Securus Application for Rehearing, CA, Rules of Practice and Procedure, Telephone, 2026

Type: Miscellaneous • May 13, 2026 • Locations: United States of America -> California • Topics: Telephones, Telephones -> Telephone Access, Telephones -> Telephone Rates, Private Phone Contractors -> Securus

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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Consider
Regulating Telecommunications Services
Used by Incarcerated People.

Rulemaking 20-10-002

SECURUS TECHNOLOGIES, LLC’s APPLICATION FOR REHEARING OF
D.26-04-004 (PUBLIC VERSION)

Thaila K. Sundaresan
David Huang
DAVIS WRIGHT TREMAINE LLP
50 California Street, 23rd Floor
San Francisco, CA 94111
Tel. (415) 276-6500
Fax. (415) 276-6599
Email: thailasundaresan@dwt.com
Email: davidhuang@dwt.com
Attorneys for Securus Technologies, LLC
Dated: May 13, 2026

TABLE OF CONTENTS
I.

INTRODUCTION ...............................................................................................................1

II.

BACKGROUND .................................................................................................................3
A.

Phase I and the Adoption of Interim Rate Caps in D.21‑08‑037 ............................ 3

Judicial Review of D.21‑08‑037 and the Importance of Promised Phase II
Proceedings ............................................................................................................. 4

Phase II Scoping and the Commission’s Repeated Commitments to
Cost‑Based Ratemaking.......................................................................................... 5

The Promised Cost‑Structure Workshop Never Occurred...................................... 6

Subsequent Rulings Did Not Abandon Cost Collection ......................................... 7

Congress Passed the MWR Act, and the FCC Adopted Intrastate IPCS
Rate Caps ................................................................................................................ 7

The Staff Proposal and Securus’s Voluntary Cost Submission .............................. 9

The FCC Set New Rate Caps in Its 2025 IPCS Order ............................................ 9

Commission’s Proposed Decision and Adoption of D.26‑04‑004........................ 10

III.

STANDARD OF REVIEW ...............................................................................................12

IV.

THE COMMISSION EXCEEDED ITS JURISDICTION ................................................14
A.
1.

No Existing Legal Authority Confers Jurisdiction Over NonInterconnected VoIP to the Commission .............................................................. 15
The Commission Has No Jurisdiction over Non-Interconnected VoIP ................ 15

2.
The Martha Wright Reed Act Does Not Annul The Commission’s Jurisdictional
Distinctions Between Interconnected and Non-Interconnected VoIP .................................. 17
B.
V.

The Commission Does Not Have Authority Over Video Calling Services .......... 19

THE DECISION IS NOT SUPPORTED BY RELEVANT FINDINGS ..........................19
A.

The CDCR-Global Tel*Link Contract Is An Inappropriate Benchmark for
the Commission’s Permanent Intrastate IPCS Rate Cap ...................................... 21

The FCC’s 2021 Cost Comparison of Large Jails and Prisons Does Not
Justify Basing an Intrastate Voice IPCS Rate Cap on the CDCR-GTL
Contract ................................................................................................................. 23
-i-

VI.

Out of State Examples of Low Voice Call Rates Do Not Support the
$0.045 Per Minute Rate Cap ................................................................................. 24

The Commission’s $0.02 Site Commission Adder Conflicts with Federal
Law and Distorts the Rate Cap ............................................................................. 25

Facility Size Affects the Cost of Providing IPCS ................................................. 26

THE COMMISSION’S FINDINGS ARE NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE IN LIGHT OF the WHOLE RECORD,
INCLUDING SECURUS’s COST RECORDS .................................................................28

VII.

The $0.045 Rate Cap Is Untethered to Any Cost Record ..................................... 28

The Commission Had Access to Cost Data, Yet Ignored It ................................. 31

The Commission Mischaracterized the Record Regarding
California‑Specific Cost Data ............................................................................... 32

The Commission Erroneously Faulted Providers for Failing to Submit
Cost Data............................................................................................................... 34

The Commission’s Finding Regarding Facility‑Size Cost Differences Is
Unsupported .......................................................................................................... 35

THE COMMISSION FAILED TO PROCEED IN A MANNER REQUIRED BY
LAW AND ABUSED ITS DISCRETION BY DETERMINING THE RECORD
WAS ADEQUATE ............................................................................................................36

VIII.

The Commission Erroneously Adopts Permanent Rate Caps Without a
Cost Record ........................................................................................................... 36

The $0.045 Permanent Rate Cap Is Not Just and Reasonable Under Public
Utilities Code Sections 451 and 728 ..................................................................... 39

The Tier 2 Advice Letter Mechanism for Future Rate Adjustments Is
Insufficient. ........................................................................................................... 41

The Decision Erroneously Denies Securus’s Motion for Leave to File
Under Seal Confidential Appendix A to Opening Comments on
Administrative Law Judge’s Ruling Requesting Comments on Staff
Proposal (“Confidentiality Motion”) .................................................................... 42

THE RATE CAP REQUIREMENT IN D.26-04-004 IMPOSES
CONFISCATORY RATES, EFFECTS AN UNCONSTITUTIONAL TAKING,
AND IS PREEMPTED BY FEDERAL LAW ..................................................................43
1.

The Decision Causes a Substantial Impairment of Existing Contracts ................ 44
- ii -

2.
The Impairment Is Not Reasonable or Necessarily Tailored to Serve a Legitimate
Public Purpose ...................................................................................................................... 45

IX.

The Rate Cap Is Confiscatory and Amounts to an Unlawful Taking ................... 45

The Decision is Preempted by Federal Law ......................................................... 47

REQUEST FOR RELIEF ..................................................................................................48

- iii -

BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Consider
Regulating Telecommunications Services
Used by Incarcerated People.

Rulemaking 20-10-002

SECURUS TECHNOLOGIES, LLC’s APPLICATION FOR REHEARING OF
D.26-04-004 (PUBLIC VERSION)
Pursuant to Rule 16.1 of the California Public Utilities Commission’s (the “Commission”)
Rules of Practice and Procedure, Securus Technologies, LLC (“Securus”) respectfully submits this
Application for Rehearing of Decision 26-04-004 issued on April 13, 2026 (the “Decision” or
D.26-04-004).
I.

INTRODUCTION
Rehearing is warranted because the Commission’s adoption of permanent intrastate

incarcerated persons calling services (“IPCS”) rate caps in Decision 26‑04‑004 rests on a series of
fundamental legal, procedural, and evidentiary errors that independently and collectively render
the Decision unlawful.
First, the Commission exceeded its jurisdiction by asserting authority and imposing
requirements over services it has never regulated under California law, including
non‑interconnected VoIP and video calling services. The Decision disregarded the Commission’s
own precedent distinguishing interconnected from non‑interconnected VoIP, improperly relied on
federal law to erase statutory jurisdictional limits imposed by the California Legislature, and
directed staff to collect data relating to video calling services that indisputably fall outside the
Commission’s regulatory authority.

Second, the Decision adopted permanent statewide IPCS rate caps without the findings
required by law and without substantial evidence in light of the whole record. The Commission
relied on outdated benchmarks and assumptions drawn from an interim decision issued five years
earlier—while simultaneously acknowledging that those interim rates were adopted without “good
cost data.” At the same time, the Commission ignored or mischaracterized Securus’s cost data—
the only California‑specific cost evidence in the record—refused to look at data submitted to the
Federal Communications Commission (“FCC”) to which the Commission had access, and reached
conclusions about cost recovery, feasibility, and facility‑size cost differences that cannot be
reconciled with the evidentiary record.
Third, the Commission failed to proceed in the manner required by law and abused its
discretion by departing from the procedural framework it consistently represented would govern
Phase II of R.20-10-002. Throughout this proceeding, the Commission promised that permanent
rates would be informed by cost‑collection workshops, guidance, and evidentiary development.
None of those steps occurred. Instead, the Commission faulted providers for failing to submit cost
data that the Commission never requested and for which the Commission never established
procedures, and adopted permanent rates without notice, workshops, or hearings. Moreover, the
Decision also erroneously fails to approve Securus’s motion for confidential treatment of its filed
cost data, despite the Commission’s own acknowledgement that cost data is sensitive enough to
warrant a Protective Order in order to permit parties’ access to this information.
Finally, the Decision violates constitutional and statutory limits on ratemaking. The
permanent $0.045 rate cap (only $0.025 of which is recoverable by providers) is confiscatory, fails
the “just and reasonable” standard of the Public Utilities Code, unlawfully impairs existing
contracts, and conflicts with the federal IPCS compensation framework adopted pursuant to the

Martha Wright‑Reed (“MWR”) Act. The Decision’s internal inconsistencies and its reliance on a
procedurally deficient Tier 2 advice letter (“AL”) process further underscore the absence of a
lawful and durable ratemaking determination.
For these reasons, and as detailed below, the Commission should grant rehearing and
vacate or materially modify D.26‑04‑004. At a minimum, the Commission should reopen Phase
II for the limited purpose of conducting the cost‑based proceedings it repeatedly promised and
adopting any permanent IPCS rate structure on a record capable of withstanding judicial review.
II.

BACKGROUND
This rulemaking has proceeded in multiple phases over several years, during which the

Commission repeatedly represented that permanent intrastate IPCS rate caps would be developed
only after the creation of a cost‑based evidentiary record. The Decision challenged here departs
from that framework.
A.

Phase I and the Adoption of Interim Rate Caps in D.21‑08‑037

Phase I culminated in Decision 21‑08‑037, which adopted interim intrastate IPCS rate caps
while expressly deferring permanent ratemaking to a later phase.

In D.21‑08‑037, the

Commission established an interim rate cap of $0.07 per minute for debit, prepaid, and collect
IPCS calls.1 The Commission emphasized that these rates were “interim only” and were adopted
“where we do not have good cost data,” expressly acknowledging the absence of a Californiaspecific cost record.2 The Commission adopted interim relief in part due to the COVID‑19
pandemic; many public commenters explained that pandemic‑related restrictions on in‑person

D.21‑08‑037 at 2, 59-60, 115 (OP 2).

Id. at 51, 58–59.

visitation had sharply increased incarcerated persons’ reliance on IPCS and warranted temporary
rate relief pending fuller record development.3
D.21‑08‑037 also permitted the pass‑through of third‑party financial transaction fees and
applicable government taxes and fees, while prohibiting IPCS providers from imposing any
ancillary or service fees not expressly approved by the Commission.4 Critically, the Commission
explained that “[t]hese rate caps and ancillary fee requirements will remain in effect until the
Commission adopts a subsequent decision in this proceeding.”5

The Commission further

confirmed that interim relief did not resolve permanent ratemaking issues by stressing that “[t]his
proceeding remains open.”6 Taken together, the Commission made clear that permanent intrastate
IPCS rates were not being set in Phase I and would instead be addressed in later phases of the
proceeding following additional development of the record.7
B.

Judicial Review of D.21‑08‑037 and the Importance of Promised Phase II
Proceedings

Securus applied for rehearing of D.21-08-037, which the Commission denied.8 Securus
then challenged the Decision via a writ of review in the Court of Appeal. The Court upheld the
Commission’s adoption of interim rates, but did so in material reliance on the Commission’s
representations regarding future proceedings.9 That conclusion rested on the premise, which was

Id. at 12.

Id. at 72–74.

Id. at 3.

Id.

See D.22‑04‑038.

