Maryland Attorney General Opinion 99OAG208

208 [99 Op. Att’y

PUBLIC SAFETY

PUBLIC ASSISTANCE – WHETHER RECIPIENTS OF FEDERALLY

SUBSIDIZED CELLPHONE SERVICE ARE REQUIRED TO PAY

9-1-1 FEE

December 5, 2014

The Honorable James E. DeGrange, Sr.

The Senate of Maryland

You have asked whether low-income individuals who

receive a free cellphone and a monthly allotment of free minutes

from a prepaid wireless company through the federal

government’s Lifeline program (“prepaid Lifeline participants”)

must pay the fees that fund Maryland’s 9-1-1 system. There are

two kinds of 9-1-1 fees. The first is a fee of up to $1.00 per

month on “subscribers” of telephone service; service providers

add this fee to their subscribers’ monthly bills. See Md. Code

Ann., Public Safety (“PS”) §§ 1-310 (authorizing collection of 9-

1-1 fee of $0.25 per month), 1-311 (authorizing counties to

impose additional monthly fee of up to $0.75) (2011 Repl. Vol. &

2014 Supp.).1 The second fee applies to prepaid wireless tele-

phone service. See PS § 1-313. This 60-cent fee is imposed on

every “retail transaction” for prepaid service and is collected by

the “seller” from the “consumer” at the time of purchase. PS § 1-

313. You have asked whether prepaid Lifeline participants must

pay either fee.

In our opinion, prepaid Lifeline participants are not required

to pay either fee under the law as it currently reads. Because we

conclude that these particular Lifeline participants receive

“prepaid wireless telecommunications service,” the fee on

“subscribers” imposed by PS § 1-310 does not apply. Instead, we

must look to the fee that is imposed by PS § 1-313 on a “retail

transaction” of “prepaid wireless communications service.” The

plain language of that section, however, provides no mechanism

for collecting the fee from Lifeline participants, who do not

participate directly in a “retail transaction.” And while there is

some indication that, at an abstract level, the Legislature intended

everyone with access to the 9-1-1 system to pay the fees that

support the system, we have found no evidence that the

1

All citations to the Public Safety Article are to the 2011

Replacement Volume and 2014 Supplement unless otherwise noted.

Gen. 208] 209

Legislature specifically considered whether prepaid Lifeline

participants should pay a 9-1-1 fee. Given the language of the

statute and the lack of a clear collection mechanism, we cannot

conclude that the General Assembly intended prepaid Lifeline

participants who receive free cellphone service to pay a 9-1-1 fee.

The decision about whether these low-income individuals

should pay the fee is a matter of public policy that we must leave

to the Legislature. The General Assembly has twice before

considered whether to amend the 9-1-1 fee regime to take account

of emerging technologies and new business models in the

telecommunications industry. We see this as another instance

where the Legislature must decide whether the statute should be

amended.

I

Background

A. Maryland’s Two 9-1-1 Fees

In 1979, the General Assembly established 9-1-1 as the

primary emergency telephone number in the State and created the

Emergency Number Systems Board2 to oversee the installation of

9-1-1 systems in every county. 87 Opinions of the Attorney

General 83, 85 (2002). In doing so, the Legislature also

established a fee to fund the installation of the system and any

necessary enhancements. 1979 Md. Laws, ch. 730 (codified as

Md. Code. Ann., Art. 41, § 204H-5(b)).

Over the next few decades, this fee evolved into what is now

the enhanced 9-1-1 (or “E 9-1-1”) fee regime encompassed by

sections 1-310 and 1-311 of the Public Safety Article.3 These

2

The Board is an entity within the Department of Public Safety and

Correctional Services and is composed of 17 members appointed by the

Governor with the advice and consent of the Senate. PS § 1-305(a),

(b). The members include representatives from the telephone industry,

State government, and local government as well as two members of the

general public. PS § 1-305(b).

Further information on the development of “enhanced” 9-1-1

3

systems can be found in 87 Opinions of the Attorney General 83.

Because the distinction between the two systems is not important here,

we use the terms “9-1-1 fees” and “E 9-1-1 fees” interchangeably

throughout this opinion.

210 [99 Op. Att’y

statutes impose a fee on “[e]ach subscriber to switch local

exchange access service [i.e., landline service] or CMRS [i.e.,

“Commercial Mobile Radio Service” or, more simply, cellphone

service] or other 9-1-1-accessible service.” PS § 1-310(b); see

also PS § 1-311(b). The fee is then “payable when the bill for the

telephone service or CMRS or other 9-1-1-accessible service is

due.” PS § 1-310(c). In other words, the fee is added to every

subscriber’s monthly bill, and the service provider remits the

funds to the Comptroller on behalf of the subscriber. PS §§ 1-

310(d), (e), 1-311(f)–(h). The statewide fee is 25 cents per

month, and counties may impose an additional 75 cents per month

on top of the statewide fee for a total of $1.00 per month. PS

§§ 1-310(c), 1-311(c)(1).

