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Released: October 31, 2012
Appellate Case: 11-9900 Document: 01018937585 Date Filed: 10/23/2012 Page: 1




IN THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

____________

NO. 11-9900
____________

IN RE: FCC 11-161
____________

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

UNCITED JOINT INTERCARRIER COMPENSATION

PRINCIPAL BRIEF OF PETITIONERS

(DEFERRED APPENDIX APPEAL)
____________











Counsel for Petitioners Listed in Alphabetical Order
on Following Pages

October 23, 2012



Appellate Case: 11-9900 Document: 01018937585 Date Filed: 10/23/2012 Page: 2

Allband Communications Cooperative


By Its Counsel

Don L. Keskey
Public Law Resource Center PLLC
139 W. Lake Lansing Rd, Suite 210
East Lansing, MI 48823
Tel: 517-999-7572
donkeskey@publiclawresourcecenter.com


Arizona Corporation Commission


By Its Counsel

Maureen A. Scott
Wesley Van Cleve
Janet F. Wagner
Arizona Corporation Commission
Legal Division
1200 West Washington
Phoenix, AZ 85007
Tel: 602-542-3402
mscott@azcc.gov
wvancleve@azcc.gov
jwagner@azcc.gov




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CenturyLink*


By Its Counsel

Robert Allen Long, Jr.
Gerard J. Waldron
Yaron Dori
Mark W. Mosier
Covington & Burling
1201 Pennsylvania Avenue, NW
Washington, DC 20004
Tel: 202-662-6000
rlong@cov.com
gwaldron@cov.com
mmosier@cov.com
*CenturyLink joins Part I.B.2 and Part C.2, except for the two
paragraphs of the §201 discussion on p. 42, and the §205
discussion




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Choctaw Telephone Company


By Its Counsel

Benjamin H. Dickens, Jr.
Mary J. Sisak
Blooston, Mordkofsky, Dickens, Duffy, & Prendergast, LLP
2120 L Street, NW, Suite 300
Washington, DC 20037-0000
Tel. (202) 659-0830
bhd@bloostonlaw.com
mjs@bloostonlaw.com

Craig S. Johnson
Johnson & Sporleder, LLP
304 E High St. Suite 200
P.O. Box 1670
Jefferson City, MO 65102
Tel. (573) 659-8734
cj@cjaslaw.com


Connecticut Public Utilities Regulatory Authority* (Intervenor)


By Its Counsel

Clare E. Kindall
Assistant Attorney General
Department Head, Energy
Office of the Attorney General
10 Franklin Square
New Britain, CT 06051
Phone: (860) 827-2683
Fax: (860) 827-2893
Clare.Kindall@ct.gov

*Connecticut Public Utilities Regulatory Authority takes no position
on Part II.

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Core Communications, Inc.


By Its Counsel

James C. Falvey, Esq.
Charles A. Zdebski, Esq.
Eckert Seamans Cherin & Mellott, LLC
1717 Pennsylvania Ave., NW
12th Floor
Washington, D.C. 20006
Tel. (202) 659-6655
Fax (202) 659-6699
jfalvey@eckertseamans.com




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Gila River Indian Community and Gila River

Telecommunications, Inc.*


By Their Counsel

Patricia A. Millett
James E. Tysse
Sean Conway
Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue, N.W.
Washington, Dc 20036
Tel. (202) 887-4000
Fax. (202) 887-4288

Michael C. Small
2029 Century Park E. Suite 2400
Los Angeles, Ca 90067
Tel. (310) 229-1000
Fax (310) 229-1002

John B. Capehart
1700 Pacific Avenue, Suite 4100
Dallas, Tx 75201
Tel. (214) 969-2800
Fax (214) 969-4343

*Gila does not join Section I or Section III.B.




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Kansas Corporation Commission


By Its Counsel

Robert A. Fox
Senior Litigation Counsel
Kansas Corporation Commission
1500 SW Arrowhead Road
Topeka, Kansas 66604
(785) 271-3118
b.fox@kcc.ks.gov


Montana Public Service Commission* (Intervenor)


By Its Counsel

Dennis Lopach
Chief Legal Counsel
Montana Public Service Commission
1701 Prospect Avenue
PO Box 202601
Helena MT 59620-2601
dlopach@mt.gov
406 444-6179

*Montana takes no position on Part II.




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National Association of Regulatory Utility Commissioners*


By Its Counsel

James Bradford Ramsay
General Counsel
Holly Rachel Smith
Assistant General Counsel
National Association of Regulatory Utility Commissioners
1101 Vermont Avenue, Suite 200
Washington, DC 20005
Tel. 202.898.2207
jramsay@naruc.org
hsmith@naruc.org

*NARUC takes no position on Part II.




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National Association of State Utility Consumer Advocates*


By Its Counsel

Paula M. Carmody, NASUCA President
Maryland People’s Counsel
Office of People’s Counsel
6 St. Paul Street, Suite 2102
Baltimore, MD 21202
(410) 767-8150
FAX (410) 333-3616
paulaC@opc.state.md.us

David C. Bergmann
Counsel for NASUCA
3293 Noreen Drive
Columbus, OH 43221-4568
(614) 771-5979
david.c.bergmann@gmail.com

Christopher J. White
Deputy Rate Counsel
New Jersey Division of
Rate Counsel
P.O. Box 46005
Newark, NJ 07101
Phone (973) 648-2690
Fax (973) 624-1047
cwhite@rpa.state.nj.us

*NASUCA does not sign on to Part II of this brief.




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Consolidated Communications Holdings, Inc., National

Telecommunications Cooperative Association, and U.S.

TelePacific Corp.*


By Their Counsel

Russell Blau
Tamar Finn
Bingham McCutchen LLP
2020 K Street, NW
Washington, DC 20006
Tel: 202-373-6000
russell.blau@bingham.com
tamar.finn@bingham.com

*Consolidated Communications Holdings, Inc., National
Telecommunications Cooperative Association, and U.S. TelePacific
Corp do not join Part III of the Brief.


Pennsylvania Public Utility Commission

*

By Its Counsel

Bohdan R. Pankiw
Kathryn G. Sophy
Joseph K. Witmer
Shaun A. Sparks
Pennsylvania Public Utility
Commission
400 North Street, 3rd Floor
Harrisburg, PA 17120
Tel: 717-783-3190
bpankiw@pa.us
ksophy@pa.gov
joswitmer@pa.gov
shsparks@pa.gov

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*Pennsylvania Public Utility Commission takes no position on the
financial impact on any individual or group of carriers.


Public Utilities Commission of Ohio*


By Its Counsel

John H. Jones
Assistant Attorney General
Office of the Ohio Attorney General
Public Utilities Section
180 East Broad Street, 6th Floor
Columbus, OH 43215-3793
Tel: 614-466-4395
john.jones@puc.state.oh.us

*Public Utilities Commission of Ohio joins only in Part I. C, D, E,
and takes no position on Part I. A, B, and Parts II and III.




