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Amicus Brief of Fed.-State Joint Bd., In Re:FCC 11-161 (10th Cir.)

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Released: August 5, 2013
Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 1

ORAL ARGUMENT SCHEDULED FOR NOVEMBER 19, 2013



NO. 11-9900




IN THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

________________

IN RE: FCC 11-161
________________

ON PETITIONS FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION
____________

AMICUS BRIEF OF THE STATE MEMBERS

OF THE

FEDERAL-STATE JOINT BOARD ON UNIVERSAL SERVICE

IN SUPPORT OF PETITIONERS
____________





JAMES H. CAWLEY




400 North Street, 3rd Floor



Harrisburg, PA 17105-3265



Tel. 717.783.1197



JHC@pa.gov






Counsel for Amici Curiae
State
Members
of
the
Federal-State
Joint
Board
on
Universal
Service

July 17, 2013


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 2

TABLE OF CONTENTS


TABLE OF AUTHORITIES ............................................................... ii

GLOSSARY .............................................................................................................. iv

INTEREST OF AMICI CURIAE ............................................................. 1

ARGUMENT ................................................................................... 2

I.
The
Order Violates Dual Sovereignty .................................................. 2

II.
Expansive
Interpretation Of 251(b)(5)
Overreaches
...........................................................................................
2


III. Due Process And APA 553 Notice Requirements
Were
Violated
........................................................................................
3


A.
Due Process Precluded Ex Parte Contacts ................................. 3



B.
Opportunity For Comment Was Inadequate ............................... 4



C.
Extensive Industry 11th Hour Ex
Parte
Contacts Prevented Comment ........................................... 5

Certificate of Compliance




i


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 3

TABLE OF AUTHORITIES

Page

Cases



Action for Children's Television v. FCC, 564 F.2d 458
(D.C.
Cir. 1977) ...................................................................................................... 6

American Bus Association v. Slater, 231 F.3d 1
(D.C.
Cir. 2000) ...................................................................................................... 3

AT&T v. Iowa Utilities Board, 525 U.S. 366 (1999) ................................................. 3

Bates v. Dow Agrosciences LLC, 544 U.S. 431(2005) .............................................. 3

Gregory v. Ashcroft, 501 U.S. 452 (1991) ................................................................. 3

Home Box Office, Inc. v. FCC, 567 F.2d 9
(D.C.
Cir. 1977) ...................................................................................................... 4

Morgan v. United States, 304 U.S. 1(1938) ............................................................... 4

National Federation of Independent Business v.
Sebelius
, 567 U.S. __,132 S. Ct. 2566 (2012) ........................................................ 2

Sangamon Valley Television Corp. v. United States,
269 F.2d 221(D.C. Cir. 1959) ................................................................................. 4

Vermont Yankee Nuclear Power Corp. v. Natural
Resources Defense Council, Inc
., 435 U.S. 519 (1978) ......................................... 4

Whitman v. American Trucking Association,
531 U.S. 457 (2001) ............................................................................................... 3

Statutes


5 U.S.C. 551(6) ....................................................................................................... v

5 U.S.C. 551(7) ....................................................................................................... v
ii


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 4

5 U.S.C. 553 ............................................................................................................ 4

47 U.S.C. 251(b)(5)................................................................................................. 2

47 U.S.C. 254(b) ..................................................................................................... 1

47 U.S.C. 254(c)(1)(C) ........................................................................................... 1

47 U.S.C. 254(c)(2) ................................................................................................. 1

Other Authorities



In the Matter of Connect America Fund, A National
Broadband Plan for Our Future, Establishing Just
and Reasonable Rates for Local Exchange Carriers,
High-
Cost Universal Service Support, Developing an
Unified

Intercarrier
Compensation Regime, Federal-
State Joint Board on Universal Service, Lifeline and
Link-Up, WC Docket No. 10-90, GN Docket No. 09-51,
WC Docket No. 07-135, WC Docket No. 05-337, CC
Docket No. 01-92, CC Docket No. 96-45, WC Docket
No. 03-109, Notice of Proposed Rulemaking and
Further Notice of Proposed Rulemaking
, 26 FCC
Rcd 4554 (2011) (NPRM) ...................................................................................... 4

Daniel A. Lyons, Tethering the Administrative State:
The

Case
Against
Chevron Deference for FCC
Jurisdictional
Claims, 36 J. Corp. L. 823 (2011) ................................................... 2
iii


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 5

GLOSSARY


ABC Plan

"America's Broadband Connectivity" Plan




filed on July 29, 2011 by the USTelecom
Association
(sponsored
by
AT&T,
Verizon,
CenturyLink,
Windstream,
Frontier,

FairPoint
Communications,
the
National
Telecommunications
Cooperative

Association
(NTCA),
OPASTCO,
and
the
Western
Telecommunications
Alliance





(WTA))1


APA


The federal Administrative Procedure Act

ARC

Access
Recovery
Charge

Board, Joint Board
The Federal-State Joint Board on
Universal Service consisting of three FCC
commissioners, four State Members who are State regu-
latory commissioners (currently from Pennsylvania, Ne-
braska, South Carolina, and Vermont) nominated by the
National Association of Regulatory Utility Commission-
ers and approved by the FCC, and one State-appointed
utility consumer advocate (currently the Colorado Con-
sumer Counsel) nominated by the National Association
of State Utility Consumer Advocates. 47 U.S.C. 254.