During the 1990s, however, a new business model emerged

that did not fit easily within the State’s method of collecting the

fee through customers’ monthly bills. Wireless carriers like

TracFone began offering prepaid cellphone service, which

allowed customers to buy a fixed allotment of minutes in advance

without the need for annual contracts or monthly bills. See

TracFone Wireless, Inc. v. Comm’n on State Emergency

Comm’cns, 397 S.W.3d 173, 176 (Tex. 2012) (explaining the

basics of prepaid wireless service). At first, many prepaid

wireless companies remitted 9-1-1 fees to state governments, but

they soon stopped, contending that they were not required to

collect the fees because their customers did not receive bills for

their service. See, e.g., id. at 176-77. In some states, the issue

was resolved through litigation, though with different outcomes.

In Texas and Kentucky, for example, courts agreed that the fee

did not apply to prepaid wireless service, see id. at 178, Virgin

Mobile U.S.A., L.P. v. Kentucky, __ S.W.3d __, 2014 WL

4116480 (Ky. Aug. 21, 2014), while in Alabama and Washington,

courts held that the lack of an explicit collection mechanism did

not excuse wireless providers from the statutory obligation to pay

the fee. See T-Mobile South, LLC v. Bonet, 85 So.3d 963, 976-77

(Ala. 2011); TracFone Wireless, Inc. v. Dep’t of Revenue, 242

P.3d 810, 818-19 (Wash. 2010).

In Maryland, the issue was resolved by legislation. In 2013,

the General Assembly established a new 9-1-1 fee that explicitly

applied to “prepaid wireless telecommunications service.” 2013

Md. Laws, ch. 313 (codified as PS § 1-313). This statute imposes

a 60-cent fee per “retail transaction,” which is defined as the

“purchase of prepaid wireless telecommunications service from a

seller for any purpose other than resale.” PS § 1-313(a)(4), (b).

The fee is then “collected by the seller from the consumer for

Gen. 208] 211

each retail transaction in the State.” PS § 1-313(c). In other

words, the fee is levied at the point of sale, much like a sales tax.

Every time a consumer purchases a prepaid cellphone or prepaid

cellphone minutes from a seller, the seller collects a 60-cent fee

on behalf of the State by adding it to the purchase price. The “fee

is the liability of the consumer and not of the seller or of any

provider,” except that the seller must remit the fees it collects to

the Comptroller. PS § 1-313(e), (g).

The two fee regimes are mutually exclusive. The new

prepaid wireless E 9-1-1 fee governs only “prepaid wireless

telecommunications service.” PS § 1-313. Conversely, the older

fee, which is levied on “[e]ach subscriber to switch local

exchange access service or CMRS or other 9-1-1-accessible

service,” explicitly excludes “prepaid wireless telecommunications

service” from its scope. PS §§ 1-310(a), 1-311(a). Many states

have similar dual systems that impose different fees on prepaid

wireless service and other 9-1-1-accessible service. Some of

these states have explicitly exempted all Lifeline participants

from paying either 9-1-1 fee. See, e.g., Del. Code Ann. tit. 16,

§ 10103(a)(1); N.Y. County Law §§ 304, 334, 335; Ohio Rev.

Code Ann. § 128.42(A)(2)(b). The Maryland statutes, however,

contain no such express exemption.

B. The Lifeline Program

Lifeline is a federally-funded program administered by the

FCC which, since 1985, has provided subsidized telephone

service to qualifying low-income individuals. See Federal Com-

munications Commission, Lifeline Program for Low-Income

Consumers, http://www.fcc.gov/lifeline (last visited, Dec. 2,

2014). The purpose of the program is to ensure that low-income

Americans can “connect to jobs, family, and emergency services.”

Id. Federal regulations thus specifically require that Lifeline

service include access to the 9-1-1 system. 47 C.F.R. § 54.101(b).

Individuals qualify for Lifeline if their income is at or below

135% of the federal Poverty Guidelines or they participate in one

of various public assistance programs, such as Medicaid, the

Supplemental Nutrition Assistance Program, or Temporary

Assistance to Needy Families. 47 C.F.R. § 54.409. States may

also create broader eligibility criteria, 47 C.F.R. § 54.409(a)(3),

212 [99 Op. Att’y

which Maryland has elected to do for landline subscribers.4 See

Md. Code Ann., Public Utilities (“PU”) § 8-201(a)(2). But each

household may only have one Lifeline-subsidized connection. 47

C.F.R. § 54.409(c). Telephone companies, for their part, may

offer Lifeline service within a state only if they have been deemed

an “eligible telecommunications carrier” (“ETC”) by that state’s

regulating body.5 47 C.F.R. §§ 54.201, 54.405. The program is

financed through the Universal Service Fund, which levies a

charge on telecommunication providers, who, in turn, may pass it

on to their customers. 47 C.F.R. §§ 54.706, 54.712.