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Rural Telephone Service Company, Inc.; Adak Eagle Enterprises

LLC, Adams Telephone Cooperative, Alenco Communications,

Inc., Arlington Telephone Company, Bay Springs Telephone

Company, Inc., Big Bend Telephone Company, Inc., The Blair

Telephone Company, Blountsville Telephone LLC, Blue Valley

Telecommunications, Inc., Bluffton Telephone Company, Inc.,

BPM, Inc., Brantley Telephone Company, Inc., Brazoria

Telephone Company, Brindlee Mountain Telephone LLC, Bruce

Telephone Company, Bugs Island Telephone Cooperative,

Cameron Telephone Company, LLC, Chariton Valley Telephone

Corporation, Chequamegon Communications Cooperative, Inc.,

Chickamauga Telephone Corporation, Chickasaw Telephone

Company, Chippewa County Telephone Company, Clear Lake

Independent Telephone Company, Comsouth

Telecommunications, Inc., Copper Valley Telephone

Cooperative, Cordova Telephone Cooperative, Crockett
Telephone Company, Inc., Darien Telephone Company,

Deerfield Farmers' Telephone Company, Delta Telephone

Company, Inc., East Ascension Telephone Company, LLC,

Eastern Nebraska Telephone Company, Eastex Telephone

Coop., Inc., Egyptian Telephone Cooperative Association,

Elizabeth Telephone Company, LLC, Ellijay Telephone

Company, Farmers Telephone Cooperative, Inc., Flatrock

Telephone Coop., Inc., Franklin Telephone Company, Inc.,

Fulton Telephone Company, Inc., Glenwood Telephone

Company, Granby Telephone LLC, Hart Telephone Company,

Hiawatha Telephone Company, Holway Telephone Company,

Home Telephone Company (St. Jacob, Ill.), Home Telephone

Company (Moncks Corner, SC), Hopper Telecommunications

Company, Inc., Horry Telephone Cooperative, Inc., Interior

Telephone Company, Kaplan Telephone Company, Inc., KLM

Telephone Company, City Of Ketchikan, Alaska, Lackawaxen

Telecommunications Services, Inc., Lafourche Telephone

Company, LLC, La Harpe Telephone Company, Inc., Lakeside

Telephone Company, Lincolnville Telephone Company, Loretto

Telephone Company, Inc., Madison Telephone Company,

Matanuska Telephone Association, Inc., McDonough Telephone

Coop., Inc., MGW Telephone Company, Inc., Mid Century

Telephone Coop., Inc., Midway Telephone Company, Mid-Maine

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Telecom LLC, Mound Bayou Telephone & Communications,

Inc., Moundville Telephone Company, Inc., Mukluk Telephone

Company, Inc., National Telephone of Alabama, Inc.,

Ontonagon County Telephone Company, Otelco Mid- Missouri

LLC, Otelco Telephone LLC, Panhandle Telephone Cooperative,

Inc., Pembroke Telephone Company, Inc., People's Telephone

Company, Peoples Telephone Company, Piedmont Rural

Telephone Cooperative, Inc., Pine Belt Telephone Company,

Pine Tree Telephone LLC, Pioneer Telephone Cooperative, Inc.,

Poka Lambro Telephone Cooperative, Inc., Public Service

Telephone Company, Ringgold Telephone Company, Roanoke
Telephone Company, Inc., Rock County Telephone Company,

Saco River Telephone LLC, Sandhill Telephone Cooperative,

Inc., Shoreham Telephone LLC, The Siskiyou Telephone

Company, Sledge Telephone Company, South Canaan

Telephone Company, South Central Telephone Association,

Star Telephone Company, Inc., Stayton Cooperative Telephone

Company, The North-Eastern Pennsylvania Telephone

Company, Tidewater Telecom, Inc., Tohono O'Odham Utility

Authority, SD, Unitel, Inc., War Telephone LLC, West Carolina

Rural Telephone Cooperative, Inc., West Tennessee Telephone

Company, Inc., West Wisconsin Telcom Cooperative, Inc.,

Wiggins Telephone Association, Winnebago Cooperative

Telecom Association, and Yukon Telephone Co., Inc.*


By Their Counsel

David Cosson
2154 Wisconsin Avenue, N.W.
Washington, DC 20007
Tel: 202-333-5275
dcosson@klctele.com

H. Russell Frisby, Jr.
Dennis Lane
Harvey Reiter
Stinson Morrison Hecker LLP
1775 Pennsylvania Ave., NW
Suite 800
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Washington, DC 20006
Tel: 202-785-9100
rfrisby@stinson.com
dlane@stinson.com
hreiter@stinson.com

*Rural Telephone Service Co., Inc. et al. does not join in Part III of
the brief



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Rural Independent Competitive Alliance*


By Its Counsel

David Cosson
2154 Wisconsin Avenue, N.W.
Washington, DC 20007
Tel: 202-333-5275
dcosson@klctele.com

H. Russell Frisby, Jr.
Dennis Lane
Harvey Reiter
Stinson Morrison Hecker LLP
1775 Pennsylvania Ave., NW
Suite 800
Washington, DC 20006
Tel: 202-785-9100
rfrisby@stinson.com
dlane@stinson.com
hreiter@stinson.com

*RICA does not join in Part III of the brief



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tw telecom inc.*

By Its Counsel

David P. Murray
Thomas Jones
Nirali Patel
Willkie Farr & Gallagher LLP
1875 K Street, NW
Washington, DC 20006
Tel. (202) 303-1000
dmurray@willkie.com
tjones@willkie.com
npatel@willkie.com

*tw telecom joins only in Part I.C of this brief.


Vermont Public Service Board*


By Its Counsel

Bridget Asay
Assistant Attorney General
Office of the Attorney General
for the State of Vermont
109 State Street
Montpelier, VT 05609-1001
Tel: 802-828-3181
basay@atg.state.vt.us

*Vermont does not join Part III.B.




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Virginia State Corporation Commission* (Intervenor)


By Its Counsel

Raymond L. Doggett, Jr., Senior Counsel
Office of General Counsel
Virginia State Corporation Commission
P.O. Box 1197
Richmond, Virginia 23218
Phone: (804) 371-9671
Fax: (804) 371-9240
raymond.doggett@scc.virginia.gov

* Virginia State Corporation Commission joins Part I.B.1 and 2 of
this brief and takes no position on the balance of the issues
included in this brief.
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Table of Contents

Table of Contents ................................................................ xvii
Table of Authorities ............................................................. xix
Statement of Related Cases ................................................ xxiii
Glossary ............................................................................. xxiv
Statement of Issues ................................................................ 1
Standard of Review ................................................................. 3
Argument Summary ............................................................... 3
Argument ............................................................................... 7
I.
The FCC lacks authority to establish a new Section 251(b)(5)
framework. ....................................................................... 7
A. The FCC lacks statutory authority to classify exchange
access as reciprocal compensation. ..................................... 7
B. The FCC lacks authority to classify intrastate access as
reciprocal compensation. ................................................... 14
C. Assuming the revised §251(b) framework is lawful, the FCC
lacks statutory authority to establish a zero rate for
reciprocal compensation. ................................................... 28

D. The FCC Lacks Authority to Effect Changes to Part 36
without a Joint Board Recommended Decision. ................. 45
E. The FCC Lacks Authority to Instruct States not to grant
§251(f)(2) Relief from Bill-and-Keep. .................................. 45
II.
The New §251(b)(5) Framework is Arbitrary and Capricious.
....................................................................................... 49
III. The Order Violates Due Process and Raises Serious
Constitutional Questions. ............................................... 57
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A. The Order Violates Due Process. ........................................ 57
B. The Order Usurps State Sovereignty .................................. 61
CERTIFICATE OF COMPLIANCE ........................................ C-1
CERTIFICATE OF SERVICE ................................................ C-2





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Table of Authorities


Cases


American Ass'n of Meat Processors v. Bergland, 460 F.Supp. 279
(D.D.C. 1978) ............................................................................ 58
AT&T v. Iowa Utilities Board, 525 U.S. 366 (1999) 15, 17, 26, 28, 48
Chevron U.S.A. Inc. v. Nat’l Resources Defense Council, Inc., 467 U.S.
837 (1984) ............................................................................. 3, 38
Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) ..................... 14
City of Arlington, Tex. v. FCC, No. 2012 WL 4748083 (U.S. Oct. 5,
2012) ........................................................................................... 3
Competitive Telecomms Ass’n v. FCC, 87 F.3d 522 (D.C. Cir. 1996)