Securus Technologies, LLC v. Pub. Util. Comm’n, 88 Cal. App. 5th 787, 796, 799, 802 (2023).

shared by the Commission at that time, that Phase II would provide the procedural vehicle for cost
discovery and evidentiary development.10
Specifically, the Court held that evidentiary hearings were not required for the adoption of
interim rates, in part because the Commission had scheduled Phase II proceedings to “resolve
contested issues of material fact.”11 The Court likewise rejected Securus’s argument that the
Commission acted arbitrarily by adopting interim rates without considering IPCS cost data,
reasoning that Securus had not voluntarily offered such evidence at that stage of the proceeding.12
C.

Phase II Scoping and the Commission’s Repeated Commitments to Cost‑Based
Ratemaking

The Assigned Commissioner’s Phase II Scoping Memo made clear that Phase II would be
the forum for developing a cost based evidentiary record to inform permanent IPCS ratemaking.
The Scoping Memo expressly identified as central Phase II issues “[w]hat methodology should the
Commission use to develop any permanent voice only rate caps” and “[w]hat types of data should
the Commission consider when developing permanent rate caps,” including whether and how the
Commission could ensure the accuracy of self-reported cost data.13 In doing so, the Commission
represented that permanent rates would follow the development and evaluation of IPCS cost data,
not precede it.
To build that record, the Assigned Commissioner expressly agreed that workshops were
necessary “to help build the record in this proceeding,” and specifically committed to convening a
Cost Structures workshop focused on IPCS providers’ costs and revenues.14 Rather than deferring

Id. at 801-02.

Id. at 796.

Id. at 803-04.

Phase II Scoping Memo at 11–12.

Id. at 5.

cost discussions, the Assigned Commissioner stated a preference to hold the workshop “relatively
early in Phase II to inform subsequent guidance on precisely how IPCS providers should submit
cost data in response to discovery requests,” emphasizing that “[t]aking this additional step early
on will help ensure that analysis of the submitted data yields practical insights.”15 The Scoping
Memo explained that the workshop would “focus on cost and revenue related questions,” that
“IPCS providers shall be the main presenters,” and that the Commission expected advance
submissions “to facilitate productive discussions.”16
The Scoping Memo further underscored that “solid rate and/or cost data must inform
Commission adoption of permanent IPCS regulations,” and expressly sequenced other issues
“until after such time as we have developed a robust record on costs and rates.”17 Consistent with
that sequencing, the Assigned Commissioner confirmed that Phase II could involve contested
factual issues regarding IPCS “cost and revenue structures,” and therefore reiterated that
“[e]videntiary hearings may be needed,” to be scheduled after discovery and related workshops.18
These representations collectively conveyed a clear procedural commitment that permanent
intrastate IPCS rates would be adopted only after the Commission developed, tested, and evaluated
a robust, cost-based evidentiary record.
D.

The Promised Cost‑Structure Workshop Never Occurred

Despite these express commitments, the promised cost structure workshop never occurred.
The Assigned Commissioner determined that the workshop would take place in Q1 2022, but no

Id.

Id. at 7.

Id. at 12.

workshop was convened, no guidance or reporting template was issued, and no ruling directed
providers to submit cost data by a date certain or in any specified format.19
Even so, as late as April 2022, the Commission continued to represent that cost data
collection would remain part of Phase II and that permanent rates would be developed through
additional record development.20
E.

Subsequent Rulings Did Not Abandon Cost Collection

When the Commission amended the scope of Phase II in May 2022, it expanded the list of
issues to be addressed but did not remove cost methodology, cost data, or permanent ratemaking
from the Phase II scope.21 At no point did the Commission state that it was abandoning the effort
to develop a cost‑based record for permanent IPCS rates.
F.

Congress Passed the MWR Act, and the FCC Adopted Intrastate IPCS Rate Caps

While Phase II remained pending, Congress enacted the Martha Wright-Reed Act.22 In the
MWR Act, Congress directed the FCC to “promulgate any regulations necessary” to “establish a
compensation plan to ensure that all payphone service providers are fairly compensated, and all
rates and charges are just and reasonable, for completed intrastate and interstate
communications.”23 The MWR Act for the first time gave the FCC express authority to cap

Id. at 5.

ALJ’s Ruling Setting Status Conference and Providing Proposed Questions for Testimony and
Additional Briefing (Apr. 14, 2022) at 8 (“At the status conference, we will discuss the potential timing
and steps needed to develop the record to consider permanent voice-only communication service rates and
fees.”).
21

See Assigned Commissioner’s Ruling Amending Phase II Scope and Schedule and Directing
Testimony (May 20, 2022).
22

MWR Act, Pub. L. No. 117-338, 136 Stat. 6156.

MWR Act § 3(a); 47 U.S.C. § 276(b)(1)(A).

intrastate rates. Congress directed the FCC to adopt new regulations no later than 24 months after
the MWR Act’s enactment.24
In response, the FCC issued a notice of proposed rulemaking25 and its staff issued a
mandatory data collection order requiring IPCS providers to submit detailed information on their
costs.26 Securus and more than 10 other IPCS providers submitted extensive cost and other data
in response to that order.
In July 2024, the FCC released its 2024 IPCS Order.27 There, the FCC set new interstate
and intrastate rate caps for audio IPCS, broken out by facility size, ranging from $0.06 per minute
at “large jails” (1,000 or more incarcerated persons) to $0.12 per minute at “very small jails” (099 incarcerated persons).28 The FCC also concluded that states were not categorically preempted
from setting lower rate caps for intrastate voice calls, noting that states could justify lower rates if
they were based on “cost data and market conditions unique to that particular state” and fell “within
[the FCC’s] zone of reasonableness.”29 The FCC also barred and preempted payment of site
commissions.30

MWR Act § 3(a).

See Notice of Proposed Rulemaking and Order, Incarcerated People’s Communications Services, 38
FCC Rcd 2669 (2023).
26

See Order, Incarcerated People’s Communications Services, 38 FCC Rcd 6625 (Wireline Comp. Bur. &
Off. of Econ. & Analytics 2023) (“2023 Data Collection Order”).
27

Report and Order, Order on Reconsideration, Clarification and Waiver, and Further Notice of Proposed
Rulemaking, Incarcerated People’s Communications Services, WC Docket Nos. 23-62, 12-375, FCC 2475 (rel. July 22, 2024; modif. Aug. 26, 2024 and Oct. 2, 2024) (“2024 IPCS Order”).
28

See 2024 IPCS Order at ¶ 4.

Id. at ¶¶ 236-237.

Id. at ¶ 245.

The Staff Proposal and Securus’s Voluntary Cost Submission

On September 30, 2024, despite never having developed a cost-based records, Commission
staff issued a proposal advocating a $0.045 per‑minute permanent intrastate voice IPCS rate cap,
including $0.02 per minute for site commission costs.31 This rate cap left only $0.025 per minute
for IPCS providers to recover all operating and capital costs, including a reasonable return on
investment.
Securus and other parties filed opening comments on the staff proposal, in which they
explained (among other things) that staff had advanced a permanent rate cap without analyzing
IPCS costs.32 To attempt to partially cure the Commission’s failure to develop a complete cost
record, Securus voluntarily submitted its own cost data under seal derived from the data for 2019–
2022 that it submitted as part of the FCC’s Mandatory Data Collection submissions. Securus’s
data was disaggregated by FCC‑prescribed average daily population (“ADP”) tiers.33 Parties,
including Securus, thereafter filed reply comments reiterating the necessity of a developing a full
record of IPCS costs that would support a cost‑driven framework for permanent rate setting.34
H.

The FCC Set New Rate Caps in Its 2025 IPCS Order

In June 2025, the FCC staff pointed to evidence of “ongoing implementation challenges”
and “risks to safety and security” that had “greatly exceed[ed] what the [FCC] considered or

See Staff Proposal on Permanent Rates for Incarcerated Persons Calling Service (“Staff Proposal”)
(Aug. 1, 2024).
32

See Securus Comments on Staff Proposal at 10-11; ViaPath Comments on Staff Proposal at 3-6; NCIC
Comments on Staff Proposal at 2-8.
33

Securus Comments on Staff Proposal (Oct. 29, 2024) at 13 and Confidential Appendix A.

Securus Reply Comments at 1; ViaPath Reply Comments at 5; NCIC Reply Comments at 5.

anticipated when it adopted the 2024 IPCS Order.”35 It therefore waived the compliance deadlines
for the 2024 IPCS Order’s rate caps, while it “continue[d] to reevaluate its IPCS rules.”36
Then, in November 2025, the FCC issued its 2025 IPCS Order.37 There, the FCC set new
rate caps for audio IPCS, ranging from $0.08 per minute at large jails to $0.17 at extremely small
jails (0-49 incarcerated persons).38 The FCC also adopted a uniform $0.02 “rate additive” to
account “for the costs correctional facilities incur in allowing access to IPCS.”39 Thus, the 2025
IPCS Order’s “effective rate caps” range from $0.10 at large jails to $0.19 at extremely small
jails.40 The FCC carried over the preemption rulings in the 2024 IPCS Order.
I.

Commission’s Proposed Decision and Adoption of D.26‑04‑004

On February 10, 2026, the Commission issued a proposed decision (“PD”) adopting a
permanent $0.045 intrastate voice IPCS rate cap. Parties filed opening comments on March 2,
2026, including Securus’s comments identifying numerous legal, procedural, and evidentiary
defects.41 Securus explained that “[r]ather than grounding its conclusions in actual cost data, the
PD is founded only on assumptions, reverse‑engineered benchmarks, and selective outdated and
incomplete federal materials—while disregarding contrary relevant federal findings, recent [FCC]
orders, and unrebutted evidence demonstrating material cost differences across facilities and

Order at ¶ 1, Incarcerated People’s Communications Services, WC Docket Nos., 23-62 & 12-375, DA
25-565 (rel. June 30, 2025).
36

Id.

See 2025 IPCS Order ¶ 8.

Id. ¶ 37.

See id. ¶ 8.

Securus Comments on PD (Mar. 2, 2026).

providers.”42 Securus also pointed out that that the Commission reneged on its commitment to
“establish a process for the submission and evaluation of cost data, including workshops,
templates, and guidance to inform permanent ratemaking.”43 Securus and other parties filed reply
comments on March 9, 2026.44
On March 16, 2026, the Commission issued a revised PD that, for the first time,
acknowledged Securus’s cost submission but summarily concluded—without analysis—that it
was “not persuaded that the data submitted by Securus shows significant differences between
facility size on a per minute basis,” notwithstanding that Securus’s data showed precisely such
differences.45 The revised PD also cited the January 23, 2023 Joint Statement on Stipulated and
Disputed Facts and Need for Hearings as justification for not holding evidentiary hearings.46 The
stipulated and disputed facts addressed in the Joint Statement related only to the specific topics
identified for testimony in the May 20, 2022 Assigned Commissioner’s Ruling—such as the
bundling of video and voice services, video calling rates and usage, and network structure—and
did not concern the cost of providing voice‑only IPCS.47 Therefore, at no point did Securus or
other providers waive their right to a hearing for purposes of rate setting requirements. Moreover,
even aside from the absence of any agreement to forgo hearings on cost issues, the Commission

Id. at 1.

Id.

