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inContact, Inc. v. FCC & USA, No. 12-1133 (D.C. Cir.)

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Released: August 7, 2012
CASE BEING CONSIDERED FOR TREATMENT PURSUANT TO RULE 34(j) OF THE COURT’S RULES
BRIEF FOR RESPONDENTS
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 12-1133

INCONTACT, INC.,
PETITIONER,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

JOSEPH F. WAYLAND
SEAN A. LEV
ACTING ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL


ROBERT B. NICHOLSON
PETER KARANJIA
NICKOLAI G. LEVIN
DEPUTY GENERAL COUNSEL
ATTORNEYS


RICHARD K. WELCH
UNITED STATES
DEPUTY ASSOCIATE GENERAL COUNSEL
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
PAMELA L. SMITH

COUNSEL

FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740


CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES



1. Parties.
The petitioner is inContact, Inc. The respondents are the Federal
Communications Commission and the Unites States of America.
2. Rulings under review.
In the Matter of Universal Service Contribution Methodology –
Application for Review by the Wireline Competition Bureau by inContact,
Inc., 27 FCC Rcd 632 (2012) (JA ).
3. Related cases.
The order on review has not previously been before this Court.
Counsel is not aware of any related cases that are pending before this Court or
any other court.






TABLE OF CONTENTS


TABLE OF AUTHORITIES ........................................................................... ii
GLOSSARY ......................................................................................................v
JURISDICTION................................................................................................1
QUESTION PRESENTED ...............................................................................1
STATUTES AND REGULATIONS ................................................................2
COUNTERSTATEMENT ................................................................................2
I.
STATUTORY AND REGULATORY BACKGROUND.........................2
II. FACTUAL BACKGROUND ....................................................................6
A. The Bureau’s Order. ..............................................................................7
B. The Commission’s Order on Review. ...................................................9
SUMMARY OF ARGUMENT ......................................................................11
STANDARD OF REVIEW ............................................................................11
ARGUMENT ..................................................................................................13
I.
THE FCC REASONABLY INTERPRETED AND
APPLIED ITS OWN PROCEDURAL RULES WHEN IT
DISMISSED INCONTACT’S UNTIMELY REQUEST
FOR REVIEW OF AN INVOICE ISSUED BY USAC. ........................13
A. The Commission’s Interpretation of Sections 54.719 and
54.720 of its Rules Is Reasonable and Carries Controlling
Weight. ................................................................................................13
B. inContact Has Failed to Meet Its Heavy Burden of
Showing that the Commission Abused Its Discretion. .......................16
II. INCONTACT’S REMAINING ARGUMENTS ARE NOT
PROPERLY BEFORE THE COURT. ....................................................18
CONCLUSION ...............................................................................................19
i

TABLE OF AUTHORITIES

CASES


Am. Tel. & Tel. Co. v. FCC, 454 F.3d 329 (D.C.
Cir. 2006).....................................................................................................16
AT&T Corp. v. FCC, 220 F.3d 607 (D.C. Cir. 2000) .............................. 12, 16
BDPCS, Inc. v. FCC, 351 F.3d 1177 (D.C. Cir.
2003)..................................................................................................... 12, 19
Chase Bank, N.A., v. McCoy, 131 S. Ct. 871 (2011) ......................................12
Delta Radio, Inc. v. FCC, 387 F.3d 897 (D.C. Cir.
2004)............................................................................................................12
In re Core Communications, 455 F.3d 267, 276
(D.C. Cir. 2006).................................................................................... 18, 19
Minnesota Christian Broadcasters, Inc. v. FCC,
411 F.3d 283 (D.C. Cir. 2005) ....................................................................16
Morris Commc’ns, Inc. v. FCC, 566 F.3d 184 (D.C.
Cir. 2009).....................................................................................................16
*
Qwest Corp. v. FCC, 482 F.3d 471 (D.C. Cir. 2007) .....................................19
Qwest Servs. Corp. v. FCC, 509 F.3d 531 (D.C. Cir.
2007)............................................................................................................16
Star Wireless LCC v. FCC, 522 F.3d 469 (D.C. Cir.
2008)............................................................................................................12
*
Talk Am., Inc. v. Mich. Bell Tel. Co., 131 S. Ct.
2254 (2011) .......................................................................................... 12, 14

ADMINISTRATIVE DECISIONS


In the Matter of Comprehensive Review of the
Universal Service Fund Management,
Administration, and Oversight
, Report and Order,
22 FCC Rcd 16372 (2007) ............................................................................3
In the Matter of Federal-State Joint Board on
Universal Service Request for Review by Big
River Telephone Co.,
Order, 22 FCC Rcd 4974
(Wireline Comp. Bur. 2007)................................................................. 10, 17
ii

In the Matter of Universal Service Contribution
Methodology Dorial Telecom, LLC Request for
Review of a Decision of the Universal Service
Administrator
, Order, 26 FCC Rcd 3799
(Wireline Comp. Bur. 2011)........................................................................17

STATUTES AND REGULATIONS


5 U.S.C. § 706(2)(A) .......................................................................................11
28 U.S.C. § 2342(1) ..........................................................................................1
28 U.S.C. § 2344 ...............................................................................................1
47 U.S.C. § 254 .................................................................................................2
47 U.S.C. § 254(b).............................................................................................3
47 U.S.C. § 254(d).........................................................................................3, 6
47 U.S.C. § 402(a).............................................................................................1
47 U.S.C. § 405(a).................................................................................... 18, 19
47 C.F.R. § 1.115(c) ................................................................................... 5, 14
47 C.F.R. § 1.115(g)............................................................................... 5, 9, 14
47 C.F.R. § 54.701 ............................................................................................4
47 C.F.R. § 54.701-54.705 ................................................................................3
47 C.F.R. § 54.702(b)........................................................................................3
47 C.F.R. § 54.703 ............................................................................................4
47 C.F.R. § 54.705 ............................................................................................4
47 C.F.R. § 54.719(a) ........................................................................................4
47 C.F.R. § 54.719(b)........................................................................................4
47 C.F.R. § 54.719(c) ....................................................................... 2, 4, 13, 14
47 C.F.R. § 54.720 ....................................................................... 13, 14, 15, 17
47 C.F.R. § 54.720(a) ................................................................... 2, 4, 8, 11, 13
47 C.F.R. § 54.720(b)........................................................................................4
47 C.F.R. § 54.720(c) ........................................................................................4
47 C.F.R. § 54.720(d)................................................................................. 4, 15
47 C.F.R. § 54.722(a) ........................................................................................5
iii