.................................................................................................. 50
Competitive Telecommunications Ass’n v. F.C.C., 117 F.3d 1068, (8th
Cir. 1997) .................................................................................. 25
Core Communications v. FCC, 592 F.3d 139 (D.C. Cir. 2010) ........ 20
Corley v. United States, 556 U.S. 303 (2009) ................................... 9
Corning Glass Works v. Brennan, 417 U.S. 188 (1974) .................... 8
Crockett Telephone Co. v. FCC, 963 F.2d 1564 (D.C.Cir. 1991) ...... 50
Dolan v. United States Postal Service, 546 U.S. 481 (2006) ............ 10
FCC v. Fox TV Stations, Inc., 556 U.S. 502 (2009) ......................... 13
FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944) ........................ 50
FPC v. Texaco, Inc., 417 U.S. 380 (1974) ....................................... 32
Global Naps, Inc. v. Verizon New England, Inc., 444 F.3d 59 (1st Cir.
2006) ......................................................................................... 17
Grand Canyon Air Tour Coalition v. FAA, 154 F.3d 455 (D.C. Cir.
1998) ......................................................................................... 58
Greater Washington Bd. of Trade v. District of Columbia, 948 F.2d
1317 (D.C. Cir. 1991) ................................................................ 14
In re Dawes, 652 F.3d 1236 (10th Cir. 2011) ............................ 9, 16
Iowa Util. Board v. FCC, 219 F.3d 744 (8th Cir. 2000) .................. 30
Iowa Util. Board v. FCC, 301 F.3d 957 (8th Cir. 2002) .................. 30
King v. St. Vincent's Hosp., 502 U.S. 215 (1991) ............................ 10
Louisiana Public Service Commission v. FCC, 476 U.S. 355 (1986) . 7,
19, 41
Marsh v. Oregon Natural Res. Council, 490 U.S. 360 (1989) .......... 53
Maryland v. Louisiana, 451 U.S. 725 (1981) ................................. 14
McDermott Int'l, Inc. v. Wilander, 498 U.S. 337 (1991) ..................... 8
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Missouri Bd. of Examiners for Hearing Instrument Specialists v.
Hearing Help Exp., Inc., 447 F.3d 1033 (8th Cir. 2006) .............. 14
N.L.R.B. v. Pueblo of San Juan, 276 F.3d 1186 (10th Cir. 2002) .... 14
Nat’l Fed’n of Ind. Businesses, 132 S.Ct. 2566 (2012) ................... 62
Nat’l Rural Telecom Ass’n v. FCC, 988 F.2d 174 (D.C. Cir. 1993) .. 55
National Coal v. Dir., OWCP, 854 F.2d 386 (10th Cir. 1988) ........... 57
Nat'l Solid Wastes Mgmt. Ass'n v. Killian, 918 F.2d 671 (7th
Cir.1990) ................................................................................... 15
NorAm Gas Trans'n Co. v. FERC, 148 F.3d 1158 (D.C. Cir. 1990) .. 53
Prometheus Radio v. FCC, 652 F.3d 431 (3rd Cir. 2011) ..... 58, 60, 61
Qwest Corp. v. Colo. Pub. Utils. Comm’n, 656 F.3d 1093 (10th Cir.
2011) ......................................................................................... 18
Qwest Corp. v. FCC, 252 F3d 462 (DC Cir. 2001) .......................... 27
Qwest Corporation v. FCC, No. 10-9543 (10th Cir.) ........................ 18
Ramsey Winch Inc. v. Henry, 555 F.3d 1199 (10th Cir. 2009) ....... 15
Sec’y of Labor v. Excel Mining, LLC, 334 F.3d 1 (D.C. Cir. 2003) ... 12
Sierra Club v. Costle, 657 F.2d 298 (D.C. Cir. 1981) ...................... 58
Smith v. Illinois Bell Telephone, 282 U.S. 133, 151 (1930) ....... 49, 53
Texas Office of Pub. Util. Counsel v. FCC, 265 F.3d 313 (5th Cir.
2001) ......................................................................................... 55
U.S. West, Inc. v. FCC, 182 F.3d 1224 (10th Cir. 1999) ................. 61
United States Tel. Ass’n v. FCC, 188 F.3d 521 (D.C. Cir. 1999) ..... 55
US v. Lachman, 387 F.3d 42 (1st Cir 2004) ...................................... 8
Verizon Comm’s, Inc. v. FCC, 535 U.S. 467 (2002) ......................... 30
Wisconsin Public Intervenor v. Mortier, 501 U.S. 597 (1991) ........... 15
WorldCom, Inc. v. F.C.C., 288 F.3d 429 (D.C. Cir. 2002) ... 24, 25, 26

Statutes


47 U.S.C. §152(b) ............................................................. 14, 19, 39
47 U.S.C. §153 ....................................................................... 14, 18
47 U.S.C. §201 ... 2, 5, 19, 20, 21, 32, 38, 39, 40, 41, 42, 43, 44, 47,
50
47 U.S.C. §202 ............................................................................. 60
47 U.S.C. §205 ..................................................................... 2, 5, 43
47 U.S.C. §251(c) ......................................................................... 11
47 U.S.C. §251(d) ........................ 1, 5, 14, 16, 17, 18, 28, 34, 38, 47
47 U.S.C. §251(f) ................................................ 2, 6, 45, 46, 47, 48
47 U.S.C. §251(g) ........................................4, 17, 20, 23, 24, 25, 28
47 U.S.C. §252(d) . 1, 2, 5, 11, 25, 29, 31, 32, 33, 35, 36, 38, 39, 40,
41
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47 U.S.C. §253 ............................................................................. 22
47 U.S.C. §410(c) ....................................................................... 2, 6
47 U.S.C. §601 ............................................................... 1, 5, 15, 16
5 U.S.C. §553(c) ........................................................................... 58
5 U.S.C. §706 ............................................................................... 53
66 Pa.C.S. §§3011 ........................................................................ 22
73 Pa.C.S. §§2251.1 ..................................................................... 22

Other Authorities


Comments of John Staurulakis, Inc., WC Docket No. 10-90 (filed Apr.
18, 2011) ................................................................................... 54
Comments of the Nebraska Rural Independent Companies, WC
Docket No. 10-90 et al. (filed Aug. 24, 2011) .............................. 27
Core Communications, Inc. and Pennsylvania Public Utility
Commission, Petitioners v. Federal Communications Commission,
Petitions for Writ of Certiorari, Supreme Court Docket Nos. 10-
185 and 10-189, Brief for the Federal Respondents in Opposition
(October 12, 2010) ..................................................................... 21
H.R. CONF. REP. 104-458 ...................................................... 11, 24
Reply Comments of Alexicon Telecommunications Consulting, WC
Docket No. 10-90 (filed May 20, 2011) ....................................... 54
Reply Comments of the Public Service Commission of Wisconsin, WC
Docket No. 10-90 et al., at 2 (filed May 19, 2011)....................... 35
S. CONF. REP. 104-230 ............................................................... 23
Webster’s New World Dictionary 1120 (3d College Ed. 1988) ... 10, 34

Rules


47 C.F.R. §51.207 .......................................................................... 9
47 C.F.R. §51.209 .......................................................................... 9
47 C.F.R. §61.45 .......................................................................... 55
47 C.F.R. §64.901 ........................................................................ 57
47 C.F.R. §69.731 ........................................................................ 55

Agency Decisions


Access Charge Reform; Price Cap Performance Review for Local
Exchange Carriers; Low-Volume Long Distance Users; Federal-State
Joint Board on Universal Service
, Sixth Report and Order, 15 FCC
Rcd 12962 (2000) ...................................................................... 51
Beehive Telephone Company, Inc., Order Designating Issues for
Investigation, 13 FCC Rcd 20204 (1998) .................................... 56
Beehive Telephone, Inc., Memorandum Opinion & Order, 14 FCC
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Rcd 1224 (1998) ........................................................................ 56
Connect America Fund, et.al., WC Docket No. 10-90, et al., Order, 27
FCC Rcd 605 (WCB 2012) .......................................................... 22
Connect America Fund, Report and Order and Further Notice of
Proposed Rulemaking, 26 FCC Rcd 17663 (2011) . xxiii, 4, 6, 7, 15,
17, 18, 19, 21, 22, 23, 25, 29, 30, 33, 34, 35, 36, 38, 39, 41, 43,
44, 46, 47, 52
Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, First Report and Order, 11 FCC
Rcd 15499 (1996) (“Local Competition Order") .... 12, 17, 26, 29, 37
ISP Remand Order, 16 FCC Rcd 9151 (2001) .......................... 20, 23
MTS and WATS Market Structure; Amendment of Part 67 of the
Commission’s Rules and Establishment of a Joint Board, 1 FCC
Rcd 615, (1986) ......................................................................... 52
Multi-Association Group (MAG) Plan for Regulation of Interstate
Services of Non-Price Cap Incumbent Local Exchange Carriers and
Interexchange Carriers
, Second Report & Order, 16 FCC Rcd
19613 (2001) ............................................................................. 51
Policy and Rules Concerning Rates for Dominant Carriers, 5 FCC Rcd
6786 (1990) ............................................................................... 54
Rules Concerning Rates for Competitive Common Carrier Services
and Facilities Authorizations Therefor, Further Notice of Proposed
Rulemaking, 84 F.C.C.2d 445, 457 (1981) ................................. 51
TSR Wireless, LLC v. US West Communications, Inc., Memorandum
Opinion and Order, 15 FCC Rcd 11166 (2000)........................... 27


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Statement of Related Cases


There are no prior appeals, and all related cases have been
consolidated into this omnibus case. A previous order arising from
one of the administrative proceedings in which Connect America
Fund, 26 FCC Rcd 17663 (2011) (“Order”) was entered is before the
Ninth Circuit in Ronan Tel. Co. et al. v. FCC et al. (9th Cir. Case No.
05-71995).