See Securus Reply Comments on PD (Mar. 9, 2026); Network Communications International Corp
Reply Comments on PD (Mar. 9, 2026); The Utility Reform Network Reply Comments on PD (Mar. 9,
2026); Center for Accessible Technology Reply Comments on tPD (Mar. 9, 2026); ViaPath Reply
Comments on PD (Mar. 9, 2026).
45

Revised PD at 74.

Id. at 87.

See Assigned Commissioner’s Ruling (May 20, 2022).

never established a methodology for collecting or vetting IPCS cost data, nor did it ever state that
it was abandoning that step.
On April 2, 2026, the Commission issued a second revised PD adding language directing
staff to collect additional information regarding video IPCS rates.48
On April 9, 2026, the Commission adopted D.26‑04‑004. Among other things, the
Decision found that there was “ample opportunity and encouragement for the providers to submit
cost data,”49 adopted a $0.045 per‑minute rate cap ($0.02 per‑minute of which was for site
commissions and not to compensate IPCS providers),50 permanently eliminated ancillary fees
except unavoidable third‑party financial transaction fees and government-mandated taxes and
fees,51 found that no party provided data justifying higher rates for county or city jails or
summarizing security‑related costs,52 and concluded, without prior notice, that existing service
quality requirements are sufficient to satisfy Senate Bill 1008.53
The Decision was adopted and thereafter issued on April 13, 2026, triggering the thirtyday clock to file an application for hearing by May 13, 2026.54 Securus’s rehearing application is
timely filed.
III.

STANDARD OF REVIEW
An application for rehearing serves a critical and well‑established function in the

Commission’s decisional process. Its purpose is to alert the Commission to legal, procedural, and

PD (Rev. 2) at 71 (Apr. 2, 2026).

D.26‑04‑004 at 62 (FOF 12).

Id. at 75 (FOF 7).

Id. at 77 (OP 3).

Id. at 75 (FOF 8).

Id. at 76 (COL 7).

See Pub. Util. Code § 1731(b)(1).

evidentiary errors in a decision while the Commission retains jurisdiction to correct those errors
expeditiously and avoid unnecessary judicial intervention.
Consistent with that purpose, Rule 16.1 of the Commission’s Rules of Practice and
Procedure requires a party seeking rehearing to “set forth specifically the ground or grounds on
which the applicant considers the decision or order to be unlawful or erroneous.” An application
for rehearing is therefore the procedural vehicle through which parties must clearly identify legal
error, failure to follow required procedures, lack of evidentiary support, or constitutional
infirmities in a Commission decision in order to preserve those issues for further review.55
The Commission has long recognized that the analysis of whether a decision is “unlawful
or erroneous” under Rule 16.1 substantially mirrors the standards a reviewing court would apply
on appeal.56 Because the Decision at issue adopts permanent intrastate rates, it is a ratesetting
decision subject to review under Public Utilities Code section 1757(a). Section 1757 provides
that, following rehearing, a reviewing court shall determine whether the Commission has
committed reversible error on one or more specified grounds. Those same grounds define the
scope of error the Commission must address on rehearing.
Under section 1757(a), a Commission decision must be reversed or modified if the
Commission: (1) acted without, or in excess of, its jurisdiction (2) failed to proceed in the manner
required by law; (3) issued findings that do not support the decision; (4) made findings not
supported by substantial evidence in light of the whole record; (5) abused its discretion; or (6)

See Pub. Util. Code § 1732; see also S. Cal Edison Co. v. Pub. Util. Comm’n, 140 Cal. App. 4th 1085,
1096 (2006).
56

Id.

violated any right of the petitioner under the United States Constitution or the California
Constitution.57
The California Supreme Court recently confirmed in Center for Biological Diversity, Inc.
v. Public Utilities Commission, No. S283614 (Cal. Aug. 7, 2025), that courts no longer apply the
“uniquely deferential” standard of Greyhound Lines, Inc. v. Public Utilities Commission, 68 Cal.
2d 406 (1968), to the Commission’s statutory interpretations. The reviewing court applies its
independent judgment to the meaning of section 451, section 728, section 1705, and other
operative provisions of the Public Utilities Code. Review of constitutional questions remains
independent.58 The combined effect of Center for Biological Diversity and the recalibrated
“manner required by law” prong of section 1757(a)(2) is that the substantive grounds for rehearing
set forth below carry materially greater appellate force than they would have under the prior
deferential gloss.
IV.

THE COMMISSION EXCEEDED ITS JURISDICTION
The Commission improperly assumes jurisdiction over non-interconnected VoIP and video

calling service. The Commission expressly recognized its jurisdictional limitations over noninterconnected VoIP in prior decisions, and the Decision erroneously relies on federal law to erase
jurisdictional boundaries that remain binding under California law.

Additionally, the

Commission’s directive to its staff to collect video calling data exceeds the Commission’s

See Pub. Util. Code § 1757(a)(1)-(6).

Pacific Tel. & Tel. Co. v. Pub. Util. Comm’n, 62 Cal. 2d 634, 646 (1965); Ponderosa Tel. Co. v. Pub.
Util. Comm’n, 36 Cal. App. 5th 999, 1013-14 (2019). ); see also Pub. Util. Code § 1760 (“In any
proceeding wherein the validity of any order or decision is challenged on the ground that it violates any
right of petitioner under the Constitution of the United States, the Supreme Court shall exercise an
independent judgment on the law and the facts, and the findings or conclusions of the commission
material to the determination of the constitutional question shall not be final.”).

jurisdictional authority, given that the Commission does not regulate video calling services and
the Commission has not determined in this or other proceedings that it has jurisdiction over video
calling services.
A.

No Existing Legal Authority Confers Jurisdiction Over Non-Interconnected
VoIP to the Commission

IPCS providers, including Securus, offer outbound-only, IP-based voice services
originating from correctional facilities. Securus understands that such one-way voice services are
commonplace throughout the industry, given carceral facilities’ need to limit incarcerated persons
to making calls (not receiving them) for legitimate security and public safety purposes.59 Under
the Commission’s own definition of interconnected VoIP service,60 such one-way, IP-based voice
services are non-interconnected VoIP. 61

The Decision’s assertion of jurisdiction over non-

interconnected VoIP represents an unexplained and unlawful departure from settled Commission
policy and exceeds the Commission’s authority.
1.

The Commission Has No Jurisdiction over Non-Interconnected VoIP

By regulating the rates for non-interconnected VoIP services, the Commission asserts
jurisdiction over them, notwithstanding contrary Commission precedent and the absence of
statutory authority under California law. To justify its authority to set the rates of IP-based IPCS,
the Decision relies on Public Utilities Code Section 451, and broadly asserts that “VoIP providers

Correctional agencies typically restrict outbound calling to preapproved numbers in order to prevent
outbound calls that intimidate potential witnesses, jurors, and judges, or otherwise advance illegal
activity.
60

“For purposes of Section 285, the term “interconnected VoIP service” has the same meaning as Section
9.3 of Title 47 of the Code of Federal Regulations.” D.24-11-003 at 7.
61

See D.24-02-013 at 4. Compare 47 C.F.R. § 9.3 “(1) An interconnected Voice over Internet Protocol
(VoIP) service is a service that: (i) Enables real-time, two-way voice communications” (emphasis added)
with 47 U.S.C. § 153(36) (defining non-Interconnected VoIP service as one that, in part, provides oneway communication and does not include any Interconnected VoIP service.).

clearly fit within the plain language of the definition of a public utility ‘telephone corporation’.”62
The Decision points out that, in D.20-09-012, the Commission upheld the finding that VoIP
providers are “telephone corporations” and “public utilities” are under the Commission’s
jurisdiction.63 However, it ignores that the “VoIP providers” addressed in that definition were
offering two-way — that is, interconnected — VoIP.64
The Commission’s orders have long recognized that the defining characteristic of
interconnected VoIP is the “ability to both originate a call to and terminate a call from the [Public
Switched Telephone Network (“PSTN”)].” In plain terms, it is the ability to “make and receive
phone calls.”65 Indeed, in Phase 1 of this proceeding, the Commission limited its interim rate relief
as applying to “voice and interconnected VoIP calling,” underscoring that non-interconnected
VoIP is outside those rules. 66

The Decision’s sudden expansion of jurisdiction therefore

contradicts not only Commission precedent, but the Commission’s own framing of its authority
earlier in this rulemaking.
That contradiction is confirmed by the Commission’s recent jurisdictional holdings in other
proceedings.

In February 2024, the Commission dismissed on jurisdictional grounds an

application of Smart Communications (“Smart”) requesting registration as an Interexchange
Carrier Telephone Corporation pursuant to Public Utilities Code Section 1013.67 In dismissing the
application, the Commission explained that it “regulates interconnected VoIP service as a

Decision at 56-57.

Decision at 57.

See D.24-11-003 at 7 (“Senate Bill (SB) 1161 (Ch. 733, Stats. 2012), added Section 239 to define
interconnected VoIP service.”) (emphasis added).
65

D.24-11-003 at 18.

See D.21-08-037 at 21.

See D.24-02-013 at 6 (COL 1).

telephone company” and that it “has not, to this date, asserted authority over non-interconnected
VoIP providers,” such as Smart.68 Nine months later, the Commission adopted new licensing and
market entry requirements for interconnected VoIP service providers in California and affirmed
the Commission’s jurisdiction over interconnected VoIP.69

The Commission has been

unequivocal in its position that it has regulatory authority over interconnected VoIP, and this
position has been consistently maintained in the Commission’s rulemaking activity.70

The

Commission cannot plausibly maintain that non-interconnected VoIP lies outside its jurisdiction
in one proceeding and within the scope of its jurisdiction in another proceeding dealing with the
same IPCS industry without legal justification.
2.

The Martha Wright Reed Act Does Not Annul The Commission’s
Jurisdictional Distinctions Between Interconnected and NonInterconnected VoIP

The Decision’s faulty jurisdictional assertions over non-interconnected VoIP is further
compounded by its conclusion that the MWR Act eliminates all meaningful jurisdictional
distinctions between interconnected and non-interconnected VoIP. That conclusion is legally
untenable.
The MWR Act is a federal law that revised the FCC’s authority to regulate the cost of
inmate calling services. Notably, this federal statute expands federal authority over IPCS under
the Communications Act. It did not amend the California Public Utilities Code, did not expand
the jurisdictional authority of state public utility commissions granted to them by state legislatures,

Id. at 4.

See D.24-11-003 at 17-19.

See e.g., D.25-09-031 at 206 (COL 33) (finding that the Commission should establish a service quality
framework for interconnected VoIP service) (emphasis added) and R.22-08-008, Assigned
Commissioner’s Amended Scoping Memo and Ruling (Apr. 3, 2025) at 3-5 (scoping Phase 2 issues
addressing technical and implementation issues in the application of the new regulatory framework for
interconnected VoIP service generally, or nomadic-only interconnected VoIP service providers) .

nor did it override jurisdictional determinations previously made by the Commission. Thus, the
Decision’s reliance on the MWR Act to confer the Commission jurisdiction over noninterconnected VoIP IPCS is wholly inappropriate and not supported by law.
As the Decision recognizes, the Commission has jurisdiction over voice communications
providers in the state to the extent they are “telephone corporations.”71 As applied to VoIP, the
Commission has consistently asserted jurisdiction over interconnected VoIP and declined
jurisdiction over non-interconnected VoIP.72

The Decision offers no statutory basis for

abandoning that distinction. Instead, it asserts without any legal support that because the MWR
Act does not make distinctions between interconnected VoIP and non-interconnected VoIP, the
Commission may similarly disregard that distinction for state jurisdictional purposes.73 That logic
is fundamentally flawed. Federal silence on state jurisdiction does not expand state authority, and
a federal statute cannot be used as a vehicle to rewrite the Commission’s own jurisdictional
precedents or the limits imposed by California law. The Decision’s reliance on the MWR Act to
justify an assertion of jurisdiction the Commission has disclaimed is therefore error as a matter of
law.