47 C.F.R. § 54.722(b)........................................................................................5
47 C.F.R. § 54.723(a) ........................................................................................5
47 C.F.R. § 54.723(b)........................................................................................5

OTHERS


http://www.usac.org/about/about/universal-
service/fast-facts.aspx....................................................................................3

* Cases and other authorities principally relied upon are marked with
asterisks.

iv

GLOSSARY

Administrator or USAC Universal Service Administrative Company

Bureau
Wireline Competition Bureau, Federal
Communications Commission

Bureau Order
In the Matter of Universal Service Contribution
Methodology Request for Review by inContact, Inc.
of a Decision by Universal Service Administrator,

Order, 25 FCC Rcd 4739 (Wireline Comp. Bur.
2010) (JA )

Commission or FCC
Federal Communications Commission (respondent)

inContact
inContact, Inc. (petitioner)

Order on Review
In the Matter of Universal Service Contribution
Methodology Application for Review of a Decision
by the Wireline Competition Bureau by inContact,
Inc.
, Memorandum Opinion and Order, 27 FCC
Rcd 632 (2012) (JA )

USF
Universal Service Fund



v

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 12-1133

INCONTACT, INC.,
PETITIONER,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

BRIEF FOR RESPONDENTS

JURISDICTION

The Federal Communications Commission (“FCC” or “Commission”)
order that is the subject of this petition for review was released on January 5,
2012. The petition for review was timely filed on March 5, 2012. See 28
U.S.C. § 2344. The Court has jurisdiction under 47 U.S.C. § 402(a) and 28
U.S.C. § 2342(1).

QUESTION PRESENTED

The FCC designated the Universal Service Administrative Company
(“USAC”) to administer federal universal service support programs. Under

the FCC’s rules, any person aggrieved by an action taken in a decision by
USAC may ask the Commission to review that decision, but must do so
within 60 days. 47 C.F.R. §§ 54.719(c), 54.720(a). Believing that USAC
erroneously billed it for universal service contributions, inContact asked the
FCC to review USAC’s invoice approximately 80 days after it was issued.
The question presented is whether the FCC lawfully exercised its
discretion when it affirmed a staff decision dismissing as untimely
inContact’s request for review because inContact filed its request outside the
prescribed 60-day filing period.

STATUTES AND REGULATIONS

The pertinent statutory provisions and regulations are set forth in the
appendix to this brief.

COUNTERSTATEMENT

I.

STATUTORY AND REGULATORY BACKGROUND

Section 254(d) of the Communications Act, 47 U.S.C. § 254(d),
requires every telecommunications carrier that provides interstate
telecommunications to contribute to the support mechanisms established by
2

1
the Commission to preserve and advance universal service. A key goal of
universal service “is to ensure affordable telecommunications services to
consumers living in high-cost areas, low-income consumers, eligible schools
and libraries, and rural health care providers.” In the Matter of
Comprehensive Review of the Universal Service Fund Management,
Administration, and Oversight, Report and Order, 22 FCC Rcd 16372, 16373
at ¶ 2 (2007) (citing 47 U.S.C. § 254(b)).
The Commission has established various programs to support universal
service. These programs are funded by the Universal Service Fund (“USF”),
which currently provides approximately $8 billion annually in universal
2
service subsidies. The FCC designated USAC (also referred to as the
“Administrator”), an independent, not-for-profit corporation, to administer
these programs. See generally 47 C.F.R. §§ 54.701-54.705. The
Administrator’s duties include “billing contributors, collecting contributions
to the universal service support mechanisms, and disbursing universal service
support funds” to eligible telecommunications carriers. Id. § 54.702(b). The

1 Section 254(d) also vests the Commission with broader, permissive
authority to assess contributions, such that “[a]ny other provider of interstate
telecommunications may be required to contribute to the preservation and
advancement of universal service if the public interest so requires.” 47
U.S.C. § 254(d).
2 See http://www.usac.org/about/about/universal-service/fast-facts.aspx.
3

Administrator has a 19-member board of directors, which is broken into three
committees (each of which oversees a corresponding division). See id. §§
54.701, 54.703 & 54.705.
Under the FCC’s rules, any person “aggrieved” by an “action taken” by
the Administrator (or one of its divisions or a committee of the board) has a
choice of two remedies: It may appeal internally within USAC, see id. §
54.719(a) & (b); or it may seek direct review by the FCC without first
pursuing an appeal at USAC, see id., § 54.719(c). Under either option, an
aggrieved person must file a request to review the “action taken” within 60
days of the issuance of a “decision” by the Administrator, division, or
committee of the board. Id. § 54.720(a), (b) & (c). If a person elects to
pursue an appeal with USAC, the filing of its request for internal USAC
review tolls the time period for seeking review from the FCC. Id. §
54.720(d). When the relevant USAC committee or its board of directors rules
on the appeal, the party that filed the request then has 60 days to file an
appeal with the Commission. Id.
Requests for review of Administrator decisions that are submitted to
the FCC are typically “considered and acted upon” by the agency’s Wireline
4

3
Competition Bureau (“Bureau”). Id. § 54.722(a). The Bureau conducts “de
novo review of request[s] for review of decisions issue[d] by the
Administrator.” Id. § 54.723(a). An affected party may seek review by the
full Commission of the Bureau’s decision. See id. § 54.722(b). The
Commission “may grant the application for review in whole or in part, or it
may deny the application with or without specifying reasons therefor.” Id. §
1.115(g).
The FCC’s rules governing Commission review of staff-level action
contain an exhaustion requirement: The Commission will not grant an
application for review of the Bureau’s decision if that application “relies on
questions of fact or law upon which the [Bureau] has been afforded no
opportunity to pass.” Id. § 1.115(c). Rather, a party seeking to introduce new
questions of fact or law not raised below must first present them “to the
[Bureau] in a petition for reconsideration,” subject to the requirements of
section 1.106 of the Commission’s rules. Id. § 1.115(c) NOTE.