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Glossary



Access Charges
Fees charged to IXCs by LECS for exchange




access, i.e., charged for toll calls that “begin




and end in different calling areas.
1996 Act

Telecommunications Act of 1996
Act, or 1934 Act
Communications Act of 1934, as amended
ARC


Access Recovery Charge
Board, Joint Board Federal-State Joint Board on Separations
BOC


Bell Operating Company
CAF
Connect America Fund
CLEC


Competitive Local Exchange Carrier
CMRS


Commercial Mobile Radio Service
FCC, Commission Federal Communications Commission
ICC


Intercarrier Compensation
ILEC


Incumbent Local Exchange Carrier
ISP


Internet Service Provider
IXC


Interexchange (or Long Distance) Carrier
LEC


Local Exchange Carrier
RLEC


Rate-of-Return ILEC
TELRIC

Total Element Long-Run Incremental Cost
USF


Universal Service Fund
USF Brief

Uncited Joint Universal Service Fund Principal




Brief
VoIP


Voice over Internet Protocol
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Statement of Issues




Sixteen years after enactment, in the face of multiple contrary
Congressional proscriptions, the FCC concocts a new interpretation
of 47 U.S.C. §251(b)(5) "reciprocal compensation," raising the
following issues:

Whether the FCC can expand its jurisdiction to set “reciprocal
compensation” rates for all intrastate and interstate traffic
eliminating an assigned State duty (§252(d)(2)), preempting
intrastate access charge regimes in the face of an explicit
reservation (47 U.S.C. §251(d)(3)), and contravening Congress’s
explicit instructions not to imply preemption (§601(c)(1))?

Whether the FCC can classify "originating" intrastate access as
reciprocal compensation given §251(b)(5) addresses only the
“transport and termination of telecommunications” and does not
mention originating traffic?

Whether the FCC's specification of a zero rate as a
"methodology" intrudes on the State’s authority to "set the actual
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rate" specified by statute, conceded by the FCC, and recognized by
the Supreme Court?

Whether the imposition of a zero rate conflicts with (i) the
pricing standards in 47 U.S.C. §252(d)(2) requiring "mutual
recovery" of costs from each carrier, (ii) prior FCC interpretations
allowing such arrangements only where exchanging carrier rates
are symmetrical and traffic is balanced, and (iii) 47 U.S.C. §201's
requirement for rates to be “just and reasonable", and/or the FCC's
failure to conduct hearings required by 47 U.S.C. §205.

Whether the FCC can in a rulemaking change its Part 36 rules
without complying with 47 U.S.C. §410(c)’s mandate for a specific
referral to a joint board and a recommended decision as a basis for
such change?

Whether the FCC can instruct States, assigned by Congress
the task of considering carrier requests under 47 U.S.C. §251(f)(2
not to suspend or modify, inter alia, the FCC’s “bill-and-keep”
methodology?

Whether the FCC acted arbitrarily, capriciously, and
otherwise unlawfully in ignoring conflicts among its existing cost
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recovery rules, relevant legal precedent, and its new rules reducing
and eliminating ICC rates and USF Support Mechanisms?

Whether the FCC’s ex parte process violates fundamental due
process?

Whether the FCC’s order infringes on core State sovereignty?

Standard of Review



Section I of the brief is governed by the Chevron “step one”
standard set out at pp. 39-40 of the Preliminary Joint Brief.1
Chevron U.S.A. v. Nat’l Resources Defense Council, Inc. 467 U.S.
837, 842-3 (1984). Section II is governed by the arbitrary and
capricious standard of review set out at pp. 41-42 of that brief.

Argument Summary


Both “reciprocal compensation” and “access charges” had
established meanings Congress incorporated in 1996 legislation.
Sixteen years after the passage, in the face of unambiguous

1
Subsequent to the filing of the Joint Preliminary Brief, the
Supreme Court granted certiorari to address whether Chevron
applies at all where the issue concerns any agency's determination
of its own jurisdiction. City of Arlington, Tex. v. FCC, No. 2012 WL
4748083 (U.S. Oct. 5, 2012).
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statutory text, the FCC attempts to expand its jurisdiction under
47 U.S.C. §251(b)(5) to set compensation for all intrastate and
interstate traffic—including associated exchange access charges—
on the theory that the 1996 Act gives it jurisdiction over
compensation relating to all “telecommunications.” Order, ¶764.
The FCC nowhere provides an adequate explanation of its departure
from the prior interpretations. Read in context, it is clear that
§251(b)(5) and §251(g) cannot authorize including access charges as
reciprocal
compensation.

Unlike
traditional
reciprocal
compensation, access charges (including originating access charges)
are not “reciprocal” – that is – there is no reciprocity. IXCs pay
access charges for exchange access, a LEC service that permits
IXCs to complete toll calls, a service separate from the local services
to which reciprocal compensation arrangements apply. The
servicing LEC does not make a corresponding payment.
Even if the inclusion of access charges were permissible, the
FCC can’t set a zero rate for the service. The agency concedes
Congress expects States to set the rate for §251(b)(5) traffic and
that, whatever traffic belongs within §251(b)(5), the FCC only has
authority to set a “methodology.” Id., ¶773. But having conceded
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that statutory limitation, the FCC promptly ignores it, specifying
that its zero-rate “methodology” is “less burdensome than
approaches that would require…state commissions to [actually] set a
uniform positive intercarrier compensation rate, such as $0.0007.”
Id., ¶743. (emphasis added)
In setting the rate at zero, the FCC eliminates a
Congressionally assigned State duty (§252(d)(2)) and ignores record
evidence of positive termination costs, preempts State intrastate
access charge regimes in the face of an explicit Congressional
reservation (§251(d)(3), manufactures an ambiguity out of whole
cloth that contravenes Congress’s explicit instructions not to imply
preemption (§601(c)(1)), ignores explicit Congressional instructions
limiting bill-and-keep to balanced traffic and voluntary carrier
negotiations (§252(d)(2)), violates the mutual and reciprocal
requirements that carriers recover termination costs from each
other while at the same time acknowledging that LECs are unlikely
to be able to recover such costs from other sources (§§251(b)(5) and
252(d)(2)), attempts to exercise general §201 rulemaking authority
to set rates rather than comply with the more specific standards
and processes that govern ratesetting (§§252(d)(2) and 205), and
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effects separations changes without Congressionally-mandated
Joint Board referrals (§410(c)).
Then, adopting a de facto public interest standard that it
admits lacks record support, arbitrarily ignoring other prongs of
§251(f)(2), and exceeding its jurisdiction to adopt rules that “guide”
the States, the FCC instructs States not to exercise their
jurisdiction to grant relief from the new zero-rate regime, claiming
the standard can be met only under “highly unlikely”
circumstances. Order ¶824.
The FCC also unlawfully and arbitrarily prohibits RLECs from
recovering interstate costs through intercarrier compensation rate
elements assigned to the interstate jurisdiction at the same time it
acknowledges that LECs will be precluded from recovering such
costs elsewhere.
Finally, the FCC’s ex parte process is so deficient as to
constitute a denial of due process.
The FCC’s effort to rewrite the Act flounders under any careful
examination of the unambiguous statutory text, legislative history,
and controlling precedent.
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Argument


I.