Decision at 55 (“The California Constitution and the Public Utilities Code provide the Commission
authority over public utilities, including telephone corporations.”) (citing Cal. Const., art. XII §§ 3, 6 and
Pub. Util. Code § 216(b)).
72

Compare D.24-11-003 at 18-19 (articulating the basis for categorizing interconnected VoIP service
providers as “telephone corporations”) with D.24-02-013 at 4 (“The Commission regulates interconnected
VoIP as a telephone company. The Commission has not, to this date, asserted authority over noninterconnected VoIP providers.”) (emphasis added).
73

Decision at 58 (“Similarly, in light of the [MWR] Act, for the purposes of regulating IPCS as provided
in this rulemaking, the Commission need not recognize any distinctions between interconnected VoIP or
non-interconnected VoIP services. . .”).

The Commission Does Not Have Authority Over Video Calling Services

The Decision further exceeds the Commission’s jurisdiction by directing the Commission
to track video call rates and the percentage of IPCS calls that are video calls. The Commission
has no authority to regulate video communications, which are information services outside the
scope of the Commission’s jurisdiction.74 Notably, providers of video calling services are not
telephone corporations or otherwise public utilities subject to the Commission’s jurisdiction.
Although a video call may include an audio component, that audio is inseparable from the
simultaneous transmission of video and data. The service is not a voice telephony service and
cannot be disaggregated into a regulated “telephone” component without fundamentally
mischaracterizing the nature of the service.

Given its lack of regulatory authority over video

calling services, the Commission has no reasonable basis for concluding that it should collect data
relating to the cost of video calls or their frequency of use by IPCS users.75 By directing staff to
collect information concerning video IPCS rates and usage, the Decision ventures beyond the
Commission’s statutory authority and into a field reserved to federal regulation of information
services. That jurisdictional overreach requires rehearing and correction.
V.

THE DECISION IS NOT SUPPORTED BY RELEVANT FINDINGS
The Decision’s orders pertaining to the permanent voice IPCS rate cap, site commission

costs, and ancillary charges are based on findings made in the Commission’s decision adopting
interim caps on intrastate rates for IPCS, D.21-08-037. The Decision’s reliance on factual findings

See D.13-12-005 (“It is well-established that internet service is classified for state and federal
regulatory purposes as an ‘information’ service and that the state commissions such as the California
Public Utilities Commission do not have jurisdiction over information services even if the providers also
provide ‘communications services’ that are subject to state regulation.”) (internal citations omitted).
75

See United States v. Morton Salt Co., 338 U.S. 632, 652 (1950) (finding that an agency may compel
information only if the demand is within its lawful authority, not too indefinite, and “the information
sought is reasonably relevant” to the inquiry.).

from five years ago supporting the interim rate cap is inappropriate because these findings are
outdated, inaccurate, and otherwise irrelevant to California’s voice IPCS marketplace today. The
Decision also incorrectly states that the $0.045‑per‑minute rate cap was “first calculated in
D.21‑08‑037,” further undermining its reliance on purported factual findings from D.21‑08‑037 to
justify that rate cap.76
The Decision asserts that the $0.045-per-minute rate cap is based on the same findings the
Commission made in 2021 to support the interim rate cap:77
a) The California Department of Corrections and Rehabilitation’s (“CDCR”) December
2020 contract with Global Tel*Link (“CDCR-GTL Contract”), which encompasses the
state’s largest carceral system, sets a rate of $0.025 per minute, and which the
Commission “see[s] no reason to differentiate” from the permanent voice IPCS rate
cap.
b) The FCC found in its 2021 order that, nationwide, the cost of providing IPCS to jails
with a population greater than 1,000 is up to 25% higher than the cost of serving
prisons.
c) Other states, and at least one city and at least one county in other states, had IPCS voice
call rates that fell below $0.05 per minute.
d) The $0.045 rate cap includes a $0.02 “adder” for site commissions.
e) The cost of providing intrastate IPCS did not change based on the size of the facility.
However, as detailed in Securus’s opening comments on the PD, none of these findings provides
a rational or persuasive basis for the Commission’s adoption of a $0.045 permanent intrastate
voice-only IPCS rate cap (only $0.025 of which goes to IPCS providers). Moreover, in D.21-08037, the Commission had acknowledged that it was adopting an interim rate cap without “good
cost data” and that the “correctness” of rates set by a regulatory commission can only be known
once the rates are implemented and monitored over time, which it intended to do.78 And in
upholding D.21-08-037, the Court of Appeal relied in part on the Commission’s representation

Decision at 61 (“Further, this rate cap was first calculated in D.21-08-037 . . .”).

Decision at 61.

D.21-08-037 at 58.

that evidentiary hearings would be held in Phase II of the proceeding (i.e., after the interim rate
cap was set).79 The Commission’s recycling of its analysis from its decision adopting the interim
voice IPCS rate cap demonstrates that there are no novel factual findings that would support a
permanent rate cap that is lower than the interim rate cap.
A.

The CDCR-Global Tel*Link Contract Is An Inappropriate Benchmark for the
Commission’s Permanent Intrastate IPCS Rate Cap

The Decision’s continued reliance on the CDCR-Global Tel*Link contract as an anchor
for permanent rate design is among its most consequential and least supported choices. Most
notably, this is an outdated 2020 contract that never even went into effect because it did not meet
the complete terms of the CDCR’s request for proposal.80 Moreover, the contract reflects a unique
procurement for the state’s largest prison system and is not representative of the diverse set of
county and city jails subject to the Commission’s permanent cap.

As Securus previously

explained, the CDCR contract covers the largest facilities in the state all of which have ADP of
well over 1,000,81 reflects extraordinary economies of scale and scope that are unattainable at
smaller carceral facilities,82 bundles voice with non-voice services that may not be universally

Securus Technologies, LLC v. Public Utilities Commission (2023) 88 Cal.App.5th 787, 803; see also id.
at 802 (finding that evidentiary hearing is not required under Public Utilities Code section 728 when the
Commission is imposing “temporary restrictions on rates while considering whether and how to regulate
them long term.”) (emphasis added).
80

Securus Application for Rehearing of D.21-08-037, Ex. A, p. 9 (granting Securus’s Petition for Writ of
Mandate to the Superior Court of California to set aside the CDCR-GTL Contract).
81

See Securus Comments on Staff Proposal at 18; Securus Reply Comments on Staff Proposal at 10.

See Securus Comments on Staff Proposal at 18; Securus Reply Comments on Staff Proposal at 9, 10,
and 13.

offered by all IPCS providers or offered to carceral facilities,83 and is a renewal contract84 under
which the substantial, up-front capital costs of deploying network equipment and telephones to
individual facilities have likely already been recovered.
While the Decision recognizes that “the Proposal identified a continuing need to address
communication affordability and accessibility in non-CDCR facilities,”85 the Decision
nevertheless determines that the permanent rate cap for non-CDCR facilities should track CDCR’s
rate of $0.025 per minute. The CDCR-GTL Contract represents over half of California’s total
incarcerated population and the over 30 state prisons all hold over 1,000 ADP, the highest FCC
IPCS facility population tier.86 Importantly, that means that the cost to provide service to small,
medium, or large jails in the state, which are the main targets of the Commission’s permanent rate
cap, were never considered in deriving the $0.025 per minute benchmark. Put simply, the CDCRGTL Contract standard is not representative of county or city jails, smaller facilities, and smaller
providers. Therefore, at a minimum, the Commission’s rationale does not provide a lawful basis
for a permanent statewide cap for non-CDCR facilities. But it also cannot support a permanent
statewide cap even for CDCR facilities for the reasons set forth above.

See Viapath Comments on Staff Proposal at 6 (“Voice IPCS is only one aspect of the complete solution
that the CDCR requires under the contract. The contract includes many other services such as email,
video messaging, movie and music streaming, e-books, and the supply of the required technology and
hardware to enable use of these services. . .”); Securus Reply Comments on Staff Proposal at 9-10; TURN
and CforAT Comments on Staff Proposal at 7-8.
84

See Securus Reply Comments on Staff Proposal at 9.

Decision at 18 (emphasis added).

See Securus Reply Comments on Staff Proposal on Permanent IPCS Rates at 10.

The FCC’s 2021 Cost Comparison of Large Jails and Prisons Does Not Justify
Basing an Intrastate Voice IPCS Rate Cap on the CDCR-GTL Contract

The Decision also relies on an asserted FCC finding that “costs for jails with populations
over 1,000 are up to 25% higher than the cost of serving prisons. 87 The Commission ignores that,
in the same Order, the FCC unequivocally disagreed with the assertion that “size does not impact
costs” and found that “providers incur higher costs per minute for jails with ADPs below 1,000
than for larger jails.”88 The FCC’s 2024 and 2025 orders are consistent with that conclusion, with
each setting higher rate caps for smaller facilities.89 Moreover, the Decision erroneously concludes
without any analysis or explanation that a 25% difference in the cost of providing IPCS to large
jails versus prisons does not at minimum justify a tiered rate cap distinguishing large jails and
prisons.
Even if it were reasonable for the Commission to find that cost differences of 25% between
large jails and prisons are negligible, which it is not, the Decision does not apply the 25%
differential. It sets the IPCS provider cost-recovery rate at the CDCR-GTL rate of $0.025, not 25%
higher. It is nonsensical to justify a rate on a factor that is not applied. Moreover,the finding does
not support the application of the permanent rate cap to medium and smaller jails, which constitute
a majority of carceral facilities in California. The mere assertion that it costs 25% more to provide

See id. at n.189 (citing D.21-08-037 at 52, citing Third Report and Order, FCC 21-60, at ¶ 148 [sic])
(correct citation: Third Report and Order, FCC 21-60, at n.145).
88

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Third Report and Order, Order
on Reconsideration, and Fifth Further Notice of Proposed Rulemaking, FCC 21-60 ¶¶ 47 and 48 (2021).
89

See 2025 IPCS Order at ¶ 21 (“Given the significant number of [small] jails and their distinct cost
structures, and given their generally more rural nature, we find it necessary to further refine our rate cap
tiers to better capture the variability among small jails generally and within the very small jail tier
specifically to more accurately reflect providers’ costs and ensure they are fairly compensated.”) and ¶ 22
(“As a general matter, we agree with commenters that as ADP decreases, per-minute or per capita costs
for the provision of IPCS increase for the provider.”); see also 2024 IPCS Order at ¶ 148 (“The record
nearly uniformly supports maintaining a rate cap structure that distinguishes among jails based on facility
size.”).

IPCS to large jails than to prisons does not challenge that it is more expensive per IPCS minute or
per capita to provide IPCS to a facility with an even lower ADP because the fixed costs are spread
across a smaller user base.90

And furthermore, this assertion does not challenge that the

Commission should adopt a higher or a tiered rate based on the actual cost of providing IPCS,
especially in light of findings at the federal level that IPCS rate caps (including $0.02 for facility
costs) should range between $0.10 for large jails and $0.19 for extremely small jails.91 Those rate
caps not only vary substantially by jail size, but also are all substantially higher than the $0.045
rate the Commission set for all jails statewide.
C.