3 Requests for review of Administrator decisions “that raise novel questions
of fact, law or policy shall be considered by the full Commission,” 47 C.F.R.
§ 54.722(a), and the Commission “shall conduct de novo review of requests
for review of decisions by the Administrator that involve novel questions of
fact, law or policy.” Id. § 54.723(b). Where no such questions are presented,
“the Commission shall not conduct de novo review.” Id.
5

II.

FACTUAL BACKGROUND

As a provider of telecommunications services, inContact is obligated to
contribute to the USF. 47 U.S.C. § 254(d); see Brief of Petitioner (“Br.”) at
4
2-5. On January 23, 2009, USAC issued an invoice to inContact, seeking
$316,447.38 in USF contributions. Invoice No. UBDI0000340915 (JA ).
inContact’s Corporate Secretary (Kimm Partridge) acknowledged
“receiv[ing] and review[ing]” the invoice. Decl. at ¶ 6 (JA ). She also stated
that she “contacted USAC seeking an explanation of the timing and items
invoiced,” “asked for permission from USAC to have time to review the
invoice,” and was “informed by a representative of USAC that inContact
could take some time to consider the invoice before paying.” Decl. at ¶¶ 7-9
5
(JA ).
On April 13, 2009, inContact filed with the FCC a “Petition for Special
Relief and Waiver” in which it disputed $298,410.50 of the charges on the
invoice and asked USAC to “remove such amounts from any future USAC

4 The invoice was issued to UCN, Inc., the name under which inContact did
business. See Declaration of Kimm Partridge (“Decl.”) (JA ).
5 The Commission is not aware of any evidence in the administrative record
– and inContact cites none – that supports inContact’s assertions in its brief
that USAC informed inContact that it “could take a ‘couple of months’ to
review the Invoice” (Br. at 19). Although Petitioner cites to Kimm
Partridge’s declaration for support (see Br. at 5 n.8), the declaration does not,
in fact, support that assertion.
6

invoice.” Petition for Special Relief and Waiver (“Request for Review”) at 2
(JA ). “In addition,” inContact sought from the Commission “[w]aiver of
penalties and fees” and “confirmation” that inContact “has a right to dispute
the assessment without first appealing to USAC.” Ibid. (JA ). A day later,
“in lieu of a formal Letter of Appeal,” inContact filed with USAC the same
pleading it had filed the previous day with the FCC. Letter of Appeal dated
6
April 14, 2009 at 1 (JA ).

A. The Bureau’s Order.

On May 7, 2010, the FCC’s Wireline Competition Bureau dismissed
inContact’s request for review of the invoice “as procedurally defective” and
its request for waiver “as moot.” In the Matter of Universal Service
Contribution Methodology Request for Review by inContact, Inc. of a
Decision by Universal Service Administrator, Order, 25 FCC Rcd 4739, ¶ 1

6 On July 31, 2009, USAC denied inContact’s appeal “that USAC hold in
abeyance interest charges, penalties and debt transfers while the FCC
considers inContact’s appeal related to its contribution assessment.”
Administrator’s Decision on Contributor Appeal at 1 (JA ). USAC also
closed the appeal “as moot before USAC,” explaining that, “in matters where
an appeal of the same issue is simultaneously before USAC and the FCC,
which is the case for this matter, USAC defers to the FCC to decide the
matter.” Id. at 2 (JA ).
7

7
(Wireline Comp. Bur. 2010) (“Bureau Order”) (JA ). The Bureau noted
that “[a]lthough inContact frames its filing as a petition for special relief and
waiver, the petition is actually a request for review of an action taken by
USAC pursuant to sections 54.719 through 54.725 of the Commission’s
rules.” Id. n.1 (JA ).
In dismissing inContact’s request for “review of a January 23, 2009
8
invoice from USAC,” the Bureau explained that “inContact was required to
file a request for review by March 24, 2009” but inContact “did not file its
appeal until April 13, 2009, [or] 20 days late.” Id. ¶ 2 (citing 47 C.F.R.
§ 54.720(a) (JA ). The Bureau further dismissed as moot inContact’s request
for “‘a waiver of the rules requiring contributors to first dispute USAC’s
9
assessments with USAC,’” because “parties may seek review of USAC
decisions with either USAC or the Commission.” Id. ¶ 3 (JA ). The Bureau

7 In the order, the Bureau used the term “deny” rather than “dismiss” in
describing the action it took. As the Commission explained on subsequent
administrative review, however, the context of the Bureau’s discussion makes
clear that the Bureau meant to dismiss inContact’s request for review for
untimeliness (rather than reaching the merits of inContact’s arguments and
denying the request for review). See In the Matter of Universal Service
Contribution Methodology Application for Review of a Decision by the
Wireline Competition Bureau by inContact, Inc.
, Memorandum Op. and
Order, 27 FCC Rcd 632, n.5 (2012) (“Order on Review”) (JA ).
8 Bureau Order ¶ 2 (JA ) (citing Request for Review at 4 (JA )).
9 Bureau Order ¶ 3 (JA ) (quoting Request for Review at 16 (JA )).
8

further explained that, under the Commission’s rules, “there is no
requirement that parties first go to USAC before requesting review from the
Commission.” Id. (JA ).