CLEC
Competitive
Local
Exchange
Carrier

ETC
Eligible
Telecommunications
Carrier

ICC
Intercarrier
Compensation

IXC
Interexchange
(Long Distance) Carrier

LEC
Local
Exchange
Carrier

1 JA at 2986, 2988, 3002, 3006, 3034, 3068; 3137 & 3142.

iv


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 6

Order2


The Report and Order and Further Notice
of
Proposed
Rulemaking
appealed
from

RLEC Plan

A plan filed by the Joint Rural
Associations (NECA, NTCA, OPASTCO,
and WTA) on April 18, 20113

SLC
Subscriber
Line
Charge

State Members
State Members of the Federal-State Joint Board on Uni-
versal Service

State Plan

State Members' Comments filed May 2,
20114

USF
State or the federal Universal Service Fund

2 Connect America Fund, Report and Order and Further Notice of Proposed Rule-
making, 26 FCC Rcd 17663 (2011) (JA at 390-1141). The FCC often promulgates
rules by means of what it refers to as "orders" although the APA defines an "order"
as "the whole or a part of a final disposition in a matter other than rule making but
including licensing." 5 U.S.C. 551(6); see also id. 551(7) (defining "adjudica-
tion" as "agency process for the formulation of an order").

3 JA at 2141-2273.

4 JA at 2654-2830.

v


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 7

INTEREST OF AMICI CURIAE



The State Members constitute a majority of the Joint Board, tasked by
Congress to ensure federal universal service policies adhere to articulated princi-
ples and to recommend redefinitions of supported services. 47 U.S.C. 254(b),
254(c)(1)(C), 254(c)(2).


1


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 8

ARGUMENT


I. The

Order Violates Dual Sovereignty.


Contrary to dual sovereignty, the Order establishes a zero ICC rate for intra-
state access charges and requires State implementation and enforcement.5 This
"economic dragooning [of] the States with no real option but to acquiesce"6 is not
enticement but direct and indirect coercion7 that "conscript[s] state [utility com-
missions] into the [FCC's] national bureaucratic army."8

II. Expansive

Interpretation Of 251(b)(5) Overreaches.


Again overreaching,9 the FCC usurps intrastate access ratemaking, using
251(b)(5) to rationalize, "That which is not forbidden is permitted."10 Agencies
have no inherent powers, only those granted by Congress which "does not alter the

5 Order 813 (JA at 667).

6 Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. __, 132 S.Ct. 2566, 2605 (2012).

7 Id., 132 S.Ct. at 2602.

8 Id., 132 S.Ct. at 2607.

9 Lyons, Tethering the Administrative State: The Case Against
Chevron Deference for FCC Jurisdictional Claims, 36 J. Corp. L. 823 (2011).

10 Order 765 (JA at 643).

2


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 9

fundamental details of a regulatory scheme in vague terms or ancillary provi-
sions."11 Federal statutes must clearly and manifestly supplant state regulation.12
Section 251(b)(5) is neither jurisdiction-conferring nor FCC-empowering,
obligating only LECs. The FCC may establish a "pricing methodology,"13 but
States must "implement that methodology, determining the concrete result in par-
ticular circumstances."14 "Bill-and-keep" predetermines a zero rate.

III. Due Process And APA 553 Notice Requirements Were Violated.



A. Due

Process

Precluded

Ex Parte Contacts.



This rulemaking intended to cull small companies15 by depriving them of
vital terminating access revenues, conferring a billion dollar annual windfall on
wireless carriers and wireline IXCs and effectively forcing fire sale consolidations.

11 Whitman v. American Trucking Ass'n, 531 U.S. 457, 464 (2001); American Bus
Ass'n v. Slater
, 231 F.3d 1, 8 (statutory silence on granting a power is not an ambi-
guity but a denial of that power) (Sentelle, J., concurring).

12 Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449 (2005);
Gregory v. Ashcroft, 501 U.S. 452, 460 (1991).

13 Order 773 (JA at 647).

14 AT&T v. Iowa Utilities Bd., 525 U.S. 366, 384 (1999).

15 "[I]t may not serve the public interest for consumers across the country to subsi-
dize the cost of operations for so many very small companies," NPRM at 217
(http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-13A1.pdf at 76).

3


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 10

Not merely "valuable privileges"16 were at stake but property rights in "extremely
compelling circumstances,"17 and pending adjudications.18

Ex parte contacts may be banned in informal proceedings "involv[ing] com-
petitive interests of great monetary value [that] confer[] preferential advantages,"19
and where "the very existence of [owners is] in jeopardy attack[ing] them at a vital
spot."20

B.

Opportunity

For

Comment Was Inadequate.