The FCC lacks authority to establish a new Section
251(b)(5) framework.



A. The FCC lacks statutory authority to classify

exchange access as reciprocal compensation.

In ¶765, the FCC rejects arguments that §251(b)(5) cannot
apply to intrastate access charges. The agency claims that if
Congress intended to exclude certain telecommunications traffic
from the reciprocal compensation framework, it could have easily
done so by using more restrictive terms to define the traffic subject
to §251(b)(5).2
But that’s precisely what Congress did.
The Supreme Court has specified that technical terms in a
statute should be interpreted by reference to the industry to which
they apply.3 Both “reciprocal compensation” and “access charges”

2
Order, ¶765. The FCC also relies on statements in a 2008
order that on their face apply ONLY to dial-up interstate traffic the
FCC prior to the 1996 Act exempted from interstate access charges.
Both the FCC’s legal theory and the reviewing Court specified the
case is specific to “interstate” traffic terminating to an Internet
service provider. See discussion, infra, at 20-21.

3
See, Louisiana Public Service Commission v. FCC, 476 U.S.
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had established meanings that Congress incorporated in the 1996
legislation.4 Even today, on its website, the FCC properly
distinguishes the concepts:
There are two major forms of intercarrier
compensation - access charges and reciprocal
compensation.

Access charges generally apply to calls that
begin and end in different local calling areas…

The Commission oversees interstate access
charge rates, and the states oversee intrastate
access charge rates.

Access charges do not apply to Internet service

providers under an [FCC] exemption for
enhanced service providers that use the
facilities of local telephone companies
.


355, 371-2 (1986) (“in accordance with the rule of construction that
technical terms of art should be interpreted by reference to the
trade or industry to which they apply.”) See, e.g., McDermott Int'l,
Inc. v. Wilander, 498 U.S. 337, 342 (1991); Corning Glass Works v.
Brennan, 417 U.S. 188, 201–02 (1974); US v. Lachman, 387 F.3d
42, 53 (1st Cir 2004) (“There are instances where a statutory or
regulatory term is a technical term of art, defined more
appropriately by reference to a particular industry usage than by
the usual tools of statutory construction.”)

4
See, November 26, 2008 Initial Comments of the National
Association
of
Regulatory
Utility
Commissioners,
at:
http://apps.fcc.gov/ecfs/document/view?id=6520188674">http://apps.fcc.gov/ecfs/document/view?id=6520188674, at p.8
n.19 outlining pre-Act references to reciprocal compensation and
local exchange competition.

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Reciprocal compensation generally applies to
calls that begin and end within the same local
calling area.5


The FCC effort to lump these concepts together ignores a host
of specific Congressional requirements and reservations.6 Section
251(b)(5) cannot include access charges for exchange access traffic.
Exchange access is a LEC service that permits IXCs to utilize the
LECs’ networks for the IXC’s intrastate telephone toll service, and is
separate from the local competitive LEC services to which reciprocal
compensation arrangements apply. See Preliminary Brief of
Petitioners at 15-16; see also 47 C.F.R. §51.209 (Toll dialing parity)
and 47 C.F.R. §51.207 (Local dialing parity).

Section 251(b)(5) specifies only that LECs have a duty to
“establish reciprocal compensation arrangements for the transport

5
FCC
“Intercarrier
Compensation”
page
at
http://transition.fcc.gov/wcb/ppd/IntercarrierCompensation/">http://transition.fcc.gov/wcb/ppd/IntercarrierCompensation/
(last accessed 9/25/2012) (emphasis added). This webpage was
updated in 2009 after the release of the ISP Remand Decision that,
in the accompanying rulemaking, first raised the FCC’s new
interpretation of “reciprocal compensation.”

6
In re Dawes, 652 F.3d 1236, 1242 (10th Cir. 2011) cert.
denied, 132 S. Ct. 2429 (U.S. 2012) quoting Corley v. United States,
556 U.S. 303, 314 (2009) (“[A] ‘statute should be construed so that
effect is given to all its provisions, so that no part will be inoperative
or superfluous, void or insignificant.’”).
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and
termination
of
telecommunications.”

The
term
“telecommunications” within §251(b)(5) cannot be divorced from the
duty to establish “reciprocal compensation arrangements” or from
other provisions of the Act. For compensation to be “reciprocal” it
must, by definition, be given by “each to the other.” Webster’s New
World Dictionary 1120 (3d College Ed. 1988). Exchange access
traffic and access charge payments are never reciprocal. The IXC
pays LECs serving the calling and called parties for the service on
both ends of the long distance call and no reciprocity exists between
the IXC and the LEC, i.e., no traffic is exchanged between them
since all of the traffic is that of the IXC.

Moreover, reading reciprocal compensation in §251(b)(5) more
closely and in the context of other sections of the Act forecloses
expansion of that term to cover access traffic. “[A] statute is to be
read as a whole, since the meaning of statutory language, plain or
not, depends on context.”7 Read in context, §251(b)(5) can only
apply to non-access traffic. Subsection (b)(5) specifies the LEC duty

7
King v. St. Vincent's Hosp., 502 U.S. 215, 221 (1991); see also,
Dolan v. United States Postal Service, 546 U.S. 481, 486 (2006) (The
“[i]nterpretation of a word or phrase depends upon reading the
whole statutory text, considering the purpose and context.”)

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to transport and terminate the traffic of other LECs competing in
the same local exchange service area. On its face, it has no
applicability to exchange access services, either interstate or
intrastate. LECs have never established reciprocal compensation
arrangements with IXCs. Indeed, Congress distinguished exchange
access services from the reciprocal compensation transport and
termination arrangements required by §251(b)(5), when it specified
that competitive LECs can utilize the facilities and equipment of
incumbents “for the transmission and routing of telephone
exchange service and exchange access.” 47 U.S.C. §251(c)(2)(A)8
Section 252(d)(2)(A) adds further support to this view – when it
refers to an “incumbent local exchange carrier’s” compliance with
§251(b)(5) and specifies “mutual and reciprocal recovery by each
carrier of costs associated with the transport and termination on
each carrier’s network facilities of calls that originate on the

8
In the Conference report, the Senate specification that “[t]he
obligations and procedures proscribed in this section do not apply
to interconnection arrangements between local exchange carriers
and telecommunications under section 201 . . . for the purposes of
providing interexchange service, and nothing in this section is
intended to affect the Commission’s access charge rules” morphed
into §251(i). H.R. CONF. REP. 104-458, at pp 117, 123.

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network facilities of the other carrier.” The FCC’s effort to collapse
“telephone exchange service” and “exchange access” is flatly
inconsistent with both the express terms of the statute and the
FCC’s prior interpretations of those terms.9

Section 251(b)(5) applies only when traffic is both transported
and terminated by the carrier seeking compensation. The FCC
relied on this limitation in the Local Competition Order, finding that
“transport and termination of local traffic” is distinct from “access
service for long distance communications,” and so rejected claims
that §251(b)(5) governs the exchange of traffic between a LEC and
an IXC. Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, First Report and Order, 11 FCC
Rcd 15499, 16013 (1996) (“Local Competition Order"). As the
Commission noted, it is the LEC, not the IXC, which terminates the
traffic. Id. 16013. The Commission defined transport “as the
transmission of terminating traffic that is subject to section

9
See Secretary of Labor v. Excel Mining, LLC, 334 F.3d 1, 7 (D.C.
Cir. 2003) (Court prefers an agency interpretation made “when the
origins of both the statute and the finding were fresh in the minds
of their administrators” over a subsequent interpretation.”)
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251(b)(5).” Id. 16015. Therefore, termination defines the scope of
§251(b)(5) traffic.

