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State v. Biddeford Internet Corp.

Supreme Court of Maine

October 10, 2017


          David P. Silk, Esq., Benjamin M. Leoni, Esq. (orally), and Rebecca Gray Klotzle, Esq., Curtis Thaxter LLC, Portland, for appellant Biddeford Internet Corporation.

          Janet T. Mills, Attorney General, and Thomas A. Knowlton, Asst. Atty. Gen. (orally), Office of the Attorney General, Augusta, for cross-appellants State of Maine and ConnectME Authority.


          ALEXANDER, J.

         [¶1] Biddeford Internet Corporation, doing business as Great Works Internet (GWI), appeals, and the State of Maine and the ConnectME Authority cross-appeal, from an amended judgment entered in the Business and Consumer Docket [Horton, J.) awarding the State and the Authority $406, 852 in unpaid fees pursuant to 35-A M.R.S. § 9216 (2014).[1] On appeal, all parties argue that the court erred by concluding that the section 9216 assessment was a valid business excise tax. GWI contends that the assessment constitutes either an invalid business excise tax or an unconstitutional property tax. The State and the Authority contend that the assessment is not a tax but rather a fee.[2] We agree with the State and the Authority that the Legislature properly characterized this assessment as a fee, and, with that clarification, we affirm the judgment.

         I. CASE HISTORY

         [¶2] After a non-jury trial, the court made the following findings, which are supported by competent evidence in the record.

         [¶3] The Legislature established the Authority "to stimulate investment in advanced communications technology infrastructure" and to expand the availability of broadband service in unserved or underserved areas in Maine. P.L. 2005, ch. 665, § 3 (effective Aug. 23, 2006) (codified at 35-A M.R.S. § 9203 (2014)); see also 35-A M.R.S. §§ 9202, 9202-A, 9204 (2014).[3]

         [¶4] In 2009, private telecommunications service providers began meeting with representatives of the State, including the Authority, to address the lack of broadband capacity in Maine. Broadband involves the transmission of data-generally associated with the internet-through both fiber optic and digital subscriber line (DSL) technology, among other means. Fiber optic transmission is currently the fastest means of data transmission and is accomplished via optical fiber cable, which is essentially a group of plastic or glass strands that can carry light pulses to transmit data. The term "dark fiber" applies to the unlit fiber optic strands within a cable. Dark fiber providers lease or sell strands of dark fiber to telecommunications service providers who then use, "light, " the strands to transmit data for their customers.

         [¶5] During the meetings involving the State, the Authority, and private telecommunications service providers, an initiative, called the "Three Ring Binder, " was developed to serve as a new route for fiber optic cable in unserved and underserved areas. The purpose of the project was to put dark fiber in areas where there was no dark fiber at all.

         [¶6] GWI, one of the telecommunications service providers that participated in the meetings, applied for a federal grant to subsidize construction of the Three Ring Binder. The application required GWI to assign the project to a new entity, Maine Fiber Company, Inc., that would own the Three Ring Binder and be responsible for its construction. Maine Fiber would make the Three Ring Binder available on an "open access" basis so that any telecommunications service provider could purchase or lease dark fiber to extend service to its residential or business customers.

         [¶7] The grant was approved in December 2009 in the amount of $25, 402, 904.[4] The grant required GWI to transfer the right to receive the funds to Maine Fiber and required Maine Fiber to complete construction of the Three Ring Binder within three years. Maine Fiber now holds title to the Three Ring Binder, which was completed in 2012, and is a "dark fiber provider" within the meaning of 35-A M.R.S. § 102(4-A) (2014) and section 9216.

         [¶8] When Maine Fiber was created, it lacked legal authority to attach dark fiber and equipment to utility poles that were owned by other entities and to construct the Three Ring Binder within public rights of way. Because of the narrow timeline for completion of the project, emergency legislation was introduced to provide Maine Fiber the necessary authority to build the Three Ring Binder. See L.D. 1778 (124th Legis. 2009).

         [¶9] In February 2010, the Legislature held a public hearing at which GWI, Maine Fiber, and the Authority testified in favor of L.D. 1778. FairPoint Communications, the largest provider of dark fiber and telephone service in Maine, opposed the legislation, asserting that the Three Ring Binder would overbuild the existing ...

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