The federal program typically works as follows: A telephone

company will give an eligible participant a “reduced charge” or

“discount” of $9.25 per month on his or her bill, and the federal

government will reimburse the service provider for that discount.

See 47 C.F.R. §§ 54.401, 54.403(a)(1), 54.407. Although pro-

viders that are authorized to impose an “End User Common Line

Charge” are subject to slightly different rules, the cellphone

providers at issue in this opinion must apply the entire $9.25

subsidy “to reduce the cost of any generally available residential

service plan or package.” 47 C.F.R. § 54.403(b)(1).

C. Prepaid Wireless Providers, the Lifeline Program, and

“Free” Cell Phones

Because prepaid wireless customers pay up front, providers

cannot give Lifeline participants a discount on their monthly bills,

as the federal regulations contemplate. Instead, these carriers give

Lifeline customers a free cellphone and a monthly allotment of

“free” minutes. This monthly allotment of minutes is at least

equal in retail value to the $9.25 per month subsidy provided by

the federal government. See Matt Richtel, Providing Cellphones

for the Poor, N.Y. Times (June 15, 2009), available at

4

Maryland has also established an additional discount for eligible

landline subscribers under State law. See PU § 8-201(c). This ad-

ditional discount does not apply to wireless carriers, however, who are

covered instead by the standard federal regulations. See PU §§ 8-

201(b) (providing that the State program applies only to “local

telephone compan[ies]”), 1-101(ll)(2) (defining “telephone company”

to exclude “a cellular telephone company”).

5

In Maryland, the regulating body is the Public Service

Commission. A service provider can also petition the FCC for

recognition as an ETC if the provider is “not subject to the jurisdiction

of a State commission.” 47 U.S.C. § 214(e)(6).

Gen. 208] 213

http://www.nytimes.com/2009/06/15/technology/15cell.html?_r=0.

The federal government then reimburses the provider $9.25 per

month for the prepaid phone service.

You asked in particular about SafeLink Wireless, a

subsidiary of TracFone, but other prepaid wireless companies also

offer the same kind of “free” plans.6 Indeed, TracFone and other

wireless companies have become ETCs for the limited purpose of

providing Lifeline in numerous states, including Maryland. See,

e.g., Letter Order of Maryland Public Serv. Comm’n (Aug. 19,

2009) (approving Petition of TracFone Wireless, Inc. for

Designation as an Eligible Telecommunications Carrier in the

State of Maryland for the Limited Purpose of Offering Lifeline

Service to Qualified Households). The plan offered by SafeLink

to Lifeline participants includes either 68, 125, or 250 minutes per

month, depending on whether the participant wants free

international calling, rollover minutes, or both. See SafeLink

Wireless Website, Terms & Conditions. Customers may also

purchase additional minutes to supplement their subsidized

monthly allotment. Id.

Because it is not clear how these Lifeline customers fit into

the point-of-sale fee regimes adopted in Maryland and other

states, SafeLink’s service model has again led to uncertainty

about whether prepaid wireless providers must collect 9-1-1 fees.

Most of the states that have considered the issue concluded that

the fee does not apply to Lifeline participants who receive “free”

prepaid service. See, e.g., Letter from the Attorney General of

Rhode Island to Speaker of the House Gordon D. Fox (Oct. 12,

2012); Op. Att’y Gen. S.C., 2011 WL 5304075, at *3-4 (Oct. 10,

2011); Op. Att’y Gen. Tenn. No. 09-87, 2009 WL 1430917, at *5-

6 (May 18, 2009); Virginia Department of Taxation, Prepaid

Wireless E-911 Fee, http://www.tax.virginia.gov/site.cfm?alias=

PrepaidWirelessE-911 (last visited Aug. 4, 2014). Other states,

however, specifically require Lifeline customers or other

recipients of free phone service to pay their 9-1-1 fee.

6

See, e.g., SafeLink Wireless, https://www.safelinkwireless.com/

Enrollment/Safelink/en/NewPublic/index.html (last visited Dec. 3, 2014)

(“SafeLink Wireless Website”); Life Wireless, http://www.lifewireless.com/

phones.php (last visited Dec. 2, 2014); Access Wireless, http://

www.accesswireless.com/Lifeline (last visited Dec. 2, 2014).