In any case, the FCC’s new theory is also invalid based on its
unexplained departure from prior interpretations. To change its
position, an agency must, at a minimum, acknowledge that it is
departing from its earlier view and “show there are good reasons for
the new policy.” “[T]he requirement that an agency provide reasoned
explanation for its action would ordinarily demand that it display
awareness that it is changing position. An agency may not, for
example, depart from a prior policy sub silentio or simply disregard
rules that are still on the books.” See FCC v. Fox TV Stations, Inc.,
556 U.S. 502, 515 (2009). The FCC cannot satisfy this requirement
because it does not acknowledge its prior definitions of “transport”
and “termination,” much less provide a reasoned explanation for
changing its position.


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B. The FCC lacks authority to classify intrastate access

as reciprocal compensation.

1.

The FCC Lacks authority to preempt State
intrastate exchange access authority.




Reciprocal compensation necessarily excludes intrastate
access by any plain text reading and the action of §152(b).10
Section 152 operates in tandem with other sections of the Act that
specifically preserve continuing State authority to “establish[]
access and interconnection obligations of local exchange carriers.”11
Exceptions to this authority must be express.12

Preemption of State law is “not lightly to be presumed”13 and is
not lightly found.14 True, the Supreme Court determined Congress

10
47 U.S.C. §152(b).

11
47 U.S.C. §251(d)(3).

12
Section 601(c)(1), codified at 47 U.S.C. §153 note.

13
See, e.g., Greater Washington Bd. of Trade v. District of
Columbia, 948 F.2d 1317, 1320 (D.C. Cir. 1991); N.L.R.B. v. Pueblo
of San Juan, 276 F.3d 1186, 1195 (10th Cir. 2002) citing Maryland
v. Louisiana, 451 U.S. 725, 746 (1981) (“Statutes are entitled to the
presumption of non-preemption.”); Missouri Bd. of Examiners for
Hearing Instrument Specialists v. Hearing Help Exp., Inc., 447 F.3d
1033, 1035 (8th Cir. 2006) citing Cipollone v. Liggett Group, Inc., 505
U.S. 504, 518-19 (1992). Compare, Louisiana PSC v. FCC, 476 U.S.
355 (1986).

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provided the FCC with a limited degree of intrusion upon State
authority with respect to the local competition provisions of the
1996 Act. AT&T v. Iowa Utilities Board, 525 U.S. 366, 377-378
(1999)(“Iowa Utilities Board”). But the FCC steps well outside those
statutory bounds in preempting intrastate exchange access.
Indeed, Congress provided a specific rule that conclusively resolves
the point. Section 601 (c)(1) specifies that where a provision can be
read in more than one way, it must be construed to avoid
preemption.15 The FCC’s use of §251(b)(5) is subject to §601’s
limitation. The prior FCC interpretation of §251(b)(5) that predates
the Order by 15 years complies with Congress’ explicit instruction
in §601. Section 251(b)(5) does not require preemption. The Court
need not consider any other aspect of the FCC’s “analysis.”
Compare Order, ¶¶760-768.

14
Wisconsin Public Intervenor v. Mortier, 501 U.S. 597 (1991); see
also Ramsey Winch Inc. v. Henry, 555 F.3d 1199, 1204 (10th Cir.
2009) quoting Nat'l Solid Wastes Mgmt. Ass'n v. Killian, 918 F.2d
671, 676 (7th Cir.1990) (“Courts do not ‘lightly attribute to
Congress or to a federal agency the intent to preempt state or local
laws’”).

15
Section 601(c)(1) provides that “[t]his Act and the amendments
by this Act shall not be construed to modify, impair, or supersede
Federal, State, or local law unless expressly so provided in such Act
or amendments.” (emphasis added).
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Even absent §601’s limitation, the FCC’s action is expressly
barred by §251(d)(3) (“Preservation of State Access Regulations”),
which states:
In prescribing and enforcing regulations to
implement the requirements of this section,
the Commission shall not preclude the
enforcement of any regulation, order, or policy
of a State commission that -

(A) establishes access and interconnection
obligations of local exchange carriers;

(B) is consistent with the requirements of this
section; and

(C)
does
not
substantially
prevent
implementation of the requirements of this
section and the purposes of this part.

47 U.S.C. §251(d)(3).

The Court cannot permit the FCC to construe §251(b)(5) so as
to eliminate §251(d)(3).16 The FCC conducts no analysis of
§251(d)(3) and fails to articulate any criterion that allows the agency
to override this express reservation of State authority. Clearly,
intrastate exchange access services are included within §251(d)(3),
(A)’s retention of State authority over intrastate LEC “access and
interconnection obligations.” The FCC does not suggest otherwise.

16
In re Dawes, 652 F.3d at 1242.
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Order, ¶767. LEC intrastate exchange access service affords IXCs
the use of the LEC’s network for the origination and termination of
the IXCs’ toll services. States have historically overseen the
intrastate rates, terms and conditions pursuant to which an IXC
may utilize the LEC network to originate or terminate the traffic.
Nor can the FCC sustain its suggestion, id., that State exchange
access regulation is inconsistent with “the requirements of this
section.” 47 U.S.C. §251(d)(3)(B). There is no requirement in
§251(b)(5), §251(g), or anywhere else for the FCC to override State
access regulations. As the FCC previously (and properly) ruled,
§251(b) addresses the obligations of all LECs with respect to the
competitive services they offer within a local calling area. See Local
Competition Order, 16013. Finally, the Order ignores the fact that
preemption is not necessary to implement any requirement or
purpose of §251, a fact the Commission must demonstrate to
sustain preemption. Section 251 was intended to open up local
markets to competition.17 While the FCC attempts unpersuasively

17
See, e.g., Iowa Utilities Board, 525 U.S. 366, 371 (The 1996 Act
“fundamentally restructures local telephone markets.); see also
Global Naps, Inc. v. Verizon New England, Inc., 444 F.3d 59, 61-62
(1st Cir. 2006) (The 1996 Act “was enacted ‘to end the local
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to now apply a legal theory that rejects history, it can cite to no
record that supports the conclusion that preemption of State
authority over exchange access services is necessary to implement
any §251(b)(5) requirement or to achieve the local competition
purpose of §251. The fact is that exchange access remains an input
into the provision of telephone toll service (47 U.S.C. §153(20)), a
class of service that is separate from telephone exchange service. 47
U.S.C. §§153(54) and (55).

Indeed, there is no specific finding that the preemption of
intrastate exchange access is required to avoid “substantially
prevent[ing] implementation of the requirements of this section and
the purposes of this part,” (47 U.S.C. §251(d)(3)(C)), other than the
circular argument that intrastate access must be eliminated to
comply with §251(b)(5). Order, ¶767. The record cannot support
the notion that State intrastate exchange access regulation and the

telephone monopolies and create a national telecommunications
policy that favored competition in local telephone markets.’”); see
Qwest Corporation v. FCC, No. 10-9543, issued August 6, 2012 (10th
Cir.)(to be published) at 3 citing Qwest Corp. v. Colo. Pub. Utils.
Comm’n, 656 F.3d 1093, 1096 (10th Cir. 2011) (The 1996 Act
“imposed on the monopolistic local phone companies . . . several
new requirements designed to enhance competition in the market
for local telephone service.”).
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coexistence of parallel inter- and intrastate access regimes has
prevented local competitive markets from developing (see 47 U.S.C.
§251 et seq. (Part II – Development of Competitive Markets)).

Preemption of State intrastate exchange access regulation is of
course necessary to effect the Order’s new legal theory. Louisiana
makes clear, however, that regardless of the FCC's policy desires,
the agency can only act where Congress has given it jurisdiction:
[W]e simply cannot accept an argument that
the FCC may nevertheless take action which it
thinks will best effectuate a federal policy. An
agency may not confer power upon itself. To
permit an agency to expand its power in the
face of a congressional limitation on its
jurisdiction would be to grant to the agency
power to override Congress.18


Nor does Iowa Utilities Board permit the FCC (Order, ¶ 760) to
bootstrap its §201(b) rulemaking authority to re-write the §251
framework to eliminate State authority over intrastate exchange
access services. See 47 U.S.C. §152(b)(1). The discussion in Iowa
Utilities Board did not address whether the 1996 Act preserved
State ratemaking authority over intrastate exchange access rates.
Rather, as the FCC admits, the discussion could only address the

18
Louisiana, 476 U.S. at 374-375.

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pricing issues under the Act related to the new local service
competitive framework – local traffic exchanged between
competitors which was “the subject of” the FCC’s “reciprocal
compensation rules since the Commission implemented the 1996
Act.” Order, ¶765. Given the local focus, the decision cannot be
cited to extend the FCC’s jurisdiction to intrastate exchange access.