The largest carriers filed the ABC Plan, including a sophisticated computer
model made available only on the industry consultant's computer in Cincinnati for
compensation.21



16 Sangamon Valley Television Corp. v. United States, 269 F.2d 221, 224 (D.C. Cir.
1959).

17 Vt. Yankee Nuclear Corp. v. NRDC, 435 U.S. 519, 543 (1978).

18 Order 975 & n.2044; 1419 (JA at 757, 879).

19 Home Box Office, Inc. v. FCC, 567 F.2d 9, 62 (D.C. Cir. 1977) (Mackinnon, J.,
concurring).

20 Morgan v. United States, 304 U.S. 1, 20 (1938).

21 JA at 3780, 3842; 3775.

4


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 11

Three days later, the FCC redirected the rulemaking by requesting,22 within
only 34 days, without focusing the inquiry, comments on a divergent, factually-
clashing panoply of complex proposals--principally the ABC Plan, and the RLEC
and State Plans.

"Paying-to-comment" in Cincinnati within the abbreviated period was intol-
erable. The time allotted to assess and comment was grossly inadequate.
On October 7, 17, and 19, 2011, FCC staff inundated the record with an
astounding array of supplemental materials.23 The FCC relied on them to justify
"bill-and-keep."24
No real opportunity to reply was afforded because the important was indis-
tinguishable from the merely peripheral.

C.

Extensive

Industry

11th Hour Ex Parte Contacts Prevented

Comment.

Industry ex parte contacts intensified up to the Sunshine period (beginning
October 21). For example:



22 JA at 349-368; JA at 377 (reply comments filing extension).

23 JA at 3847, 3918, 3947.

24 Order 742-743 & nn.1295-1296 (JA at 632-634); 744 & n.1304 (JA at 634-
635).

5


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 12

Two October 21 Verizon ex parte filings revealed discussions with a
Commissioner about the "reform order now circulating [and the ABC Plan]."25
The Order reflects Verizon's October 20 ex parte26 giving holding compa-
nies discretion to allocate ARC amounts,27 and AT&T's five October 21 ex parte
filings28 describing discussions about ICC, high-cost support through the USF
mechanism, SLC upper limit, and ETC obligations.
No one could react adequately and timely to these filings. The Commission
voted only six days later, but Order drafting continued for 22 days, ample time to
incorporate these one-sided suggestions.29

The rule should be vacated.






25 JA at 4004 & 4005 (emphasis added).

26 JA at 3980.

27 Order 910 (JA at 717).

28 JA at 3982, 3983, 3984, 3992;
http://apps.fcc.gov/ecfs/document/view?id=7021716987.

29 Action for Children's Television v. FCC, 564 F.2d 458, 476 (D.C. Cir. 1977) (ex
parte
contacts vitiate agency informal rulemaking if they may have materially in-
fluenced the action ultimately taken).
6


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 13

Respectfully
submitted,


/s/
JAMES H. CAWLEY
400
North
Street,
3rd Floor
Harrisburg,
PA
17105-3265





Tel. 717.783.1197





JHC@pa.gov






Counsel for Amici Curiae
State
Members
of
the
Federal-State
Joint
Board
on
Universal
Service


July 17, 2013
7


Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 14

CERTIFICATE OF COMPLIANCE


Certificate of Compliance With Type-Volume Limitations,

Typeface and Type Style Requirements,

Authorship, Funding, Privacy

Redaction Requirements, and Virus Scan


1.
This filing complies with the type-volume limitation of the Court's Order
dated November 30, 2012, granting leave to file an amicus brief limited to 810
words because it contains 810 words, excluding the parts of the filing exempted by
Fed. R. App. P. 32(a)(7)(B)(iii) and 10th Cir. R. 32(b).

2.
Pursuant to Fed. R. App. P. 32(a)(7)(C), this brief complies with the type-
face requirements of Fed. R. App. P. 32(a)(5)(A) and 10th Cir. R. 32(a) and the
type style requirements of Fed. R. App. P. 32(a)(6) because this filing has been
prepared in a proportionally spaced typeface using Microsoft Word 2010 in 14-
point Times New Roman font.

3.
Pursuant to Fed. R. App. P. Rule 29(c)(5), I certify that (1) the text of this
brief was authored by me as the State Chairman of the Federal-State Joint Board
on Universal Service; (2) no other party's counsel authored this brief in whole or in
part; and (3) no party or party's counsel (or any other person) contributed money
intended to fund preparation or submission of this brief.

4.
All required privacy redactions have been made.

5.
This filing was scanned for viruses using McAffee VirusScan Enterprise
8.8.0 (8.8.0.975), updated on December 5, 2012, and according to the program is
free of viruses.


/s/ James H. Cawley


July 17, 2013





Appellate Case: 11-9900 Document: 01019093314 Date Filed: 07/17/2013 Page: 15

CERTIFICATE OF SERVICE



I hereby certify that, on July 17, 2013, I caused the foregoing document to
be sent electronically to FCC_briefs_only@ca10.uscourts.gov. I also certify this
document will be furnished through ECF electronic service to all parties in this
case through the Clerk's Office of the 10th Circuit. This document is available for
viewing and downloading on the CM/ECF system.

/s/ James H. Cawley

July 17, 2013







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