214 [99 Op. Att’y

The Alabama 9-1-1 Board, for example, recently issued

regulations requiring all ETCs to collect a monthly fee from

Lifeline participants, including those who receive a free phone. 7

See Ala. Admin. Code r. 585-X-4-.05. Texas regulations also

appear to require that sellers or providers remit a fee even if they

provide free service. See 34 Tex. Admin. Code § 3.1271(d)(4)(B)

(applying fee to “prepaid wireless telecommunication service not

sold at retail but used by a seller or other person in Texas,”

including, for example, free service provided by the wireless

company to employees). And Colorado entered into a settlement

agreement with a number of prepaid wireless providers that

allowed them to operate as ETCs if, among other things, they

agreed to pay the 9-1-1 fee on behalf of their Lifeline customers.

See, e.g., Colorado Public Utilities Comm’n, Docket No. 13A-

0150T, Stipulation & Settlement Agreement, at 12, ¶11E (July 3,

2013) (attached to Colorado Public Utilities Comm’n,

Recommended Decision, In the Matter of Telrite Corp., 2013 WL

4013300 (July 30, 2013)). As we understand it, prepaid service

providers in Maryland do not currently collect any 9-1-1 fee from

their Lifeline customers.

II

Analysis

You have asked whether any of Maryland’s 9-1-1 fees apply

to prepaid Lifeline participants who receive a free allotment of

monthly minutes from SafeLink Wireless or other prepaid

wireless companies. As always, the “cardinal rule” of statutory

interpretation “is to ascertain and effectuate legislative intent.”

Mayor and City Council of Baltimore v. Chase, 360 Md. 121, 128

(2000). Although we begin our analysis with “the plain language

of the statute,” La Valle v. La Valle, 432 Md. 343, 355 (2013),

“the plain language rule of construction is not absolute; rather, the

statute must be construed reasonably with reference to the

purpose, aim, or policy of the enacting body.” Pelican Nat’l Bank

v. Provident Bank, 381 Md. 327, 336 (2004) (internal quotation

marks and citation omitted). “[I]f the true legislative intent

cannot readily be determined from the statutory language alone,”

7

TracFone has filed a lawsuit challenging these regulations, and

certain interest groups sent a letter to Alabama’s Governor in July 2014

urging him to rescind the regulations. Mike Cason, Users of Free

Government Cellphones to Start Paying State 911 Tax, AL.com,

http://www.al.com/news/index.ssf/2014/07/users_of_free_government_

cellp.html (last visited Dec. 2, 2014).

Gen. 208] 215

we must “look to other indicia of that intent, including . . . its

legislative history, its general purpose, and the relative rationality

and legal effect of various competing constructions [of the

statute].” Baltimore County v. RTKL Assocs., 380 Md. 670, 678

(2004).

A. Which 9-1-1 Fee Statute Governs?

Before we address whether prepaid Lifeline participants

must pay the 9-1-1 fee, we must first determine which of

Maryland’s two 9-1-1 fee regimes governs the situation here.

SafeLink’s service is either “prepaid wireless telecommunications

service,” in which case it must be analyzed under the new point-

of-sale fee imposed by PS § 1-313, or it is not, in which case the

fee may be assessed only if SafeLink’s customers are

“subscribers” within the meaning of the older 9-1-1 fee set forth

in PS § 1-310. A cellphone service qualifies as “prepaid wireless

telecommunications service” if it satisfies the following four

elements: It must (1) be “a commercial mobile radio service” and

it must also (2) “allow[] a consumer to dial 9-1-1 to access the 9-

1-1 system;” (3) “be paid for in advance;” and (4) be “sold in

predetermined units that decline with use in a known amount.”

PS § 1-301(r).

As an initial matter, SafeLink provides commercial mobile

radio service through the Lifeline program. CMRS “means

mobile telecommunications service that is: (1) provided for profit

with the intent of receiving compensation or monetary gain; (2)

an interconnected, two-way voice service; and (3) available to the

public.” PS § 1-301(d). SafeLink clearly satisfies the second and

third criteria; it provides voice service to the public in the same

way as other cellphone plans. Although one might question

whether the service is “provided for profit,” the prepaid wireless

companies indeed turn a profit from the $9.25 per month federal

reimbursement because that reimbursement covers the retail

price, not the per-unit cost to the provider. See Richtel, supra.8

Turning back to the other three elements of “prepaid

wireless telecommunication service,” SafeLink easily satisfies

8

A provider may earn more profit still if the Lifeline participant

purchases additional minutes or becomes a loyal, paying customer

when he is no longer eligible for the federal program. See Richtel,

supra.