Out of State Examples of Low Voice Call Rates Do Not Support the $0.045 Per
Minute Rate Cap

The Decision’s reliance on isolated out-of-state examples of low per-minute rate caps fares
no better.92 Select rates from other states—many of which date back to five years ago—do not
constitute evidence of reasonable costs for California’s county and city jails today. Additionally,
these rates were cited by the Commission in 2021 to support the notion that “$0.05 is a reasonable
‘base rate’ to use to identify the appropriate interim per-minute rate;” thus, they lack any
evidentiary value to support a $0.025 base rate.
The out-of-state examples cited in the Decision also likely reflect unique circumstances,
including state-run systems, large facilities, public subsidies or legacy contracts. They are applesto-oranges examples that do not demonstrate that similarly low rates are feasible—or lawful—for
smaller, locally operated facilities in California. The fact that the New Jersey Department of
Corrections posted a $0.044 per minute rate in May 2021 or that the Illinois Department of

See 2025 IPCS Order at ¶ 22.

See id. at ¶ 8.

Decision at n.190.

Corrections posted a $0.009 per minute rate in May 2021 should have no bearing on what the
Commission should impose as a permanent intrastate voice IPCS rate cap today that would bind
the providers of IPCS to lower ADP carceral facilities run by non-state level agencies in California.
In addition, the New Jersey and Illinois examples are not relevant to the Commission’s
consideration of the permanent rate cap, given that CDCR, the operator of California’s largest
prison facilities, has been required to provide voice communications for free to incarcerated people
since 2022. Similarly, 2021 rates in Dallas County jails and New York City jails are also not
relevant, as these facilities could be located in less costly to serve areas with substantial jail
populations that can support a lower per minute call rate and are not accurate proxies for lower
ADP carceral facilities.
D.

The Commission’s $0.02 Site Commission Adder Conflicts with Federal Law and
Distorts the Rate Cap

The Decision’s finding that the $0.045 per minute permanent rate cap is supported by the
Commission’s designation of a $0.02 per minute set-aside for site commissions is misguided.
When the Commission determined that the $0.07 per minute interim rate cap included a $0.02 per
minute set-aside for site commission payments, it did so to mirror the FCC’s approach for jails
with ADPs greater than 1,000, per the FCC’s Third Order.93
However, since the adoption of the Commission’s interim IPCS rate cap, the FCC has
prohibited site commissions through its 2025 Order.94 Therefore, a permanent IPCS rate cap
cannot lawfully incorporate a pre-set site commission value, and is preempted by the FCC’s 2025

See D.21-08-037 at 54.

Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking,
Incarcerated People’s Communications Services, WC Docket Nos. 23-62, 12-375, FCC 25-75 (rel. Nov.
6, 2025) (“2025 IPCS Order”) at App. A (promulgating 47 C.F.R. § 64.6015, which is a prohibition
against site commissions); see id. ¶ 130 (setting the date on which “compliance [with the new regulations]
shall be required).

Order.

Federal law overrides state law when state law is in actual conflict with federal law.95

Conflict preemption exists when state law frustrates the accomplishment and execution of the
objective of federal law or interferes with methods Congress selected to achieve those objectives.96
Finally, the Decision internally contradicts itself regarding the recovery of site
commissions. On one hand, Conclusion of Law (“COL”) 1, Ordering Paragraph (“OP”) 1, and
Finding of Fact (“FOF”) 14 authorize $0.02 per minute in site-commission-equivalent recovery
within the rate cap. On the other, OP 2 and COL 2 permanently prohibit providers from “paying
or recovering site commissions, sign-on bonuses, or similar payments from the rates charged to
end-users.”

Moreover, while FOF 15 acknowledges that the FCC’s October 2025 Order

maintained its prohibition on site commissions and added a rate additive of up to $0.02 per minute
separate from its rate caps, the Decision provides no explanation to reconcile this finding with its
statements relating to site commissions or its position that “audio safety and security functions”
corresponding to the delivery of IPCS should be excluded from the calculation of the rate cap,97
and effectively, be deemed a non-recoverable cost. Internal inconsistency on this scale constitutes
an independent abuse of discretion under section 1757(a)(5) and a failure to proceed in the manner
required by law under section 1757(a)(2).
E.

Facility Size Affects the Cost of Providing IPCS

Finally, the Decision’s reliance on the assertion that “costs to provide intrastate IPCS did
not change based on the size of the facility” is misplaced and unsupported.98 That proposition is

See Qwest Corp. v. Arizona Corp. Com’n, 567 F.3d 1109, 1118 (9th Cir. 2009) (citing Freightliner
Corp. v. Myrick, 514 U.S. 280, 287 (1995)).
96

Id. (citing Int’l Paper Co. v. Ouellette, 479 U.S. 481 (1987)).

See Decision at 71.

Decision at 61.

not a finding based on Phase II record development, but a carryover from D.21‑08‑037, where the
Commission merely stated that the then‑existing record did not persuade it one way or the other
on whether costs vary by facility size. 99 That statement reflected an evidentiary gap—not an
affirmative conclusion—and was made in the context of adopting an expressly interim rate cap
without a developed cost record.
That interim conclusion rested in part on the Commission’s rejection of Pay Tel’s argument
that it is more costly to serve facilities with ADPs below 1,000.100 Critically, the Commission did
not reject Pay Tel’s argument on the merits; it rejected it because Pay Tel relied on cost data from
the FCC’s 2016 Order, which had been vacated.101 The Commission has now transformed that
procedural rejection—based on outdated data—into a substantive finding that facility size does
not affect costs, without developing new evidence and without reconsidering the issue in light of
current cost information.
That approach is especially untenable given the broad consensus that has long governed
the industry. Industry providers, consumer advocates, and the FCC have all concluded that IPCS
costs vary materially by facility size, with per‑minute and per‑capita costs increasing as ADP
decreases.102 As the FCC has recently reaffirmed, “as ADP decreases, per‑minute or per‑capita

D.21-08-037 at 55.

100

Id.

101

Id.

102

See supra, note 32; see 2024 IPCS Order ¶ 148 (“The record nearly uniformly supports maintaining a
rate cap structure that distinguishes among jails based on facility size”), ¶ 156 (“ADP continues to be the
most practical metric for determining the size of correctional facilities for the purposes of applying our
rate caps.”), and n.520 (reciting past FCC orders setting rate cap tiers based on facility type and size based
on ADP); see also Incarcerated People’s Communications Services; Implementation of the Martha
Wright-Reed Act, Rates for Interstate Inmate Calling Services, Report and Order, Order on
Reconsideration, and Further Notice of Proposed Rulemaking, FCC 25-75 ¶ 20 (2025) (“FCC 25-75”)
(“The Martha Wright-Reed Act directs the Commission to ensure just and reasonable rates and consider
costs associated with ‘small, medium, and large facilities’ or ‘other characteristics.’ In the 2024 IPCS

costs for the provision of IPCS increase for the provider.”103 That is why the FCC, in both its
2024 and 2025 orders, set rate caps that increase as facility size decreases. The Decision cites no
record evidence developed in this proceeding to support the opposite conclusion, despite Securus’s
cost data showing an inverse relationship between ADP per-minute and per-capita costs. By
relying on an outdated, record‑limited statement from an interim decision to justify a permanent
statewide rate cap, the Commission substitutes assumption for analysis and fails to make the
relevant findings required by law.
VI.

THE COMMISSION’S FINDINGS ARE NOT SUPPORTED BY SUBSTANTIAL
EVIDENCE IN LIGHT OF THE WHOLE RECORD, INCLUDING SECURUS’S
COST RECORDS
Under Public Utilities Code section 1757(a)(4), a Commission decision must be vacated or

modified if its findings are not supported by “substantial evidence in light of the whole record.”
This standard requires more than selective citation or inference; it requires that the Commission
meaningfully grapple with the evidence before it and explain how that evidence supports its
conclusions. Here, multiple key findings in the Decision—especially those purporting to justify a
uniform $0.045 intrastate IPCS rate cap—lack substantial evidentiary support and rest instead on
demonstrably false premises and ignored record evidence.
A.

The $0.045 Rate Cap Is Untethered to Any Cost Record

As Securus and other providers explained throughout Phase II, the Commission never
implemented the process it repeatedly promised—through the Phase II Scoping Memo and
subsequent rulings—for the systematic collection of cost data, including cost‑structure workshops,
discovery, guidance, or standardized reporting templates. Without such a process, the Commission

Order, the Commission interpreted this language as a mandate to analyze the cost characteristics of
different-sized facilities.”).
103

FCC 25-75 ¶ 22 (emphasis added).

could not lawfully determine providers’ costs, let alone whether a permanent rate cap allows
recovery of those costs plus a reasonable return.
Nevertheless, in FOF 7, the Commission found that “[a] uniform intrastate IPCS rate cap
of $0.045 per minute is sufficient to cover the documented cost of service plus a reasonable margin
for providers.”104 That finding is untenable on its face. A conclusion about whether a rate covers
the “cost of service plus a reasonable margin” necessarily presupposes that the Commission
collected, evaluated, and relied upon cost‑of‑service evidence from IPCS providers.

The

Commission did not do so.
Notwithstanding the Commission’s failure to establish a cost‑collection framework,
Securus submitted cost data into the record—the only documented costs submitted in the record.
On October 29, 2024, Securus confidentially submitted cost data derived from its FCC mandatory
data collection submissions, disaggregated by the FCC‑prescribed ADP tiers.105 That data shows
that Securus’s cost of providing voice IPCS exceeds $0.045 per minute across every ADP tier,
including large facilities. It bears repeating that although the overall proposed rate cap is $0.045,
only $0.025 is available to recover IPCS providers’ cost of service. In other words, the PD’s
permanent voice-only IPCS rate cannot recover Securus’s actual cost of service, contrary to the
statutory directive that providers be “fairly compensated.”106
The Decision does not dispute this evidence, explain why it is unreliable, or reconcile it
with FOF 7. Instead, the Commission simply proceeds as though no such cost data exists. A

104

D.26‑04‑004 at 58, 75 (FOF 7).

105

See Securus Comments on Staff Proposal, Confidential Appendix A (Oct. 29, 2024); Securus
Comments on the PD at 6.
106

47 U.S.C. § 276(b)(1)(A).

finding that a rate cap is sufficient to cover providers’ costs, while ignoring unrebutted evidence
showing the opposite, is not supported by substantial evidence.
The Commission’s error is underscored by footnote 194 of the Decision, which asserts—
without analysis—that the $0.025 rate cap is economically feasible for IPCS providers.107
Securus’s cost data demonstrate precisely the opposite. Indeed, of the more than forty California
facilities Securus operates, not one can provide voice IPCS at a per‑minute cost at or below
$0.025.108 To the contrary, Securus’s facilities operate at per‑minute costs nearly double the
adopted cap, and in many cases higher, once required security, monitoring, and operational costs
are accounted for.109 Footnote 194’s conclusory assertion of economic feasibility is thus squarely
contradicted by the only provider cost data in the record.
In addition, the Decision improperly dismisses critical cost categories Securus included in
its aggregated cost calculations by asserting that those categories reflect “broader operational
platform costs rather than the incremental telecommunication cost of providing voice calling.”110
That distinction is fundamentally flawed in the IPCS context. IPCS is not analogous to residential
or retail voice service. Audio safety and security functionalities such as call monitoring, recording,
alerting, and investigative tools, are not optional or ancillary features “bolted on” to a basic voice
product. They are integrated features of IPCS and the defining characteristics that distinguish
IPCS from other telephony services. These capabilities are legally and contractually required,
operationally inseparable from voice calling in carceral environments, and integral to the provision
of IPCS itself. That is precisely why, in its 2025 Order, the FCC adopted IPCS rate caps explicitly

107

D.26‑04‑004 at 66 n.194.