B. The Commission’s Order on Review

.
On June 7, 2010, inContact sought review by the full Commission of
the Bureau Order. Application for Review (JA ). In its application for
review, inContact contended, inter alia, that the Bureau erred in dismissing as
untimely its request for review of the “January 23, 2009 true-up invoice”
because “USAC’s invoice does not qualify as a decision, and therefore, the
60-day deadline does not apply.” Application for Review at 1 (JA ).
In the Order on Review, released January 5, 2012, the Commission
dismissed in part and denied in part inContact’s application for review. The
FCC dismissed the application to the extent that it relied on “questions of
facts or law not previously presented to the Bureau,” explaining that the
exhaustion requirement of 47 C.F.R. § 1.115(c) bars such arguments. Order
on Review ¶ 3 (JA ). In all other respects, the Commission denied
inContact’s application for review and upheld the Bureau’s decision “for the
reasons stated in its Order.” Id. ¶ 2 (JA ); see 47 C.F.R. § 1.115(g)
(Commission may deny an application for review “with or without specifying
reasons therefor”).
9

Based “[u]pon review of the Application for Review and the entire
record,” the Commission concluded that “inContact ha[d] failed to
demonstrate that the Bureau erred” in dismissing, as procedurally defective,
inContact’s request for review. Order on Review ¶ 2 (JA ). The
Commission upheld the Bureau’s decision to dismiss as moot inContact’s
request for waiver of the “require[ment]” that it “first dispute USAC’s
assessments with USAC, before seeking review by the Commission” because
there was no such requirement. Id. ¶ 2 & n.4 (JA ). The Commission further
upheld the Bureau’s decision that inContact’s request for review was
untimely, explaining that “[f]or purposes of 47 C.F.R. § 54.720, USAC’s
invoice is a decision by the Administrator” that marks the beginning of the
60-day period for seeking Commission review of USAC action under the
FCC’s rule. Id. n.3 (JA ). The Commission also pointed to an earlier case in
which the Bureau had made a similar finding – In the Matter of Federal-State
Joint Board on Universal Service Request for Review by Big River Telephone
Co., Order, 22 FCC Rcd 4974 (Wireline Comp. Bur. 2007) (“Big River”).
See ibid. (JA ).
This petition for review followed.
10

SUMMARY OF ARGUMENT

The sole issue properly before the Court is whether the Commission
abused its discretion when it upheld the Bureau’s dismissal of inContact’s
underlying request for review of an action taken by the Administrator because
inContact’s request was filed out of time. The Commission did not abuse its
discretion or otherwise act unlawfully when it concluded that inContact’s
request had been properly dismissed on procedural grounds.
The Commission reasonably determined that the issuance of an invoice
by USAC constitutes a “decision” of the Administrator that must be appealed
within 60 days under 47 C.F.R. § 54.720(a). Because inContact did not file
its request for review until 80 days after issuance of the invoice, it was too
late.
The Commission’s interpretation of its own rules was reasonable, and
inContact’s request for review of the USAC invoice was clearly untimely.
The petition for review should be denied.

STANDARD OF REVIEW

The Court must affirm the Order on Review unless inContact
demonstrates that the challenged agency action is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
11

§ 706(2)(A). This “[h]ighly deferential” standard of review “presumes the
validity of agency action,” AT&T Corp. v. FCC, 220 F.3d 607, 616 (D.C. Cir.
2000), and applies where, as here, the Court reviews “an agency’s dismissal
of pleadings on procedural grounds.” BDPCS, Inc. v. FCC, 351 F.3d 1177,
1183 (D.C. Cir. 2003).
Moreover, the courts owe substantial deference to an agency’s
construction of its own rules. See Talk Am., Inc. v. Mich. Bell Tel. Co., 131
S. Ct. 2254, 2260-61 (2011). Indeed, the FCC’s construction of its own rules
is controlling unless that construction is “‘plainly erroneous or inconsistent
with the regulation[]’ or there is any other ‘reason to suspect that the
interpretation does not reflect the agency’s fair and considered judgment on
the matter in question.’” Talk Am., 131 S. Ct at 2261 (quoting Chase Bank,
N.A., v. McCoy, 131 S. Ct. 871, 881 (2011)); see also Star Wireless LCC v.
FCC, 522 F.3d 469, 473 (D.C. Cir. 2008). Ultimately, the Court sits “not to
judge the wisdom of the FCC’s . . . rules but to determine whether [the]
decision was an abuse of discretion.” Delta Radio, Inc. v. FCC, 387 F.3d
897, 901 (D.C. Cir. 2004).
12

ARGUMENT

I.

THE FCC REASONABLY INTERPRETED AND APPLIED
ITS OWN PROCEDURAL RULES WHEN IT DISMISSED
INCONTACT’S UNTIMELY REQUEST FOR REVIEW OF
AN INVOICE ISSUED BY USAC.

A. The Commission’s Interpretation of Sections 54.719 and

54.720 of its Rules Is Reasonable and Carries
Controlling Weight.

Section 54.719(c) of the Commission’s rules provides that “[a]ny
person aggrieved by an action taken by [USAC]” may seek review from the
FCC, 47 C.F.R. § 54.719(c). The opportunity to seek review, however, is
limited by the filing deadlines set forth in section 54.720, 47 C.F.R. § 54.720.
Specifically, an aggrieved party requesting review of USAC action “by the
Commission pursuant to § 54.719(c)” “shall file such a request within sixty
(60) days of the issuance of the decision by [USAC].” Id. § 54.720(a).
The Commission reasonably determined in this context that, “[f]or
purposes of 47 C.F.R. § 54.720, USAC’s invoice is a decision by the
Administrator” that triggers the 60-day limitations period in the rule. Order
on Review n.3 (JA ). USAC issued the invoice on January 23, 2009. Thus,
inContact’s request for review was due no later than March 24, 2009. See id.
¶ 2 (JA ) (upholding the Bureau’s finding “that inContact’s request was
procedurally defective because it was filed more than sixty days after
USAC’s decision,” id. ¶ 1 (JA )). Because inContact missed that deadline,
13

the Commission did not adopt a “plainly erroneous” reading of its rule, Talk
Am., 131 S. Ct. at 2261, or one “inconsistent with the regulation[],” ibid.,
when it upheld the Bureau’s conclusion that inContact’s request for review
10
was time-barred. See Order on Review ¶¶ 2 & 3 (JA ).
The Commission’s understanding of its rule also makes sense as a
practical matter. When an aggrieved party appeals an invoice directly to the
FCC, as occurred here, there is not necessarily anything other than the
invoice itself that the agency is being asked to review. So it makes logical
sense to treat the issuance of the invoice as the “decision” that starts the 60-
day limitations period for seeking review. Indeed, inContact acknowledged
this in its request for review. See Request for Review at 16 (JA ) (the
“FCC’s rules mandate a contributor first address its disputes regarding