216 [99 Op. Att’y

most of these as well. It certainly allows a consumer to dial

9-1-1. In fact, federal law requires Lifeline providers to ensure

access to the 9-1-1 system. See 47 C.F.R. § 54.101(b). And the

service is provided “in predetermined units that decline with use

in a known amount.” But it is not as clear that the service is “paid

for in advance” given that Lifeline participants do not pay

anything to their providers before receiving their monthly

allotment of minutes. Although the federal government pays for

the service, it technically does not do so “in advance” because it

reimburses the provider.

We do not believe, however, that the General Assembly

intended for the determination of which 9-1-1 fee should govern

to hinge on the timing of federal reimbursement. Common sense

must guide us in the interpretation of statutes, Marriott Emps.

Fed. Credit Union v. Motor Vehicle Admin., 346 Md. 437, 445

(1997), and, from a common sense perspective, SafeLink offers

prepaid service. The customer signs up for a set number of

minutes of phone service and, if he uses up all of the minutes

before his next allotment, he cannot make another call unless he

purchases more. It seems to us that the Legislature, in defining

“prepaid wireless telecommunications service,” was trying to

distinguish prepaid service from the traditional “post-paid” model

of wireless service covered by PS § 1-310, where a consumer is

billed at the end of the month based on usage during that month.

The phrase “paid for in advance,” therefore, was probably meant

only to distinguish prepaid service from more traditional

subscription service.

Our conclusion is bolstered by the fact that SafeLink

customers who purchase additional minutes on top of their

subsidized monthly allotment unquestionably receive “prepaid

wireless telecommunications service” that would be governed by

PS § 1-313. It seems unlikely that the General Assembly

intended consumers to be governed by two different, mutually

exclusive fee statutes for the same service. We will therefore

categorize SafeLink as a “prepaid wireless” provider and focus on

PS § 1-313 to determine whether its customers are subject to a

9-1-1 fee.

B. The Plain Language of § 1-313 of the Public Safety Article

We begin our analysis of § 1-313 with the plain language of

the statute. The provision imposes “a prepaid wireless E 9-1-1

fee of 60 cents per retail transaction.” PS § 1-313(b). “Retail

transaction” is defined as “the purchase of prepaid wireless

Gen. 208] 217

communications service from a seller for any purpose other than

resale.” PS § 1-313(a)(4). The statute requires that the “amount

of the [fee] shall be disclosed to the consumer at the time of the

retail transaction,” PS § 1-313(d) (emphasis added), and it

provides an explicit collection mechanism: “[T]he fee shall be

collected by the seller from the consumer for each retail

transaction in the State.” PS § 1-313(c). In sum, the statutory

scheme apparently envisions that a consumer will buy his or her

phone service from a retailer and that the fee will be added to the

purchase price, collected by the retailer, and remitted to the

Comptroller.

Just based on these few provisions, it seems unlikely that the

General Assembly specifically intended the fee to apply to

prepaid Lifeline participants. The way in which Lifeline

participants receive their service is not something that most

people would normally think of as a “retail transaction.”

SafeLink customers do not buy their phone service, and no

obvious transaction occurs when the 60-cent fee can be charged to

the customer. If the customer chooses to buy additional minutes,

he certainly must pay the fee on those minutes. But requiring

Lifeline participants who do not pay for their service to pay the 9-

1-1 fee does not seem to fit very comfortably within the statutory

language.

The statutory definition of “retail transaction”—at least on

its face—seems to confirm our initial sense that there is no such

transaction here. As noted above, the statutory definition of

“retail transaction” depends on whether a consumer “purchases”

wireless service from a “seller.” See PS § 1-313(a)(4).

“Purchase” is not defined by the statute, but it generally means to

“acquire by the payment of money or its equivalent.” Webster’s

Encyclopedic Unabridged Dictionary 1568 (1996). “Seller” is

defined by statute, but the definition is not very helpful: a “person

that sells prepaid wireless telecommunications service to another

person.” PS § 1-301(v). The dictionary definition is somewhat

more helpful; it defines “sell” as “to transfer (goods) or render

(services) for another in exchange for money.” Webster’s

Encyclopedic Unabridged Dictionary 1739. Together, then, the

terms “purchase” and “seller” imply that some exchange of

“money or its equivalent” must take place between the buyer and

seller during the transaction—something that does not happen

between the provider and the Lifeline participant here.

218 [99 Op. Att’y

On similar grounds, two other Attorneys General have

concluded that providing free service to Lifeline participants does

not qualify as a “retail transaction” because the participants are

not “charged for” and do not “purchase” their phones or phone

service. See Letter from the Attorney General of Rhode Island to

Gordon D. Fox, supra; Op. Att’y Gen. S.C., 2011 WL 5304075,

at *3-4. The Rhode Island Attorney General, for example,

reasoned that, “[s]ince . . . the qualifying consumer receives the

telephone and service free of charge, no ‘purchase’ takes place,”

and there is thus no “retail transaction upon or for which E-911

charges must be collected.” Letter from the Attorney General of

Rhode Island to Gordon D. Fox, supra (internal quotation marks

omitted).