108

See Securus Comments on Staff Proposal at 13, 20-21; Confidential Appendix A.

109

Securus Comments on the PD at 6; Confidential Appendix A.

110

Decision at 71.

designed to allow providers to recover the costs of mandatory safety and security functionalities—
recognizing that those capabilities are inherent to, and inseparable from, the provision of IPCS
voice service.111 By contrast, excluding those same cost categories from the intrastate per‑minute
rate analysis ignores the service model the FCC found persuasive and further demonstrates that
the Commission’s rate cap is untethered from the actual cost of providing IPCS. At a minimum,
the Commission should have identified the issue of recovery of safety and security costs for notice,
comment, or workshop before categorically excluding such costs in a revised PD.
B.

The Commission Had Access to Cost Data, Yet Ignored It

The absence of substantial evidence is compounded by the Commission’s incorrect
assertion, in FOF 8, that “[n]o party provided data justifying significantly higher rates for county
or city jails or summarizing costs to provide security functions.”112 The Commission provided no
analysis, reasoning, or rationale for that conclusion.
Moreover, that statement is factually incorrect, as Securus provided precisely such data.113
As noted above, Securus submitted cost data reflecting its costs of service, disaggregated by ADP
tiers consistent with the FCC’s rate‑setting framework. That data necessarily captured differences
in cost structures across facility sizes, including county and city jails, and included costs associated
with security and monitoring functions integral to IPCS.
Moreover, the record reflects that Commission staff had access to all the cost data that
IPCS providers submitted to the FCC pursuant to that agency’s mandatory data collections, under
an executed protective order. As Securus previously explained, Commission staff obtained access

111

2025 IPCS Order at ¶ 29.

112

D.26‑04‑004 at 59, FOF 8.

113

See Securus Comments on Staff Proposal, Confidential Appendix A (Oct. 29, 2024); Securus
Comments on the PD at 6.

to the FCC’s IPCS cost database, covering multiple years of industry cost information, and
executed the FCC’s confidentiality acknowledgments permitting such access.114 In light of that
access, the Commission’s claim that no cost data were available is false. A finding that no party
provided relevant cost data cannot constitute substantial evidence where the record demonstrates
that such data were both submitted by Securus and available to Commission staff through the FCC
process.
C.

The Commission Mischaracterized the Record Regarding California‑Specific
Cost Data

The evidentiary deficiencies are further illustrated by FOF 11, which states that “IPCS
providers have failed to submit detailed California‑specific cost data necessary to justify a higher
rate cap or a tiered rate structure based on facility size.”115 Securus is an IPCS provider. And it
submitted California-specific cost data that both justified a higher rate cap and a tiered rate cap
structure. FOF 11 is thus false. The Decision does not engage with that submission or explain
why it purportedly fails to qualify as “California‑specific” cost data.
In addition, in its opening comments on the PD, Securus expressly requested that the
Commission take notice of the FCC’s interim interstate IPCS rate caps, which are based on analysis
of actual provider cost data. Those caps are $0.11 per minute for jails and $0.10 per minute for
large prisons (ADP 1,000+), more than double the Commission’s proposed permanent intrastate
rate cap.116 The FCC’s interim rate cap for extremely small jails (ADP 0–49) is $0.17 per minute,
more than four times the Commission’s adopted rate. When removing the Commission’s
designation of a $0.02 per minute set-aside for site commissions—which the FCC expressly

114

See Securus Opening Comments on Staff Proposal at 13; WC Docket No. 12‑375, Revised ICS
Database Recipient Acknowledgment (July 26, 2021).
115

D.26‑04‑004 at 60, 75 (FOF 11).

116

See 2025 IPCS Order at ¶ 8; see also Securus Comments on PD at 10–12.

prohibited in its 2024 FCC Order117—the disparity between the FCC rate cap and proposed CPUC
rate cap is even more stark, as seen below.
Facility Type

FCC Interim
Rate Cap

Proposed CPUC
Rate Cap

CPUC Rate
Cap Minus
Facility Cost
Adder
$0.025

FCC Rate
Compared to
CPUC Net Rate

Extremely Small $0.17
$0.045
6.8x higher
Jails (ADP 0-49)
Very Small Jails
$0.13
$0.045
$0.025
5.2x higher
(ADP 50-99)
Small Jails (ADP $0.11
$0.045
$0.025
4.4x higher
100-349)
Medium Jails
$0.10
$0.045
$0.025
4x higher
(ADP 350-999)
Large Jails (ADP $0.08
$0.045
$0.025
3.2x higher
1000+)
Prisons (any
$0.09
$0.045
$0.025
3.6x higher
ADP)
The Decision acknowledges that it reviewed information published by the FCC but asserts,
without explanation, that the FCC information is “consistent with our findings regarding the cost
structure” informing the Decision.118 That conclusory assertion is wildly wrong, as the table above
illustrates. The CPUC’s uniform, $0.025 rate cap (plus $0.02 in site commissions) is not consistent
with the FCC’s rate caps (the lowest of which is $0.08 plus $0.02 in facility costs) or the rate
structure (where the rate cap, but note the facility cost adder, increases as ADP decreases). There
is no consistency with the FCC’s current rate caps and rate structure. Indeed, once the common
$0.02 facility cost adder is removed, the FCC’s interim rate caps leave IPCS providers with
substantially higher rate caps than the FCC found would allow cost recovery—nearly seven times
higher for extremely small jails ($0.17 versus $0.025), and more than three times higher for the
largest jails ($0.08 versus $0.025). The Decision’s rate cap is below the FCC’s lower bound of

117

See 2024 IPCS Order at ¶ 245.

118

D.26‑04‑004 at 62.

the zone of reasonableness, which by definition means the rate is confiscatory. Those stark
disparities underscore that the Commission’s uniform $0.025 rate cap bears no rational relationship
to the FCC’s cost‑based analysis and further confirm that the Decision’s finding of “consistency”
lacks substantial evidentiary support. The Commission’s findings are not supported by substantial
evidence.
D.

The Commission Erroneously Faulted Providers for Failing to Submit Cost Data

Parties repeatedly explained—both in opening comments and reply comments on the PD—
that the Commission never followed through on its express commitments in the Phase II Scoping
Memo to establish guidelines regarding what cost data should be submitted, in what format, and
through what procedural mechanism. Providers have repeatedly asserted their reasonable reliance
on the Commission’s representations, to which the Commission refuses to respond.119 It is
arbitrary to fault providers for failing to comply with data‑submission requirements that the
Commission never established.
Against that backdrop, FOF 12 claims that “IPCS providers have not tendered a reasonable
excuse for their failure to submit cost data for the Commission’s consideration.”120 That finding
disregards the undisputed procedural history of this proceeding.
In any event, the premise of FOF 12 is incorrect as applied to Securus. Despite the absence
of Commission guidance, Securus submitted cost data seventeen months ago and Commission
staff had access to additional provider cost data through the FCC process. And, as noted above,
the Commission had access to the data all IPCS providers submitted to the FCC through that same

119

Securus Comments on the PD at 1-3; ViaPath Comments on the PD at 1-3; NCIC Comments on the
PD at 1-5; Securus Reply Comments on the PD at 1; Viapath Reply Comments on the PD at 1-3; NCIC
Reply Comments on the PD at 1-4.
120

D.26‑04‑004 at 61, 75 (FOF 12).

process. The finding that providers failed to submit cost data and lacked a reasonable excuse for
doing so cannot be squared with the record.
FOF 11 and FOF 12 are also infirm because they draw an unwarranted negative inference
against IPCS providers from a perceived failure to submit cost data. The California Supreme Court
has held that such a negative inference can attach only where a party “fails to produce evidence
that would naturally have been produced” that is, evidence as to which “in the nature of things his
client is the only source from which that evidence may be secured.”121 The predicate fails on this
record. First, Securus voluntarily submitted Confidential Appendix A on October 29, 2024,
tendering the very category of evidence the Commission deemed missing; voluntary tender is the
antithesis of suppression. Second, Commission staff had equal access to the cost data through the
FCC database under an executed confidentiality acknowledgment, so Securus was not “the only
source” of the evidence.122 Third, no Commission rule or order required submission of the data in
any particular form or on any particular schedule, so there was no culpable non-compliance to
support the inference. FOF 11 and FOF 12 therefore rest on unsupported adverse inferences.
E.

The Commission’s Finding Regarding Facility‑Size Cost Differences Is
Unsupported

Finally, the Commission finds in FOF 10 that “[t]he data submitted by Securus does not
show significant differences between facility size on a per minute basis.”123 But that is exactly
what it shows. Specifically, Securus’s aggregated cost data show per‑minute costs declining
materially as facility size increases—from approximately [BEGIN CONFIDENTIAL]

121

Williamson v. Superior Court (1978) 21 Cal.3d 829, 836, fn. 2 (italics in original); see also CedarsSinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 11–12; CACI No. 204 (2025).
122

Williamson, supra note 121, 21 Cal.3d at 836, fn. 2.

123

D.26‑04‑004 at 59, 75 (FOF 10).

.124 [END
CONFIDENTIAL] Those differences reflect a spread of roughly [BEGIN CONFIDENTIAL]

[END CONFIDENTIAL] and demonstrate clear economies of scale tied directly to facility

size.125 The Decision does not explain how it reached the opposite conclusion.
By contrast, the FCC found that the data that Securus and other IPCS providers submitted
does show such differences. This is why the FCC adopted interim rate caps that vary materially
by facility type and size—from approximately $0.08 per minute for large jails to $0.17 per minute
for extremely small jails, excluding the FCC’s $0.02 rate additive.126 The difference between the
low and high ends of the FCC’s cost‑based caps—approximately $0.08 per minute, or more than

50 percent—shows the FCC’s finding that facility size materially affects IPCS costs. The
Commission offers no explanation for rejecting both Securus’s facility‑specific data and the FCC’s
cost‑based tiering. FOF 10 therefore also fails substantial‑evidence review.
VII.

THE COMMISSION FAILED TO PROCEED IN A MANNER REQUIRED BY
LAW AND ABUSED ITS DISCRETION BY DETERMINING THE RECORD WAS
ADEQUATE
A.

The Commission Erroneously Adopts Permanent Rate Caps Without a Cost
Record

The Commission failed to proceed in the manner required by law and abused its discretion
by determining the record was adequate and adopted permanent intrastate IPCS rate caps without
conducting workshops, discovery, evidentiary development, and further briefing on the cost of
providing IPCS it repeatedly committed to undertake in Phase II. This was not a minor procedural

124

See Securus Comments on Staff Proposal, Confidential Appendix A (Oct. 29, 2024).

125

Id.