10 inContact never presented to the Bureau its primary argument on appeal –
that a USAC invoice may not be properly treated as an Administrator
“decision” within the meaning of the Commission’s rule, 47 C.F.R. § 54.720,
which specifies the deadline for seeking review of “action taken” by USAC,
47 C.F.R. § 54.719(c). See e.g. Br. at 15 (an invoice does not “qualify[y] as a
decision for the purpose of establishing the timeframe for USAC appeals”).
The Commission properly dismissed this portion of inContact’s application
for review of the Bureau Order because it was barred by section 1.115(c) of
its rules, 47 C.F.R. § 1.115(c). See Order on Review ¶ 2 (JA ). The
Commission also acted well within its discretion when it otherwise denied
inContact’s procedurally defective application for review and clearly was
under no obligation to address “each and every argument presented by
inContact” (Br. at 24). See id. ¶ 3 (JA ) (citing 47 C.F.R. § 1.115(g), which
provides that the Commission may deny an application for review “with or
without specifying reasons therefor”).
14

contribution obligations to USAC in the form of an appeal [;] [t]he appeal
must be filed with USAC within 60 days of the issuance of USAC’s
assessment decision”) (citing 47 C.F.R. § 54.720; footnote omitted).
inContact’s argument to the contrary in its brief presupposes that there
would be another “decision” to appeal. See Br. at 19 (“USAC issued no
written decision that inContact could have appealed”). But there is only
another “decision” when the aggrieved party first seeks review of the invoice
by USAC. In that situation, the rules expressly provide that “[t]he filing of a
request for review with [USAC] . . . under § 54.719(a) or . . . under §
54.719(b), shall toll the time period for seeking review from the [FCC]” and
that “the party that filed the request for review” with USAC “shall have sixty
(60) days from the date [USAC] . . . issues a decision to file an appeal with
the Commission.” 47 C.F.R. § 54.720(d). But inContact did not first seek
11
review of the invoice by USAC. Thus, the 60-day limitations period was not
tolled, and so there was no occasion for a new 60-day clock for seeking FCC
review to start. Consequently, inContact’s appeal was simply too late.

11 inContact filed its request for review by USAC the day after it filed its
request for Commission review of the January 23, 2009 invoice, see Br. at 6
n.9, and USAC properly disposed of that later (and duplicative) request
because inContact had an earlier request for review pending before the FCC.
See Administrator’s Decision on Contributor Appeal at 2 (JA ).
15

B. inContact Has Failed to Meet Its Heavy Burden of

Showing that the Commission Abused Its Discretion.

inContact is wrong in contending that the Commission cannot lawfully
interpret its rules in the absence of “adopt[ing] a substantive rule declaring
invoices to be ‘decisions,’ either generally or specifically in regards to USAC
invoices.” See Br. at 16. It is neither unusual nor improper for an agency to
interpret its own rules (as well as the statute it administers) in the context of
an adjudication – as the FCC does when it reviews actions taken by USAC.
Indeed, this Court has affirmed such FCC interpretations in a variety of
12
adjudicatory contexts. Contrary to inContact’s apparent position, an agency
need not explicate every possible contingency or issue through rulemaking
before answering an interpretive question regarding an existing rule through
adjudication.

12 See, e.g., Am. Tel. & Tel. Co. v. FCC, 454 F.3d 329 (D.C. Cir. 2006)
(affirming FCC interpretations contained in an adjudicatory declaratory
ruling); Qwest Servs. Corp. v. FCC, 509 F.3d 531 (D.C. Cir. 2007) (same);
AT&T Corp. v. FCC, 220 F.3d 607 (D.C. Cir. 2000) (affirming FCC
interpretations in granting an application to provide service); Morris
Commc’ns, Inc. v. FCC
, 566 F.3d 184 (D.C. Cir. 2009) (affirming FCC’s
denial of waiver on basis of an interpretation of FCC’s payment deadline
rules); Minnesota Christian Broadcasters, Inc. v. FCC, 411 F.3d 283, 310
(D.C. Cir. 2005) (deferring to the FCC’s reasonable interpretation of its rule
when “language of [the rule] does not compel the FCC’s reading, neither is
the language inconsistent with that reading”).
16

inContact’s suggestion of unfair surprise caused by the Commission’s
decision is also unpersuasive. See Br. at 18. The Commission cited a
consistent Bureau order that pre-dated by three years the Bureau’s dismissal
of inContact’s request for review in this case. Order on Review n.3 (JA )
(citing Bureau’s finding in Big River, 22 FCC Rcd at 4976 n.17, that “[f]or
purposes of 47 C.F.R. § 54.720, USAC’s invoice is a decision by the
Administrator”); see also Big River, 22 FCC Rcd at 4976 (“Commission
regulations require that an appeal of an Administrator’s decision be filed with
USAC within 60 days of the issuance of that decision,” citing 47 C.F.R.
13
§ 54.720) (emphasis added; footnote omitted).
14
Finally, the Bureau-level order in Dorial Telecom does not assist
inContact. See Br. at 18-19. In that case, “Dorial appealed the invoices at
issue to USAC on November 24, 2009, and USAC addressed Dorial’s appeal
on May 18, 2010.” Dorial Telecom, 26 FCC Rcd at 3799, ¶ 3. Unlike