Nor can the FCC rely on the ISP Remand Order, 16 FCC Rcd
9151 (2001), to support its construction of §251(g). Id., ¶763,
n.1368. That decision, as acknowledged by the FCC, was remanded
(id., ¶759, n. 1346), and ultimately modified based on the explicit
premise that the traffic being addressed – ISP-bound traffic – was
jurisdictionally interstate. Compare id. ¶¶761-768 with Core
Communications v. FCC, 592 F.3d 139, 144 (D.C. Cir.
2010)(establishing that the issue the Court evaluated was “FCC
ratesetting authority for a leg of an interstate communication” and
noting that “[d]ial-up internet traffic is special because it involves
interstate communications that are delivered through local calls; it
thus simultaneously implicates the regimes of both §201 and of
§§251-252”); see also Core Communications, Inc. and Pennsylvania
Public Utility Commission, Petitioners v. Federal Communications
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Commission, Petitions for Writ of Certiorari, Supreme Court Docket
Nos. 10-185 and 10-189, Brief for the Federal Respondents in
Opposition (October 12, 2010), pp. 12 (FCC concedes that “[t]he
court of appeals correctly held that the Communications Act’s
longstanding grant of authority to the FCC over interstate
communications provided a sound basis for the Commission’s
compensation rules for ISP-bound traffic”). The Communications
Act authorizes the FCC to regulate the rates and terms of interstate
common carrier services. 47 U.S.C. §201(b))

Factually, the FCC’s claimed policy “justification” for
preemption conflicts with the record. The FCC contends per-
minute access charges should be eliminated to “promote the
transition to IP networks, provide a more predictable path for the
industry and investors, and anchor the reform process that will
ultimately free consumers from shouldering . . . multi-billion dollar
subsidies.” Order, ¶736; see also, id., ¶740. But this claim is
inconsistent with the Order’s recognition that many States have
taken action to reduce access charges (see id., ¶¶795, 796), some
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interstate rates are higher than comparable intrastate access,19 and
the fact that States have both USF and other programs to
encourage broadband deployment. Moreover, the FCC’s
appropriation of intrastate authority has real consequences. For
example, the FCC’s Order preempts Pennsylvania’s authority to
regulate intrastate access rates and to promote broadband.
Compare Order, ¶¶648-655 and 752-759 with 66 Pa.C.S. §§3011,
et. seq. (Chapter 30) and 73 Pa.C.S. §§2251.1, et seq. (“VoIP Bill”).
Pennsylvania’s VoIP Bill preserves the Commonwealth’s authority to
impose intrastate ICC. The FCC’s decision replaces the State’s
compensation with a zero rate. No record evidence establishes that
Pennsylvania’s laws interferes with the FCC’s regulation of
interstate telecommunications as required by 47 U.S.C. §253.20
Although the Order eviscerates State authority over ICC
arrangements for the stated goal of ensuring broadband service is
widely available, see Order, ¶1, it directly undermines State efforts
to promote broadband. Pennsylvania’s Chapter 30 legislation, for

19
See In the Matter of Connect America Fund, et.al., WC Docket
No. 10-90, et al., Order, 27 FCC Rcd 605, 612 (WCB 2012).
20
47 U.S.C. §253 sets out criteria to preempt State laws that
inhibit competition.
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example, provides the State flexibility to set higher rates for
intrastate telecommunications if carriers commit to deploying
broadband networks. Pennsylvania attained broadband service in
its highest-cost rural areas in December 2008 and is set to
complete a statewide broadband network no later than 2015.
Although this program is among the most aggressive in the nation,
the FCC’s action undermines the mechanism to bring it to a
successful conclusion.

Finally, any suggestion that §251(g) is a “transitional device”
(Order, ¶763) that allows the FCC to apply the §251(b)(5) framework
“‘unless and until the Commission by regulation should determine
otherwise’” (id. citing ISP Remand Order, ¶39) and therefore
provides a basis to “supersede the traditional exchange access
charge regime” (Order, ¶764) for intrastate services, is deficient on
its face. Even ignoring the fact that the FCC has not reconciled its
analysis with the underlying purpose of §251(g),21 such a

21
The legislative history is clear that the purpose of §251(g) was
to maintain the requirements of two consent decrees. See S. CONF.
REP. 104-230, at 123 (“Because the new approach completely
eliminates the prospective effect of the AT&T Consent Decree, some
provision is necessary to keep these requirements in place. By the
same token . . . some provision is also needed to ensure that the
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suggestion ignores the fact that §251(g) expressly limits22 the FCC’s
actions to those matters that had been explicitly addressed in court
orders, consent decrees or “any regulation, policy or decision of the
Commission”23 at the time the 1996 Act was signed into law on
February 8, 1996. 47 U.S.C. §251(g) (emphasis added). While
§251(g) recognizes that the FCC may alter its regulation of interstate
exchange access services established by its regulations,24 the same

GTE Operating Companies . . . continue to provide equal access and
nondiscrimination to interexchange carriers and information service
providers. Accordingly, the conference agreement includes a new
section 251(g).”); accord, H.R. CONF. REP. 104-458 at 123.

22
The Order’s quotation from §251(g) conveniently (see Order,
¶763) omits the wording that limits the scope of the section to
restrictions and obligations under a “court order, consent decree or
regulation, order or policy of the Commission.” 47 U.S.C. §251(g)
(emphasis added). The section on its face does not apply to
regulations, orders or policies of State commissions, yet the FCC
claims that the section preserves the pre-Act regulatory regime
“that applies to access traffic,” implying both State and federal.

23
See, WorldCom, Inc. v. F.C.C., 288 F.3d 429, 433 (D.C. Cir.
2002) quoting 47 U.S.C. §251(g) (citation omitted).

24
The Eighth Circuit recognized this concept. After discussing
§251(g) in the context of immediately moving access charges to
cost-based rates and quoting with emphasis the provision that the
section is applicable to a “regulation, order, or policy of the [FCC]
(emphasis in original), the court noted that §251(g) “leaves the door
open for the promulgation of new rates at some future date, but any
possible new exchange access rates for interstate calls will not carry
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cannot be said of intrastate exchange access regulation established
by the States. The FCC had no jurisdiction over intrastate
exchange access services on February 7, 1996 or before, and the
FCC points to nothing to suggest otherwise. Moreover, at least one
Court rejected the Commission’s efforts to use §251(g) as an
independent basis of authority to remove jurisdictionally interstate
local ISP-bound traffic from §251(b)(5). See, WorldCom, 288 F.3d) at
434 (“Having found that §251(g) does not provide a basis for the
Commission's action, we make no further determinations.”).
2.

The FCC lacks authority to preempt State
authority over intrastate originating access.



The FCC lacks any authority over intrastate originating access
charges. But the Order adopts bill-and-keep as the default for all
ICC, caps intrastate originating access rates immediately, and
initiates a rulemaking to transition all to bill-and-keep. Order, ¶¶
736, 777-778, 817-818. Section 251(b)(5) cannot authorize this
action because reciprocal compensation cannot apply to originating

the same deadline or the same cost-based restrictions as will those
for interconnection and unbundled network elements specifically
mentioned in §252(d)(1).” Competitive Telecommunications Ass’n v.
FCC, 117 F.3d 1068, 1072-3 (8th Cir. 1997)(emphasis added).
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access since it consists of one-way payments made by IXCs for their
access traffic and thus is not reciprocal, and §251(g) is “a
transitional device” that does not grant the FCC new authority.
Iowa Utilities Board, 525 U.S. at 481-83 n. 8-9; WorldCom, Inc. v.
FCC, 288 F.3d 429, 430, 434 (D.C. Cir. 2002). Because any new
FCC rule must have its own statutory foundation and cannot be
grounded in §251(g), the preemption of State intrastate exchange
access authority must be vacated.