126

See 2025 IPCS Order at ¶ 8.

deviation, but a wholesale abandonment of the Phase II ratemaking framework the Commission
itself established and on which the parties reasonably relied.
From the outset of Phase II, the Commission made clear that permanent rate caps would
be informed by actual cost data. The Commission has repeatedly represented that in Phase II of
the proceeding, it would collect cost data from providers to inform the adoption of a permanent
rate cap.127 At the start of Phase II in this proceeding, ALJ Fogel determined that it would be
appropriate to take comment on the methodology to develop permanent rates before finalizing how
the cost data would be collected.

That direction was expressly affirmed in the Assigned

Commissioner’s Phase II Scoping Memo, which stated unequivocally that “a solid rate and/or cost
data must inform Commission adoption of permanent IPCS regulations.”128 The Commission also
repeatedly represented that it would first establish a cost collection process, including a cost
structures workshop and guidance on submission methodology, before expecting providers to file
cost information.129 A cost structures workshop to “inform subsequent guidance on precisely how
IPCS providers should submit cost data in response to discovery requests,” as well as a ruling
setting forth expectations for providers in this workshop were also planned.130 The Phase II

127

See, e.g., D.21-08-037 at 57 (“We encourage IPCS providers to provide cost data in Phase II of this
proceeding as we consider adopting a more permanent rate cap.”); D.22-04-038 at 23 (“The proceeding
here was categorized as ratesetting an divided into two phases, with evidentiary hearings set for Phase
II.”)
128

Phase II Scoping Memo at 7.

129

The Commission stated at the beginning of this proceeding that it would assess cost data and even
described the process that it would undertake. See Assigned Commissioner’s Phase II Scoping Memo
and Ruling Extending Statutory Deadline (“Phase II Scoping Memo”) (Nov. 29, 2021) (“[A]nticipate
providing an opportunity later in Phase II for parties to comment on questions regarding the
methodology(s) and/or data sources the Commission should use to inform [its] adoption of permanent
voice-only IPCS rate caps . . . .”).
130

Phase II Scoping Memo at 5.

Scoping Memo also listed, in relevant part, the following issues for the Commission’s
consideration in Phase II:
·

What methodology should the Commission use to develop any permanent voiceonly rate caps or ancillary fee requirements and/or any interim or permanent video
calling and related services rate caps and/or ancillary fee regulations?”

“What types of data should the Commission consider when developing permanent
rate caps or ancillary fee requirements for voice-only IPCS and/or any interim or
permanent video calling and related services rate caps and/or ancillary fee
requirements? Can, and if so, how can the Commission ensure that self-reported
cost data is accurate? What format(s) should the Commission require for reporting
of cost data?”

“Should the CPUC consider alternative IPCS rate options or programs? How might
alternative IPCS rate options or programs be structured? What oversight would be
necessary? Is it feasible or necessary for the Commission to introduce mechanisms
to foster competition between providers within incarceration facilities?”

Ultimately, neither the workshop nor any corresponding ruling setting forth workshop expectations
ever occurred. Even as late as April 2022, the Commission still maintained that cost data collection
would be part of Phase II of this proceeding.131 And when the Phase II scope was amended in May
2022, the Commission expanded the scope to include additional issues without removing cost
methodology or cost data from the Phase II scope.
Despite this procedural history, Commission staff issued a proposal in September 2024
advocating for a permanent rate cap of $0.045 without having conducted any Commission-driven
cost collection or analysis. The Ruling issuing the staff proposal contained no instructions,
standards, or methodology for submitting cost data.132 Faced with a proposal to adopt permanent
rates without a cost record, Securus voluntarily submitted its own cost data in an attempt to spur
the Commission to conduct this data collection.

131

See E-mail Ruling Providing Final Status Conference Agenda and Instructions (Apr. 26, 2022).

132

See ALJ Ruling Requesting Comments on Staff Proposal (Sep. 30, 2024), Staff Proposal Permanent
Rates for incarcerated Persons Calling Services Rulemaking 20-10-002, R.20-10-002.

The Decision nevertheless criticizes IPCS providers for failing to submit cost data through
a process that the Commission itself promised, but never implemented.133 That posture is legally
untenable. A regulated party cannot be faulted for failing to comply with a data-submission regime
that never existed; nor should such party be required to guess what information the Commission
may find useful in a ratemaking proceeding. Through these omissions, the Commission deprived
parties of an opportunity to put forth key data to inform a reasonable permanent IPCS rate cap and
withheld from these parties an opportunity to meaningfully and fully participate in the
Commission’s rulemaking process. That deprivation violates basic principles of administrative
due process and constitutes a failure to proceed in the manner required by law.
B.

The $0.045 Permanent Rate Cap Is Not Just and Reasonable Under Public
Utilities Code Sections 451 and 728

The Decision deprives IPCS providers of a rate that satisfies the minimum requirements of
Public Utilities Code sections 451 and 728. Section 451 requires that all rates be “just and
reasonable;” and Section 728 directs the Commission, “after a hearing,” to determine “the just,
reasonable, or sufficient rates.” The California Supreme Court has long applied the federal endresult test of FPC v. Hope Natural Gas Co.134 and Bluefield Water Works & Improvement Co. v.
Public Service Commission135 to inform the California just-and-reasonable standard. Rates that
are not “sufficient to yield a reasonable return on the value of the property used at the time it is
being used to render the service” are “unjust, unreasonable, and confiscatory.”136 To satisfy

133

See Decision at 61, 75 (Findings of Fact 11).

134

FPC v. Hope Natural Gas Co., 320 U.S. 591, 602–03, 605 (1944),

135

Pacific Tel. & Tel. Co. v. Public Util. Comm’n, 62 Cal. 2d 634, 647 (1965).

136

Bluefield Water Works & Improvement Co. v. Public Service Commission, 262 U.S. 679, 690 (1923).

section 451, rates must “enable the company to operate successfully, to maintain its financial
integrity, to attract capital, and to compensate its investors for the risks assumed.”137
The Decision does not satisfy the requirements under sections 451 and 728. COL 1 asserts
that the $0.045 per-minute cap is “just and reasonable as required by the Public Utilities Code.”
FOF 7 asserts that the cap—which is actually $0.025— is “sufficient to cover the documented cost
of service plus a reasonable margin for providers.” Both are conclusory and unsupported. The
Decision identifies no “documented cost of service” of the California IPCS providers subject to
the rate cap. Although Securus submitted IPCS cost data, the Decision cursorily dismisses this
data as inflated due to the inclusion of audio safety and security costs and makes no finding about
whether the Securus data is representative of California IPCS providers generally.138 The Decision
also identifies no “reasonable margin” that the cap purportedly provides; and the Decision makes
no rate-of-return finding, no cost-of-capital finding, no rate-base finding, and no operatingexpense recovery finding. The five-factor methodology recited by the Decision on page 61 does
not establish the cost-coverage or margin-sufficiency that section 451 requires. The Decision’s
acknowledgment at page 62 that “it would be a fair inference to make” that the absence of provider
evidence damages the providers’ position cannot supply the affirmative cost determination the
just-and-reasonable standard requires; an adverse inference is not a substitute for the affirmative
determination of cost coverage. The only allocated California-specific cost record before the
Commission, which is Securus’s Confidential Appendix A, demonstrates that the cost of providing
voice IPCS exceeds $0.025 per minute across every FCC-prescribed ADP tier.139 The Decision

137

Hope Natural Gas, supra note 134 at 605.

138

Decision at 71.

139

Securus Comments on Staff Proposal at 22, 26, and Confidential Appendix A.

rejects the Appendix A allocation on methodological grounds (Decision at 71–72) without
supplying any substitute IPCS provider cost value upon which it bases the $0.025 voice IPCS rate
cap for provider cost recovery.
The federal “fair compensation” standard confirms the section 451 defect. The MWR Act
amended 47 U.S.C. § 276(b)(1)(A) to require that IPCS rates be both “just and reasonable” and
provide “fair compensation” to providers. The FCC determined in the 2025 IPCS Order that audio
rate caps in the range of $0.08 to $0.17 per minute across facility tiers, plus a separate $0.02 perminute facility additive, are required for fair compensation on the basis of the FCC’s industrywide mandatory cost data collection, which resulted in an effective rate cap between $0.10 to
$0.19.

The FCC’s determination is the operative federal cost-based benchmark for IPCS

ratemaking. California’s $0.045 cap, which is effectively $0.025 after the OP 2 prohibition offsets
the $0.02 site-commission allowance, is roughly one-quarter to one-eighth of the federal floor,
with no California-specific cost analysis to justify the deviation. A state cap set materially below
the federal cost-based fair-compensation floor on a record without comparative cost analysis
cannot satisfy the section 451 just-and-reasonable standard.
C.

The Tier 2 Advice Letter Mechanism for Future Rate Adjustments Is Insufficient.

The Decision’s invalid rate caps cannot be saved by deferring to a future Advice Letter
(“AL”) process that might permit individual providers to obtain higher rates. But the process for
IPCS providers to be held to a rate cap higher than $0.045 is also deficient without a clear standard
of review of such ALs. The Tier 2 AL is a ministerial process. It is designed for staff to apply
facts to clear standards established by statute, Commission regulations, or Commission orders. The
Decision’s Tier 2 AL process for future requests by IPCS providers to increase their voice IPCS

rates above the $0.045 cap supplies no articulable standard for ministerial staff application.140 The
directive that the filing be “supported by comprehensive actual cost data” is not a standard—it is
a mere list of documents without instructions on how to interpret or weigh the information in said
documents. This list supplies no allocation methodology, return-on-equity benchmark, cost-ofcapital benchmark, or submission timeline. As such, Communications Division staff cannot apply
a standard that does not exist; and forcing staff to make a rate determination without a prescribed
formula or roadmap forces them to make a discretionary (non-ministerial) decision regarding
regulated rates that only the full Commission is statutorily authorized to undertake.141
D.

The Decision Erroneously Denies Securus’s Motion for Leave to File Under Seal
Confidential Appendix A to Opening Comments on Administrative Law Judge’s
Ruling Requesting Comments on Staff Proposal (“Confidentiality Motion”)

The Commission improperly denies Securus’s October 29, 2024 Confidentiality Motion
by withholding a ruling on this motion in the Decision. The Confidentiality Motion sought the
Commission’s confidential treatment of Securus’s cost data for its California-based facilities and
explanatory materials. The Decision resolves only two motions for leave to seal the record—
Securus’s August 15, 2022 motion and The Utility Reform Network’s September 19, 2022
motion—and notes that “[a]ll motions not ruled on are deemed denied.”142 The Decision provides
no explanation for the denial of the Confidentiality Motion, despite the fact that the Confidentiality
Motion seeks the Commission’s confidential treatment of Securus’s sensitive cost data—the exact
type of IPCS provider data that the Commission recognized would require parties in this
proceeding to enter into a protective order in order to access.143 The Confidentiality Motion

140

See Decision at 64-65 and 77 (Ordering Paragraph 4).

141

See Pub. Uti. Code Sections 451, 454(a), and 728.

142

Decision at 67 and 78 (Ordering Paragraphs 9 and 10).