13 Contrary to inContact’s contention (Br. at 12-16), the Bureau’s action in
Big River – upholding USAC’s dismissal of a request for review of an invoice
that was filed more than 60 days after the invoice was issued – is fully
consistent with the Commission’s action in this case – upholding the
Bureau’s dismissal of a request for review of an invoice that was filed more
than 60 days after the invoice was issued.
14 In the Matter of Universal Service Contribution Methodology Dorial
Telecom, LLC Request for Review of a Decision of the Universal Service
Administrator
, Order, 26 FCC Rcd 3799 (Wireline Comp. Bur. 2011).
17

inContact, Dorial did not seek direct review by the Commission of an USAC
invoice; instead, it sought internal review with USAC, which resulted in a
written USAC opinion. As inContact itself acknowledges, Dorial then
“appealed USAC’s written decision to the FCC on December 15, 2010.” Br.
at 18 (emphasis added). In contrast, inContact sought direct review from the
FCC in this case, thus eliminating the possibility of a written decision
concerning the invoice from USAC. In these circumstances, it is sensible to
interpret issuance of the invoice by USAC as the action taken which triggers
the 60-day limitations period under the FCC’s rule.

II.

INCONTACT’S REMAINING ARGUMENTS ARE NOT
PROPERLY BEFORE THE COURT.

inContact also argues on appeal that the “FCC’s decision to uphold the
Bureau’s Order conflicts with federal law and FCC rules” (see Br. at 25-28)
and that the “FCC’s decision to uphold the Bureau’s Order is unreasonable,
unsound and an abuse of discretion” (see Br. at 28-30). inContact, however,
did not make these arguments to the Commission and thus is precluded from
raising them on appeal. 47 U.S.C. § 405(a). See also In re Core
Communications, 455 F.3d 267, 276 (D.C. Cir. 2006) (under section 405 of
the Communications Act, the filing of a petition for reconsideration is a
“condition precedent to judicial review of any FCC order where the party
seeking such review . . . relies on questions of fact or law upon which the
18

Commission . . . has been afforded no opportunity to pass,” and thus the
Court “generally lack[s] jurisdiction to review arguments that have not first
been presented to the Commission”) (internal quotation and citation omitted).
In addition, this Court has held that, “even when a petitioner has no
reason to raise an argument until the FCC issues an order that makes the issue
relevant, the petitioner must file ‘a petition for reconsideration’ with the
Commission before it may seek judicial review.” Id. at 276-77, quoting 47
U.S.C. § 405(a); accord, Qwest Corp. v. FCC, 482 F.3d 471, 474 (D.C. Cir.
2007).
Moreover, to the extent inContact has invited the Court to consider the
validity of the USAC invoice for the purpose of deciding whether the
Commission abused its discretion in denying review of the Bureau’s
dismissal action, the Court must decline. See BDPCS, 351 F.3d at 1183
(noting the lack of citation to “any case in which [the Court] granted relief on
the merits, notwithstanding the fact that the Commission had properly
dismissed the pleading on procedural grounds”) (emphasis in original).

CONCLUSION

The Court should deny the petition for review.
19

Respectfully
submitted,
JOSEPH F. WAYLAND
SEAN A. LEV
ACTING ASSISTANT ATTORNEY
GENERAL COUNSEL
GENERAL


PETER KARANJIA
ROBERT B. NICHOLSON
DEPUTY GENERAL COUNSEL
NICKOLAI G. LEVIN

ATTORNEYS
RICHARD K. WELCH

DEPUTY ASSOCIATE GENERAL
UNITED STATES
COUNSEL
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
/s/ Pamela L. Smith


PAMELA L. SMITH
COUNSEL

FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
August 7, 2012

20

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT


INCONTACT, INC.,
PETITIONER,
v.
NO. 12-1133
F

EDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS.



CERTIFICATE OF COMPLIANCE

Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby
certify that the accompanying Brief for Respondents in the captioned case
contains 4,175 words.

/s/ Pamela L. Smith
Pamela L. Smith

Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1740 (Telephone)
(202) 418-2819 (Fax)
August 7, 2012













STATUTORY APPENDIX
















Communications Act Provision:
47 U.S.C. § 405


FCC Rules:
47 C.F.R. § 1.115
47 C.F.R. § 54.719


47 C.F.R. § 54.720




47 U.S.C.

§ 405. Petition for reconsideration; procedure; disposition; time of filing;
additional evidence; time for disposition of petition for reconsideration of
order concluding hearing or investigation; appeal of order

(a) After an order, decision, report, or action has been made or taken in any
proceeding by the Commission, or by any designated authority within the
Commission pursuant to a delegation under section 155(c)(1) of this title, any party
thereto, or any other person aggrieved or whose interests are adversely affected
thereby, may petition for reconsideration only to the authority making or taking the
order, decision, report, or action; and it shall be lawful for such authority, whether
it be the Commission or other authority designated under section 155(c)(1) of this
title, in its discretion, to grant such a reconsideration if sufficient reason therefor be
made to appear. A petition for reconsideration must be filed within thirty days
from the date upon which public notice is given of the order, decision, report, or
action complained of. No such application shall excuse any person from complying
with or obeying any order, decision, report, or action of the Commission, or
operate in any manner to stay or postpone the enforcement thereof, without the
special order of the Commission. The filing of a petition for reconsideration shall
not be a condition precedent to judicial review of any such order, decision, report,
or action, except where the party seeking such review (1) was not a party to the
proceedings resulting in such order, decision, report, or action, or (2) relies on
questions of fact or law upon which the Commission, or designated authority
within the Commission, has been afforded no opportunity to pass. The
Commission, or designated authority within the Commission, shall enter an order,
with a concise statement of the reasons therefor, denying a petition for
reconsideration or granting such petition, in whole or in part, and ordering such
further proceedings as may be appropriate: Provided, That in any case where such
petition relates to an instrument of authorization granted without a hearing, the
Commission, or designated authority within the Commission, shall take such
action within ninety days of the filing of such petition. Reconsiderations shall be
governed by such general rules as the Commission may establish, except that no
evidence other than newly discovered evidence, evidence which has become
available only since the original taking of evidence, or evidence which the
Commission or designated authority within the Commission believes should have
been taken in the original proceeding shall be taken on any reconsideration. The
time within which a petition for review must be filed in a proceeding to which
section 402(a) of this title applies, or within which an appeal must be taken under
section 402(b) of this title in any case, shall be computed from the date upon which

2

the Commission gives public notice of the order, decision, report, or action
complained of.

