revenue. As a result, registrants must pay an annual user fee based on the Commission-established rate in effect at that time (currently set at 0.18% of gross intrastate revenue) or $100, whichever is greater.
The entities covered by these changes generally include interexchange providers, prepaid calling card providers as well as other types of entities authorized to provide telecommunications services by the CA PUC as non dominant interexchange carriers. Such providers have generally been issued registration Certificates of Public Convenience and Necessity (CPCNs), registration CPCNs or simply CPCNs by the CA PUC. In its Decision, the CA PUC decided to rename such authorizations simply "registration licenses".
Under the Decision, companies which apply to the CA PUC to transfer registration licenses must now verify compliance with all CA PUC reporting, fee, and surcharge transmittals, as well as provide the Director of the Communications Division a written acceptance of the registration license before exercising the authority granted by the license.
The Decision also modified the registration process itself. Under the ruling, applicants are required to provide resumes of all key officers, directors and owners of 10% or more of outstanding shares, listing all employment as well as provide information on prior or current known investigations by governmental agencies, and any settlement agreements, voluntary payments, or any other type of monetary forfeiture.
Finally, the application fee for new and transferred licenses is increased from $75 to $250.
Notably, the Decision did not adopt a proposal to require fingerprinting of registration applicants' officers and directors, nor a proposal to require renewal of registration licenses.
The ruling resulted from a State Controller's 2007 Audit Report that found that the CA PUC's registration process did not sufficiently scrutinize registration applicants, and the CA PUC's collection efforts were ineffective against companies that ceased to operate or filed for bankruptcy when fines were imposed.
Please let us know if you have questions regarding the CA PUC Decision, or if you need assistance in complying with the Decision.
October 2010