Although this plain reading has considerable merit, we are

not sure that the meaning of the statute is so clear as to foreclose

all further inquiry. See Mayor & Council of Rockville v. Rylyns

Enterprises, Inc., 372 Md. 514, 551-52 (2002) (noting that the

“intrinsic meaning [of a statute] may be fairly clear, but its

application to a particular object or circumstance may be

uncertain” (internal quotations omitted)). The notion that

SafeLink provides free service is, after all, a fiction. The service

is not actually free; the federal government pays for it. In this

way, the government arguably “purchases” the minutes from the

provider every month on behalf of the Lifeline participant. If the

federal government implemented Lifeline by giving eligible

participants a $9.25 voucher every month, and the participant

exchanged that voucher for prepaid minutes from TracFone, it

seems likely that the exchange would qualify as a “retail

transaction.” It is not obvious why the same participant should be

exempt from the fee merely because the federal government has

chosen a different way to administer its program.

Moreover, if the Legislature had specifically intended to

exempt these customers, it could have explicitly excluded Lifeline

participants from the fee regime, as a number of other state

legislatures have done. See, e.g., Del. Code Ann. tit. 16,

§ 10103(a)(1); N.Y. County Law §§ 304, 334, 335; Ohio Rev.

Code Ann. § 128.42(A)(2)(b). But it did not provide for such an

explicit exemption. In light of this ambiguity in how the plain

language should apply, we will turn to “other indicia of [the

Legislature’s] intent” to help us interpret the statute. RTKL

Assoc., 380 Md. at 678; see also Rylyns Enterprises, 372 Md. at

552.

Gen. 208] 219

C. Other Indicia of Legislative Intent

Unfortunately, these other indicia of legislative intent also

do not provide a definitive answer. The legislative history of PS

§ 1-313, for example, is not instructive. There is only one

mention of Lifeline participants in the legislative record and no

evidence whatsoever that the General Assembly considered this

issue one way or the other.9 To be sure, the 9-1-1 fee statute

includes a declaration of purpose that, at first blush, appears to

offer guidance: The General Assembly explicitly declared when

enacting the prepaid wireless fee in 2013 that “all end user

customers of 9-1-1-accessible services, including consumers of

prepaid wireless communications service, should contribute in a

fair and equitable manner to the 9-1-1 Trust Fund.” PS § 1-

302(a)(6) (emphasis added). This provision arguably reflects a

legislative intent that everyone who has access to the 9-1-1

system should pay the fee that supports the system.

Although the principle makes sense in the abstract, we are

not convinced that the Legislature, when it made this statement,

was thinking about Lifeline participants who do not pay for their

phone service. In 2013, the General Assembly was focused on

paying customers who, at the time, were not required to

contribute to the 9-1-1 Fund simply because they paid for their

service in advance rather than receiving monthly bills. The

Legislature did not have the opportunity to consider whether it

would be “fair and equitable” to impose the same burden on low-

income individuals who receive phone service at no cost through

9

The only mention of Lifeline that we could find in the legislative

history came from DPSCS’s legislative affairs director, Kevin Loeb,

during the hearings on Senate Bill 745, and it does not shed much light

on the applicability of the 9-1-1 fee. Responding to concerns about the

impact a prepaid wireless 9-1-1 fee could have on Maryland’s low-

income residents, Mr. Loeb explained that data showed that people of

all incomes used prepaid phones and that, in any event, the poorest of

the poor received federal subsidies through the Lifeline program. See

2013 Leg., Reg. Sess., Hearings on S.B. 745 Before the Senate Finance

Comm. (Feb. 19, 2013) and the House Health and Gov’t Operations

Comm. (March 26, 2013) (testimony of Kevin Loeb). It is unclear

whether Mr. Loeb meant that the Lifeline participants would not have

to pay the fee or merely that the fee would not inflict a significant

financial burden on Lifeline participants because they already received

discounted service. In any event, there is no evidence of how the

members of the General Assembly regarded his remarks.

220 [99 Op. Att’y

a federal benefit program. Nor does the “everyone pays”

principle have universal appeal. As the Tennessee Attorney

General noted, it would “seem peculiar for persons who are

supplied a free phone to be subjected to a monthly service

charge.” Op. Att’y Gen. Tenn. No. 09-87, 2009 WL 1430917, at

*6.