(b)(1) Within 90 days after receiving a petition for reconsideration of an order
concluding a hearing under section 204(a) of this title or concluding an
investigation under section 208(b) of this title, the Commission shall issue an order
granting or denying such petition.
(2) Any order issued under paragraph (1) shall be a final order and may be
appealed under section 402(a) of this title.

47 C.F.R.

§ 1.115 Application for review of action taken pursuant to delegated
authority.

(a) Any person aggrieved by any action taken pursuant to delegated authority may
file an application requesting review of that action by the Commission. Any person
filing an application for review who has not previously participated in the
proceeding shall include with his application a statement describing with
particularity the manner in which he is aggrieved by the action taken and showing
good reason why it was not possible for him to participate in the earlier stages of
the proceeding. Any application for review which fails to make an adequate
showing in this respect will be dismissed.

(b)(1) The application for review shall concisely and plainly state the questions
presented for review with reference, where appropriate, to the findings of fact or
conclusions of law.
(2) The application for review shall specify with particularity, from among the
following, the factor(s) which warrant Commission consideration of the
questions presented:
(i) The action taken pursuant to delegated authority is in conflict with statute,
regulation, case precedent, or established Commission policy.
(ii) The action involves a question of law or policy which has not previously
been resolved by the Commission.
(iii) The action involves application of a precedent or policy which should be
overturned or revised.
(iv) An erroneous finding as to an important or material question of fact.
(v) Prejudicial procedural error.
(3) The application for review shall state with particularity the respects in which
the action taken by the designated authority should be changed.

3

(4) The application for review shall state the form of relief sought and, subject
to this requirement, may contain alternative requests.

(c) No application for review will be granted if it relies on questions of fact or law
upon which the designated authority has been afforded no opportunity to pass.

Note: Subject to the requirements of § 1.106, new questions of fact or law may be
presented to the designated authority in a petition for reconsideration.

(d) Except as provided in paragraph (e) of this section, the application for review
and any supplemental thereto shall be filed within 30 days of public notice of such
action, as that date is defined in section 1.4(b). Opposition to the application shall
be filed within 15 days after the application for review is filed. Except as provided
in paragraph (e)(3) of this section, replies to oppositions shall be filed within 10
days after the opposition is filed and shall be limited to matters raised in the
opposition.

(e)(1) Applications for review of interlocutory rulings made by the Chief
Administrative Law Judge (see § 0.351) shall be deferred until the time when
exceptions are filed unless the Chief Judge certifies the matter to the Commission
for review. A matter shall be certified to the Commission only if the Chief Judge
determines that it presents a new or novel question of law or policy and that the
ruling is such that error would be likely to require remand should the appeal be
deferred and raised as an exception. The request to certify the matter to the
Commission shall be filed within 5 days after the ruling is made. The application
for review shall be filed within 5 days after the order certifying the matter to the
Commission is released or such ruling is made. Oppositions shall be filed within 5
days after the application is filed. Replies to oppositions shall be filed only if they
are requested by the Commission. Replies (if allowed) shall be filed within 5 days
after they are requested. A ruling certifying or not certifying a matter to the
Commission is final: Provided, however, That the Commission may, on its own
motion, dismiss the application for review on the ground that objections to the
ruling should be deferred and raised as an exception.
(2) The failure to file an application for review of an interlocutory ruling made
by the Chief Administrative Law Judge or the denial of such application by the
Commission, shall not preclude any party entitled to file exceptions to the initial
decision from requesting review of the ruling at the time when exceptions are
filed. Such requests will be considered in the same manner as exceptions are
considered.


4

(3) Applications for review of a hearing designation order issued under
delegated authority shall be deferred until exceptions to the initial decision in
the case are filed, unless the presiding Administrative Law Judge certifies such
an application for review to the Commission. A matter shall be certified to the
Commission only if the presiding Administrative Law Judge determines that the
matter involves a controlling question of law as to which there is substantial
ground for difference of opinion and that immediate consideration of the
question would materially expedite the ultimate resolution of the litigation. A
ruling refusing to certify a matter to the Commission is not appealable. In
addition, the Commission may dismiss, without stating reasons, an application
for review that has been certified, and direct that the objections to the hearing
designation order be deferred and raised when exceptions in the initial decision
in the case are filed. A request to certify a matter to the Commission shall be
filed with the presiding Administrative Law Judge within 5 days after the
designation order is released. Any application for review authorized by the
Administrative Law Judge shall be filed within 5 days after the order certifying
the matter to the Commission is released or such a ruling is made. Oppositions
shall be filed within 5 days after the application for review is filed. Replies to
oppositions shall be filed only if they are requested by the Commission. Replies
(if allowed) shall be filed within 5 days after they are requested.
(4) Applications for review of final staff decisions issued on delegated authority
in formal complaint proceedings on the Enforcement Bureau's Accelerated
Docket (see, e.g., § 1.730) shall be filed within 15 days of public notice of the
decision, as that date is defined in § 1.4(b). These applications for review
oppositions and replies in Accelerated Docket proceedings shall be served on
parties to the proceeding by hand or facsimile transmission.

