Friday, January 06, 2006

Local Coverage of the Appeal Court Decision

The local media cover the Appeals Court decision which found for BellSouth. In a nutshell, the third circuit found that the city's bond ordinance violated the cross-subsidization portions of the "Local Government Fair Competition Act." This overturns the finding of the lower court and disagrees with the Public Service Commission's interpretation of the law. The silver lining, such as it is, is that the Eastin/Naquin suit was dismissed.

Details can be found in the Advocate, the Advertiser, and a brief piece on KATC.

The Advocate article is an update of yesterday's online-only article with additional quotes from the principals involved. The Advertiser substantially expanded yesterday's brief report and the new article is well worth reading. Sidebars include a good timeline and a link to the pdf-formatted 3rd circuit decision.

Both the papers report an amazingly obnoxious press release by Bill Oliver in which he has the unmitigated gall to claim that his interpretation was what the city agreed to and to get pious about government "subsidization." Oliver knows quite well that the city has never agreed with his and his lawyers version of that portion of the law.

(The disagreement is about the meaning of the word pledge in context of a section that declares itself to be about securing the best possible interests rates for local governments who develop a telecommunications utility. The 3rd circuit has agreed with BellSouth that if, for example, you "pledge" your assets when you take out a loan that you have to go into bankruptcy to pay off your creditor unless you have chosen to call it an "assignment" instead. This is plainly nuts--and is cannot be what the legislators or the city meant when the agreed to the compromise. Even Noble Ellington, the putative author said: "he thought the matter had been settled in the negotiations and said he wished the lawsuits 'were not happening'" as was reported in the Advocate when Terry Huval first suggested repeal of the (un)Fair act.)

But what is more obnoxious is the and even less believable is the implication that what LUS proposes is an unfair governmental subsidy when BellSouth, recipient of years of federal subsidy that continues to this day, and a recipient of large subsidies from the city-parish for the Cingular call center, and, additionally and amazingly, the recipient of continuing subsidies from LUS itself in the form of below-market-rate fuel (wouldn't we like a taste of that this winter) has ANY standing to complain about "subsidies." Oliver resembles nothing so much as Slick Sam Slade the nonsense-talking used car salesman made famous during the referendum fight.

Join Lafayette Coming Together, the City, LUS, New Orleans, and a multitude of private citizens in demanding the repeal of the Local Government (un)Fair Competition Act.


Anonymous said...

I read the decision and what I read was that the court said was the LUS fiber plan was unfair competition and against the law.

John said...

Anon poster,

You are right--but only if you interpret this more loosely than the court would. What they have more precisely said is that the bond repayment plan (not the business plan itself) violates the law. I've said nothing different here. That is what the decision says. That, by itself, neither makes the judgement correct nor makes the law just.

The state supreme court will decide the legalities. But only we can decide if those legalities are just.

So I ask:Should Lafayette be prevented from doing what BellSouth does freely? And what, on the evidence, the author of the bill, the city, and the PSC think not what was intended?

What "fair competition" -- or justice is there in that?

Anonymous said...

I understand what you are saying. Laws aren't necessarly just. Should we be concerned about what LUS has told us about the law? They have been telling us that they were not in violation. But, this is the second time a court has held that LUS is breaking the law. We voted to approve the plan based on what they said. IS LUS wrong or the courts? Maybe we just don't understand the plan.

John said...


I'm worried about your counting method. BellSouth and Cox have lost again and again in legal arenas and their wins have been weak...What is proven is solely that if you take enough swings you'll eventually connect with the ball every once in awhile.

So far Cox and BellSouth have this record: for Vote: 1 decision, the city (mistakenly in my judgment still) decided not to appeal a ruling that surprised all and very likely would have been overturned on appeal. The city says, and I have good reason to believe, that they did this only to avoid delay and cost. Having decided to go to a vote they couldn't appeal since they'd mooted the point of any possible appeal.

BellSouth won by default my judgment solely because the city was unwilling to brook delay. (Their fear of delaying tactics is being justified by events, I think you will agree.) Their confidence that the city would back them if they fought and that that was the quicker path has also been confirmed. (I still think that was way too risky--so I'd have made a different decision but I have to say that history demonstrates they read the situation well.)

Lawsuits over line cutting, attempts at a class action suit, another stab at subsidization through another lawsuit...all gone, dismissed, or lost.

The second big legal issue has been this nonsense about "subsidization."

They lost, despite having huge, well-established influence with the regulators, this same battle over "cross subsidization" at the Public Service Commission. They lost badly and in the process offended the commissioners. (I went to a meeting and was amazed at the shenanigans. The commissioners eventually clearly got offended at being told to do things that were simply unconstitutional.) The commissioners are charged by the law with deciding how to implement the clauses and were so sure they were right about this issue (and perhaps so offended by the plaintiffs) that they took the unusual step of supporting Lafayette in a friend of the court brief that asserted their right to make rules and derided BellSouth's claims as an attempt to get the court to do an end-run around the legal process set up by the very law they contest.

If you think that the PSC regularly and without good reason crosses BellSouth--probably the largest company it regulates--you need to think a bit longer. They believe they are right on this.

Having lost at the PSC and lost again at the trial level where the full case was heard they got an appeals court to make a distinction between "pledge" and "assignment" which rests on an arcane supreme court decision. The law in question refers only to pledge (not taking into account any "assignment") and refers to it in the context of explicitly and narrowly intending to allow LUS to "pledge" the full company assets for the express purpose of achieving the cheapest bond rates. It makes NO sense to believe that the legislators intended to force LUS to go into default every month for a few hours and pay substantially higher bond rates and involve the courts just to pay off the bond interest, especially when they've said in the law that low rates are the purpose of the clause. That's too whacky to believe of even our legislators. (On the author's (!) legislative intent, see my link to the Advocate in post above.) No, In truth this was part of a compromise agreement. LUS and the city and its statewide supporters agreed to this very restrictive clause (they can't use monies for ongoing maintenance, for instance) and the legislators thought they should be allowed --as BellSouth is allowed, incidentally--to get the best rates by pledging its full assets. The business plan always called for several years of losses while recovering startup costs. This is necessary, sensible and normal business practice.

BellSouth is simply breaking the word it gave in compromise sessions. The first attempt was simply doing an end-run using the regulatory apparatus in the PSC-- its home turf-- to "fix" the problem. This is common practice for BellSouth that regularly molds regulations to its benefit. Failing there it takes another bite of the apple in the courts. They lost at the full hearing and found a weird technicality at the appeals level that finally got them what they wanted.

There's no reason for a citizen of Lafayette to think that anything has happened here that does anything but demonstrate BellSouth's bad faith. And the fact that if you take enough wild swings you'll eventually connect.

There's still the State Supreme Court and it was going there anyway. Let's see what the big boys say. But even if BellSouth lucks out twice I don't see where that changes my analysis. And I don't see where there is any reason to doubt what the city or LUS has told us...and plenty of reason to doubt the integrity of the opposition.

Again I ask: What do you think on the issue of justice? From what you ignore and what you choose to focus on out of the full story I have to think that you do not favor the decision the people of Lafayette made. The issue of how just this is is and should be paramount.

If my version is true. And if it strikes you as demonstrating bad faith on the part of BellSouth then win, lose or draw at the Supreme Court level this bad law ought to be repealed. Simply because it is unfair and makes a mockery of its title.

Can you join me (and Lafayette) in demanding repeal?