The collection mechanism established by the General

Assembly provides perhaps the best evidence that the Legislature

did not have Lifeline participants in mind when creating the new

prepaid wireless fee. The fee is supposed to be collected “by the

seller from the consumer” for each “retail transaction.” PS § 1-

313(c)(1)(i). A person only qualifies as a “consumer” if he

“purchases prepaid wireless telecommunications service in a retail

transaction.” PS § 1-313(a)(2). Even assuming that a “purchase”

occurs when the federal government pays for Lifeline service, the

Lifeline participant is not the one doing the purchasing and thus

would seem not to qualify as a “consumer” from which the fee

may be collected.

Moreover, even if a Lifeline participant were considered a

“consumer,” there would be no obvious way to collect the fee.

The statute envisions that the seller will collect the fee from the

consumer at the time of the retail transaction, but there is no direct

financial transaction between the prepaid Lifeline participant and

the service provider. If the General Assembly had specifically

intended the fee to apply to these Lifeline participants, we suspect

that it would have outlined a workable collection mechanism.10

10

Although we have concluded that the prepaid wireless fee

governs this situation, we note that a similar problem would arise if we

analyzed SafeLink’s service under PS §§ 1-310 and 1-311. This older

fee regime, which applies to “subscriber[s] to . . . 911-accessible

service,” requires that the fee be paid “when the bill for . . . service is

due” and mandates that the service carrier “add the 9-1-1 fee to all

current bills rendered.” PS § 1-310(b)–(d). Lifeline participants who

receive free phone service may well be “subscriber[s],” but, even so,

there is no clear collection mechanism. The fee must be paid when the

bill is due, but SafeLink customers are not billed for their service. See

Op. Att’y Gen. Tenn. No. 09-87, 2009 WL 1430917, at *5-6

(concluding that a similarly-worded statute did not require SafeLink

customers to pay an E 9-1-1 fee). If the General Assembly were to

consider legislation clarifying the applicability of the 9-1-1 fee to

Lifeline participants, we would recommend that the legislation address

both the prepaid and subscription services provided under the Lifeline

program.

Gen. 208] 221

The Kentucky Supreme Court recently found that the

absence of a mechanism for collecting 9-1-1 fees from certain

paying customers was relevant in determining whether the

legislature intended prepaid wireless service providers to collect

9-1-1 fees from those customers. See Virgin Mobile, 2014 WL

4116480 at *5-7 (explaining that the legislature could not have

intended to require service providers to fashion their own

collection mechanisms where the legislature created an explicit

mechanism and, thereby, “permitted or authorized no other means

of collecting the fee”); see also TracFone Wireless, 397 S.W.3d at

176-78 (reaching a similar conclusion under Texas law). We

similarly think that the absence of a workable mechanism for

collecting the fee from prepaid Lifeline participants weighs

against requiring these individuals to pay the fee.

We recognize that the “difficulty in collecting the tax” is

largely “due to TracFone’s choice of business model.” Wash.

Dep’t of Revenue, 242 P.3d at 818. If prepaid wireless companies

implemented Lifeline in a different way, there might be no

ambiguity in the statute as applied to Lifeline participants. Along

these lines, some courts have held that the lack of a clear

collection mechanism should not excuse prepaid wireless

providers from collecting 9-1-1 fees from their paying customers.

Virgin Mobile USA, LP v. Arizona Dep’t of Revenue, 282 P.3d

1281, 1284 (Ariz. 2012); Bonet, 85 So.3d at 976-77; TracFone

Wireless, 242 P.3d at 818-19.

In those cases, however, the plain language of the fee

statutes in question explicitly covered all telephone users. In

Alabama, for instance, the fee was imposed on each telephone

“connection.” Bonet, 85 So.3d at 973; see also Arizona Dep’t of

Revenue, 282 P.3d at 1284 (imposing fee on each “customer” who

receives “telephone or telecommunication services”); Wash.