(f) Applications for review, oppositions, and replies shall conform to the
requirements of §§ 1.49, 1.51, and 1.52, and shall be submitted to the Secretary,
Federal Communications Commission, Washington, DC 20554. Except as
provided below, applications for review and oppositions thereto shall not exceed
25 double-space typewritten pages. Applications for review of interlocutory
actions in hearing proceedings (including designation orders) and oppositions
thereto shall not exceed 5 double-spaced typewritten pages. When permitted (see
paragraph (e)(3) of this section), reply pleadings shall not exceed 5 double-spaced
typewritten pages. The application for review shall be served upon the parties to
the proceeding. Oppositions to the application for review shall be served on the
person seeking review and on parties to the proceeding. When permitted (see
paragraph (e)(3) of this section), replies to the opposition(s) to the application for
review shall be served on the person(s) opposing the application for review and on

5

parties to the proceeding.

(g) The Commission may grant the application for review in whole or in part, or it
may deny the application with or without specifying reasons therefor. A petition
requesting reconsideration of a ruling which denies an application for review will
be entertained only if one or more of the following circumstances is present:
(1) The petition relies on facts which related to events which have occurred or
circumstances which have changed since the last opportunity to present such
matters; or
(2) The petition relies on facts unknown to petitioner until after his last
opportunity to present such matters which could not, through the exercise of
ordinary diligence, have been learned prior to such opportunity.

(h)(1) If the Commission grants the application for review in whole or in part, it
may, in its decision:
(i) Simultaneously reverse or modify the order from which review is sought;
(ii) Remand the matter to the designated authority for reconsideration in
accordance with its instructions, and, if an evidentiary hearing has been held,
the remand may be to the person(s) who conducted the hearing; or
(iii) Order such other proceedings, including briefs and oral argument, as may
be necessary or appropriate.
(2) In the event the Commission orders further proceedings, it may stay the
effect of the order from which review is sought. (See § 1.102.) Following the
completion of such further proceedings the Commission may affirm, reverse or
modify the order from which review is sought, or it may set aside the order and
remand the matter to the designated authority for reconsideration in accordance
with its instructions. If an evidentiary hearing has been held, the Commission
may remand the matter to the person(s) who conducted the hearing for
rehearing on such issues and in accordance with such instructions as may be
appropriate.

Note: For purposes of this section, the word “order” refers to that portion of its
action wherein the Commission announces its judgment. This should be
distinguished from the “memorandum opinion” or other material which often
accompany and explain the order.

(i) An order of the Commission which reverses or modifies the action taken
pursuant to delegated authority is subject to the same provisions with respect to
reconsideration as an original order of the Commission. In no event, however, shall
a ruling which denies an application for review be considered a modification of the

6

action taken pursuant to delegated authority.

(j) No evidence other than newly discovered evidence, evidence which has become
available only since the original taking of evidence, or evidence which the
Commission believes should have been taken in the original proceeding shall be
taken on any rehearing ordered pursuant to the provisions of this section.

(k) The filing of an application for review shall be a condition precedent to judicial
review of any action taken pursuant to delegated authority.


§ 54.719 Parties permitted to seek review of Administrator decisions.

(a) Any person aggrieved by an action taken by a division of the Administrator, as
defined in § 54.701(g), may seek review from the appropriate Committee of the
Board, as defined in § 54.705.

(b) Any person aggrieved by an action taken by the Administrator pertaining to a
billing, collection or disbursement matter that falls outside the jurisdiction of the
Committees of the Board may seek review from the Board of Directors of the
Administrator, as defined in § 54.703.

(c) Any person aggrieved by an action taken by a division of the Administrator, as
defined in § 54.701(g), a Committee of the Board of the Administrator, as defined
in § 54.705, or the Board of Directors of the Administrator, as defined in § 54.703,
may seek review from the Federal Communications Commission, as set forth in §
54.722.


§ 54.720 Filing deadlines.

(a) An affected party requesting review of an Administrator decision by the
Commission pursuant to § 54.719(c), shall file such a request within sixty (60)
days of the issuance of the decision by a division or Committee of the Board of the
Administrator.

(b) An affected party requesting review of a division decision by a Committee of
the Board pursuant to § 54.719(a), shall file such request within sixty (60) days of
issuance of the decision by the division.


7

(c) An affected party requesting review by the Board of Directors pursuant to §
54.719(b) regarding a billing, collection, or disbursement matter that falls outside
the jurisdiction of the Committees of the Board shall file such request within sixty
(60) days of issuance of the Administrator's decision.

(d) The filing of a request for review with a Committee of the Board under §
54.719(a) or with the full Board under § 54.719(b), shall toll the time period for
seeking review from the Federal Communications Commission. Where the time for
filing an appeal has been tolled, the party that filed the request for review from a
Committee of the Board or the full Board shall have sixty (60) days from the date
the Committee or the Board issues a decision to file an appeal with the
Commission.

(e) In all cases of requests for review filed under § 54.719, the request for review
shall be deemed filed on the postmark date. If the postmark date cannot be
determined, the applicant must file a sworn affidavit stating the date that the
request for review was mailed.

(f) Parties shall adhere to the time periods for filing oppositions and replies set
forth in 47 CFR 1.45.

8

12-1133


IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT



inContact, Inc., Petitioner,

v.

Federal Communications Commission, Respondent.


CERTIFICATE OF SERVICE



I, Pamela L. Smith, hereby certify that on August 7, 2012, I electronically
filed the foregoing Brief for Respondents with the Clerk of the Court for the
United States Court of Appeals for the D.C. Circuit by using the CM/ECF
system. Participants in the case who are registered CM/ECF users will be
served by the CM/ECF system.


Jacqueline R. Hankins
Nickolai G. Levin
Jonathan S. Marashlian
Robert B. Nicholson
Marashlian & Donahue, LLC
U.S. Department of Justice
1420 Spring Hill Road
Antitrust Division, Appellate Section
Suite 401
Room 3228
McLean, VA 22102
950 Pennsylvania Avenue, N.W.
Counsel for: inContact, Inc.
Washington, D.C. 20530-0001
Counsel for: USA








/s/ Pamela L. Smith

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