143

See E-mail Ruling Directing Preparation and Submittal of Proposals (Sep. 17, 2021), R.20-10-002.

provided ample legal basis for the confidential treatment of Securus’s cost data, and the Decision’s
denial of this motion without any explanation is arbitrary and capricious, and at odds with Public
Utilities Code Section 583 and legal authorities protecting trade secret information.144
VIII. THE RATE CAP REQUIREMENT IN D.26-04-004 IMPOSES CONFISCATORY
RATES, EFFECTS AN UNCONSTITUTIONAL TAKING, AND IS PREEMPTED
BY FEDERAL LAW
The Decision’s imposition of a uniform, permanent $0.045 intrastate IPCS rate cap violates
Securus’s constitutional rights under the Contracts Clause, Takings Clauses, and Supremacy
Clause of the United States and California Constitutions.145 These constitutional infirmities
independently require rehearing and correction under Public Utilities Code section 1757(a)(6).
A. The Decision Substantially Impairs Existing IPCS Contracts in Violation of the
Contracts Clause
The Contracts Clause prohibits states from passing laws that substantially impair existing
contractual obligations unless the impairment is reasonable and necessary to serve an important
public purpose.146 The analysis proceeds in three steps: (1) whether the state law substantially
impairs a contractual relationship; (2) whether the state has a significant and legitimate public
purpose; and (3) whether the adjustment of the contractual rights is reasonable and appropriately
tailored to that purpose.147

144

See Cal. Evid. Code § 1060 (protecting against disclosure of trade secrets); U.S.C. § 522(b)(4)
(excluding trade secrets from the general disclosure requirements applicable to federal agencies); 47
C.F.R. § 0.457(d)(1) (recognizing that the FCC is not required to disclose trade secrets under 5 U.S.C.
§ 522(b)(4)); Cal. Civ. Code § 3426.1(d); Cal. Gov. Code § 7922.000; see also D.20-12-021 at 33 (“If an
agency wishes to maintain confidentiality of any records, the agency must find that, on the facts of the
particular case, ‘the public interest served by not disclosing the record clearly outweighs the public
interest served by disclosure of the record.’” (citing Cal. Gov. Code § 7922.000)).
145

U.S. Const., art. I, § 10; U.S. Const., amend. V; Cal. Const., art. I, § 19.

146

U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1, 23 (1977); Energy Reserves Group, Inc. v.
Kansas Power & Light Co., 459 U.S. 400, 411–413 (1983).
147

Energy Reserves, supra note 147 at 411–412.

The Decision Causes a Substantial Impairment of Existing Contracts

There is no dispute that Securus operates under long‑term contracts with state and local
correctional facilities that allocate financial risk, define pricing assumptions, and rely on
negotiated compensation structures in effect at the time of contracting. By imposing a uniform,
mandatory $0.045 rate cap untethered to actual costs and applicable to all facilities regardless of
size, security requirements, or contract terms, the Decision nullifies core economic provisions of
those existing contracts and dramatically alters the parties’ bargained‑for expectations.
Although parties operating in regulated industries cannot claim absolute immunity from
regulatory change, the Supreme Court has been clear that regulation does not eliminate Contracts
Clause protection.148 Rather, the relevant inquiry is whether the impairment was foreseeable in
scope and kind.149 Here, while some degree of rate regulation may have been foreseeable, a
permanent, confiscatory, one‑size‑fits‑all rate cap adopted without a cost record and contrary to
federal cost‑based benchmarks was not.
Indeed, the Commission itself repeatedly represented during Phase II that permanent rate
caps would be supported by cost‑collection workshops, discovery, and California‑specific cost
analysis. Providers reasonably relied on those representations. A regulatory action that contradicts
explicit procedural assurances and retroactively destroys the economic viability of existing
contracts constitutes a severe and substantial impairment under the Contracts Clause.150

148

Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244–246 (1978).

149

Energy Reserves, supra note 147 at 416.

150

U.S. Trust, supra note 147 at 19–20.

The Impairment Is Not Reasonable or Necessarily Tailored to Serve a
Legitimate Public Purpose

Even assuming the Commission seeks to advance the important public purpose of
affordability for incarcerated persons and their families, the Contracts Clause requires that the
impairment be reasonable and necessary to achieve that purpose.151 Measures that are overly
broad, indiscriminate, or unsupported by evidence do not satisfy this standard.
The Decision fails this test. The Commission imposed a rigid, uniform rate cap without
developing a cost record, without tiering by facility size, and without considering less‑impairing
alternatives—such as cost‑based tiering or targeted affordability mechanisms—that both Securus
and other parties urged throughout the proceeding. Where a state could have achieved its
objectives through less drastic modifications of the contractual relationships, the impairment is
unconstitutional.152 The Decision’s blanket override of existing contracts is neither necessary nor
narrowly tailored and therefore violates the Contracts Clause.
B.

The Rate Cap Is Confiscatory and Amounts to an Unlawful Taking

Independently, the Decision effects a taking by imposing confiscatory rates that deny
Securus a reasonable opportunity to recover its costs or earn a fair return on investment. It is well
settled that rate regulation violates the Takings Clause if it is “so unjust as to destroy the value of
the property” for all practical purposes.153
A regulated utility is entitled to a rate structure that is sufficient to maintain its financial
integrity, attract capital, and compensate investors for the risks assumed.154

151

Although the

Energy Reserves, supra note 147 at 412; U.S. Trust, supra note 147 at 29–31.

152

U.S. Trust, 431 U.S. 1,29-30 (finding that the determination of necessity is based on whether a less
drastic modification would have achieved the agency’s purpose.).
153

Duquesne Light Co. v. Barasch, 488 U.S. 299, 307 (1989).

154

Bluefield, 262 U.S. 679 (1923); Hope Natural Gas, supra note 134 at 603.

Commission has discretion in ratemaking, it may not set rates so unreasonably low as to be
confiscatory.155
The burden rests on the utility to demonstrate confiscation, but that burden is met where
the record shows that the adopted rates are below the utility’s cost of service and threaten its
financial viability.156 Here, Securus’s cost‑per‑minute data that it submitted to the Commission
demonstrates that its actual cost of service substantially exceeds the PD’s $0.045 rate cap. Across
all jail size tiers, Securus’s costs range from approximately [BEGIN CONFIDENTIAL]

[END CONFIDENTIAL] per minute even before accounting for any return.157 Notably,

even in the largest facilities—where economies of scale are greatest—Securus’s costs remain
approximately [BEGIN CONFIDENTIAL]

END CONFIDENTIAL] per minute, or

double the PD’s proposed cap.158 These record‑based figures confirm that the proposed rate is
untethered from actual costs and would require Securus to provide service at well below its
demonstrated cost of service across every facility tier.
Taken together, these features ensure that the adopted rates are not merely low, but
confiscatory. Further evidence of its confiscatory nature is that the rate cap is below the lower
bound of reasonableness adopted by the FCC based on industry-wide average costs. By depriving
Securus of a reasonable opportunity to recover its costs or earn a fair return, the Decision threatens

155

Duquesne Light, supra note 154 at 307.

156

See Hope Natural Gas, supra, note 134 at 603.

157

See Securus Comments on Staff Proposal, Confidential Appendix A (Oct. 29, 2024).

158

Id.

Securus’s financial integrity and ability to raise capital—precisely the outcome the Takings Clause
forbids.159
C.

The Decision is Preempted by Federal Law

Finally, the Decision is independently unlawful because it conflicts with, and is therefore
preempted by, the federal IPCS regulatory framework. Although the FCC has concluded that
intrastate IPCS rate caps set below the FCC’s interim federal caps are not categorically prohibited,
it made clear that any such state‑level rates must be grounded in cost data and market conditions
unique to that state. Specifically, the FCC explained that it “expect[s] that states setting intrastate
rate caps will look at cost data and market conditions unique to that particular state,” and expected
that a state’s intrastate rate cap that “is lower than the Commission’s specified rate caps” would
still “fall within th[e] zone” of reasonableness the FCC adopted.160
None of those conditions is satisfied here. The Commission did not develop or rely on
California‑specific cost data through any structured process, did not meaningfully evaluate
state‑specific market conditions. The Commission’s rate cap of $0.025 for IPCS providers (plus
$0.02 in facilities costs) is substantially below the lower bounds of the zones of reasonableness the
FCC calculated for the non-facility costs at prisons ($0.086) and jails ($0.079 to $0.163) before
the addition of $0.02 in facility costs.161 The Commission’s rate caps thus fall far outside what the

159

See, Hope Natural Gas, supra, note 134 at 603 (“[T]he return to the equity owner should be …
sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to
attract capital.”); Railroad Com. of California v. Pacific Gas & Electric Co., 302 U.S. 388, 401; D.10-10036 at 5 (“Merely asserting in general language that regulation is confiscatory is insufficient; the facts
relied on must specifically demonstrate that the rates or cost allocation necessarily deny plaintiff just
compensation and deprive it of its property.”).
160

Incarcerated People’s Communications Services; Implementation of the Martha Wright‑Reed Act,
FCC 24‑75, ¶ 236 (2024).
161

Incarcerated People’s Communications Services; Implementation of the Martha Wright‑Reed Act;
Rates for Interstate Inmate Calling Services, Report and Order and Further Notice of Proposed
Rulemaking, FCC 25‑75, WC Docket Nos. 23‑62 & 12‑375, ¶ 70 (rel. Nov. 6, 2025). The Commission’s

FCC said in its 2024 Order states could do. Moreover, the FCC has expressly preempted site
commission payments, making the PD’s continued payment of site commissions unlawful.162
The Decision stands as an obstacle to the accomplishment of Congress’s objectives under
the MWR Act and the FCC’s orders implementing that Act and is therefore preempted under the
Supremacy Clause.
IX.

REQUEST FOR RELIEF
The Decision’s adoption of a permanent, uniform intrastate IPCS rate cap is unsupported

by relevant findings or substantial evidence, contrary to governing state and federal law, and
constitutionally infirm. At a minimum, the Commission should rescind those portions of the
Decision that impose the $0.045 per‑minute rate cap, rest on unsupported findings regarding cost
recovery and fair compensation, or resolve issues beyond the scope of Phase II.
To cure these defects, the Commission should reopen Phase II for the limited purpose of
conducting a comprehensive, data‑driven cost analysis sufficient to derive a lawful permanent rate
structure that reflects the actual cost of providing voice IPCS across facilities of different sizes and
characteristics. Granting this relief will allow the Commission to correct legal error, fulfill its
procedural commitments, and adopt a durable regulatory framework consistent with statutory and
constitutional requirements. Finally, the Commission should reverse its improper denial of
Securus’s October 29, 2024 Confidentiality Motion by making a ruling in the Decision that the
Motion should be granted.

$0.025 rate cap is also below the lower bounds of the zones of reasonableness the FCC calculated in its
since superseded 2024 Order, which set lower bounds (that did not include any recovery of facility costs)
of $0.049 for prisons and $0.047 to $0.109 for jails. Incarcerated People’s Communications Services;
Implementation of the Martha Wright‑Reed Act; Rates for Interstate Inmate Calling Services, Report and
Order, Order on Reconsideration, Clarification & Waiver, and Further Notice of Proposed Rulemaking,
FCC 24‑75, WC Docket Nos. 23‑62 & 12‑375, ¶ 207 (rel. July 22, 2024).
162

See 2024 IPCS Order ¶ 245.

Taken together, Securus respectfully requests that the Commission grant rehearing and
vacate or materially modify D.26‑04‑004.

Respectfully submitted,

/s/
Thaila K. Sundaresan
David Huang
DAVIS WRIGHT TREMAINE LLP
50 California Street, 23rd Floor
San Francisco, CA 94111
Tel. (415) 276-6500
Fax. (415) 276-6599
Email: thailasundaresan@dwt.com
Email: davidhuang@dwt.com
Attorneys for Securus Technologies, LLC
Dated: May 13, 2026