Dep’t of Revenue, 242 P.3d at 817 (imposing fee on “all radio

access lines”). A prepaid cellphone is still a “telephone con-

nection,” telephone “service,” or “radio access line” even if the

statute does not provide a clear way to collect the fee from that

particular telephone user. Thus, the only question in those cases

was whether the lack of a collection mechanism—by itself—

somehow excused the providers from collecting an otherwise

applicable fee for every “telephone connection” or every “radio

access line.” Here, however, the plain language of PS § 1-313

does not clearly provide that the fee applies in the first place. We

222 [99 Op. Att’y

find the analysis of the Kentucky Supreme Court to be more

relevant in this context.11

In sum, it does not appear that the General Assembly

specifically intended to exempt prepaid Lifeline participants from

the new prepaid wireless 9-1-1 fee or specifically intended them

to pay the fee. But, considered together, the statutory language

and the absence of a specific collection mechanism lead us to

conclude that the best reading of the statute is that it does not

require Lifeline participants to pay the fee on their free minutes.12

We do not mean to suggest that there is no way in which

SafeLink and other service providers could collect the fee from

prepaid Lifeline participants. For example, in Alabama—which

requires all Lifeline customers to pay a 9-1-1 fee—SafeLink has

notified its Lifeline customers that they should send it a check for

$1.75 every month to cover the fee, which SafeLink presumably

then remits to the state. See SafeLink Wireless Website, Notice to

Alabama SafeLink Customers, https://www.safelinkwireless.com/

Enrollment/Safelink/en/Public/AL.html (last visited Dec. 3,

11

Washington Department of Revenue is distinguishable in another

way as well. In that case, the state statute specifically identified the

9-1-1 fee as an “excise tax,” so the court applied the canon of statutory

construction by which exemptions from taxation are construed

narrowly in favor of the government. See 242 P.3d at 822; see

generally Comptroller v. Gannett Co., 356 Md. 699, 707-08 (1999)

(describing the canon). Here, however, it seems unlikely that the

“9-1-1 fee” constitutes a tax. See Bonet, 85 So.3d at 984-85 (con-

cluding that Alabama 9-1-1 fee was not a tax); see also W. Capital

Associated Ltd. P’ship v. City of Annapolis, 110 Md. App. 443, 450-51

(1996) (concluding that service charge applicable to people who use a

government service is not a tax). And, even if we were to consider the

fee a tax, there is a competing canon of construction by which the

applicability of tax laws—as opposed to exemptions therefrom—is

interpreted in favor of the taxpayer. See Gannett Co., 356 Md. at 707-

08. Given that the language of PS § 1-313 does not clearly provide that

the fee applies here, we think that this second canon would probably

control in the unlikely event a reviewing court were to consider the

9-1-1 fee a tax.

12

We do not decide whether the same analysis would apply to a

customer who receives free minutes as part of a promotion or any other

means. Such promotions might include the functional equivalent of a

retail transaction between the seller and buyer—an exchange of loyalty

points, for example—and, in any event, would require an entirely

separate inquiry into the Legislature’s intent.

Gen. 208] 223

2014). Another way to collect the fee might be to require the

provider to subtract 60 cents every month from the $9.25 federal

subsidy, remit those 60 cents to the Comptroller, and deduct 60

cents worth of minutes from the Lifeline participant’s phone.13

But, even if there are ways to collect the fee, it is not for us to

determine the most appropriate collection mechanism. That is a

policy choice for the General Assembly to make once it has had

the opportunity to decide whether Lifeline participants should pay

the 9-1-1 fee in the first place.

The General Assembly has twice before made similar policy

decisions about whether to adapt the 9-1-1 fee regime to emerging

business models in the telecommunications industry. In 1995, for

example, the Legislature reacted to the increasing popularity of

cellphones by extending the fee to “subscribers to . . . wireless

telephone service and other 9-1-1-accessible service.” 1995 Md.

Laws, ch. 158. Then, when prepaid service providers claimed

that they did not need to collect the existing fee from their paying

customers, the Legislature established the new prepaid wireless

fee in PS § 1-313. Whether the statute should be amended to

account for the Lifeline program is again a question for the

General Assembly.

III

Conclusion

We conclude that, under current law, customers of SafeLink

Wireless and similar prepaid wireless providers are not required

to pay a 9-1-1 fee on the free allotment of minutes they receive

13

We are not certain whether this approach would be consistent

with federal regulations, which require the subsidy to be used “to

reduce the cost of any generally available residential service plan or

package” without any reference to state-imposed 9-1-1 fees. See 47

C.F.R. § 54.403(b)(1). It is not uncommon for federal benefit programs

to prohibit the use of federal benefits to pay unrelated state-imposed

charges. See, e.g., 7 U.S.C. § 2013(a) (providing explicitly that states

participating in the Supplemental Nutrition Assistance Program are

prohibited from charging sales tax on purchases made with food

stamps). But given that service providers must include access to the

9-1-1 system in order to qualify under the Lifeline program, 47 C.F.R.

§ 54.101(b), we suspect that the FCC would consider the 9-1-1 fee to

be part of the “cost of [the] generally available” plan. Still, in the

absence of federal guidance, we cannot say with confidence the FCC

would permit the use of federal subsidies to pay the 9-1-1 fee.

224 [99 Op. Att’y

through the Lifeline program. Although we see no evidence that

the Legislature specifically considered whether Lifeline

participants should pay the fee, both the terms of the statute and

the lack of a specific collection mechanism suggest that the fee

does not apply to them. The General Assembly may wish to

consider amending the statute to clarify whether these individuals

should pay the fee and, if so, how the fee should be collected.

Douglas F. Gansler

Attorney General of Maryland

Patrick B. Hughes

Assistant Attorney General

Adam D. Snyder

Chief Counsel, Opinions & Advice