Moreover, as to originating access, §251(b)(5) addresses only
the “transport and termination of telecommunications.” (emphasis
added.) Originating access is not referenced. In contrast with a
local call, a toll call has three distinct parts that often are provided
by three distinct carriers: originating access, transport, and
termination. The FCC defined “transport” to mean “the
transmission of terminating traffic subject to §251(b)(5) from the
interconnecting point between the two carriers to the terminating
carrier’s end office switch that directly serves the called party.”
Local Competition Order, 16015. It defined “termination” to mean
“the switching of traffic that is subject to section 251(b)(5) at the
terminating carrier’s end office switch . . . and delivery of that traffic
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from that switch to the called party’s premises.” Id., 16015-16.
Although the FCC found that an originating LEC may not charge a
CMRS provider or other carrier for LEC-originated traffic, id.,
¶1042, the FCC later explained that finding was based on the fact
that the originating LEC recovers the costs of origination in a local
call flow from its end-user customer that places the call.25 In
contrast, where an end-user pays its IXC to make a long distance
call, the originating LEC does not recover the costs of originating
the call. See Comments of the Nebraska Rural Independent
Companies, WC Docket No. 10-90 et al., at 72 (filed Aug. 24, 2011).
Because the FCC does not acknowledge or explain why its
prohibition on origination charges applies where the originating
LEC receives no compensation from its end-user, its finding that
§251(b)(5) precludes originating access charges is also arbitrary and

25 TSR Wireless, LLC v. US West Communications, Inc.,
Memorandum Opinion and Order, 15 FCC Rcd 11166, 11186
(2000) (“[T]he cost of the facilities used to deliver this traffic is the
originating carrier’s responsibility, because these facilities are part
of the originating carrier’s network. The originating carrier recovers
the costs of these facilities through the rates it charges its own
customers for making calls.”), aff'd sub nom, Qwest Corp. v. FCC,
252 F3d 462 (DC Cir 2001).
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capricious.26

C. Assuming the revised §251(b) framework is lawful, the

FCC lacks statutory authority to establish a zero rate
for reciprocal compensation.


1.

The FCC lacks authority to set a specific rate for
reciprocal compensation.



In Order ¶773, the FCC posits the threshold question: does
“bill-and-keep intrude on States’ rate-setting authority by effectively
setting a compensation rate of zero.” The FCC answers incorrectly
“no.”

The FCC concedes the Supreme Court drew a distinction
between setting rates and designing a methodology for setting rates
- finding the FCC’s prescription of a pricing methodology does not
prevent States from establishing rates under §252(d). Order, ¶773.
“It is the States that will apply those standards and implement that
methodology, determining the concrete result in particular
circumstances.” Iowa Utilities Board, 525 U.S. at 384.

26
Nor, for the reasons discussed, infra at 22-25, can the FCC
assert that it can regulate intrastate originating access under
§251(g). Order, ¶778. See Iowa Util. Bd., 525 U.S. at 481-83 nn. 8-
9.
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The FCC never explains why bill-and-keep – which results in a
zero rate – does not conflict with both the statute and this Supreme
Court decision. Indeed, the agency effectively concedes the trespass
on the acknowledged State rate authority when it argues that zero
rate “methodology” is “less burdensome than approaches that
would require…state commissions to set a uniform positive [ICC] rate,
such as $0.0007.” Order ¶743 (emphasis added). This zero rate
does not differ conceptually from the specific default rates the FCC
also concedes in ¶773 would have been rejected by the Courts.

In 1996, the Commission adopted both a pricing methodology
for States to apply in pricing transport and termination functions
pursuant to §252(d)(2) and “default proxies” (actual rates) for
transport and termination. Local Competition Order, 16026-27. The
Eighth Circuit on remand vacated the default prices, relying upon
the Supreme Court’s determination that the FCC’s role was limited
to resolving “general methodological issues.” As the Order concedes,
the Eighth Circuit found that “‘[s]etting specific prices goes beyond
the [Commission’s] authority to design a pricing methodology,’” and
“‘intrudes on the States’ right to set the actual rates pursuant to
§252(c)(2).’” See, Order ¶773 (quoting Iowa Util. Board v. FCC, 219
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F.3d 744, 757 (8th Cir. 2000), aff’d in part and rev’d in part, Verizon
Comm’s, Inc. v. FCC, 535 U.S. 467 (2002), and vacated in part, Iowa
Util. Board v. FCC, 301 F.3d 957 (8th Cir. 2002)).
The FCC does the same thing here. It sets a rate relying on a
provision that on its face only allows the setting of a methodology.
States cannot set rates during arbitrations because the FCC has
already set the rate to zero. The Order supplants State-set
intrastate access charge rates and State-approved reciprocal
compensation rates in arbitrated agreements with an FCC-set rate
of zero. Order, ¶¶740-759.

The FCC offers two rationales for why the States rate-setting
role is not eliminated. Neither is persuasive. First, it contends that
States still have a role in setting rates (albeit not the role Congress
specified) because they will continue “to regulate rates carriers
charge their end-users.” Order, ¶776 (emphasis added). But §§251-
252 address intercarrier compensation, not retail rates which are not
reciprocal compensation. The FCC also contends States retain a
rate-setting role because they can address through §252
arbitrations “the determination of points on a network at which a
carrier must deliver terminating traffic.” Order ¶776. This is another
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non-sequitur. The Supreme Court specified the duty that the FCC’s
new legal theory calls in to question. It is establishing the actual
reciprocal compensation rate, not finding points on a network at
which a carrier must deliver traffic.

In sum, the FCC has established a rate, and in so doing the
FCC has eliminated a task assigned by Congress to the States. The
Order must be vacated.
2. Bill-and-keep is contrary to statute, arbitrary
and capricious, and an inadequately explained
departure from precedent.


The FCC asserts several statutory bases for establishing a rate
of zero. None is availing.
Section 251(b)(5) cannot be read to authorize compulsory bill-
and-keep because that reading conflicts with §252(d)(2), which
provides “pricing standards” for States to use to determine if an
ILEC’s reciprocal compensation rates comply with §251(b)(5). For a
reciprocal compensation arrangement to be “just and reasonable,” it
must (a) provide for the “mutual and reciprocal recovery” of “costs
associated with the transport and termination on each carrier’s
network facilities of calls that originate on the network facilities of
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the other carrier,” and (b) determine such costs “on the basis of a
reasonable approximation of the additional costs of terminating
such calls.” 47 U.S.C. §252(d)(2)(A)(i), (ii). Because bill-and-keep
imposes a compensation rate of zero, it does not allow for “mutual
and reciprocal recovery” of such costs.
The FCC attempts to avoid the limitation imposed by
§252(d)(2) on two grounds. Neither is persuasive. First, it argues
“the pricing standard in section 252(d) simply does not apply to
most of the traffic that is the focus of this order – traffic exchanged
between LECs and IXCs.” 27 Id. (emphasis added)

This concedes that the pricing standards do apply to some
portion of traffic covered by the new zero rate (e.g., traffic
exchanged between two LECs) which, as the FCC concedes,
implicates “States authority under §252.” Id. Where the statute
defines what is within the agency's authority, i.e., what is lawful, it
"does not say a little unlawfulness is permitted." FPC v. Texaco,
Inc., 417 U.S. 380, 399 (1974). Because the FCC does not dispute

27
Even if §252(d)(2)’s standards do not apply to some ILEC
§251(b)(5) traffic, the FCC still cannot mandate bill-and-keep for
that traffic because §201’s “just and reasonable” standard would
still apply. See Part I.C.2., infra.
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that it has mandated bill-and-keep for traffic that is subject to
§252(d)’s standard, its pricing rule must comply with that provision.
Because it does not, it must be vacated.
The FCC also acknowledges that §252(d) requires that each
carrier be allowed to recover its costs, but asserts that bill-and-keep
satisfies this requirement because “[t]he Act does not specify from
whom each carrier may (or must) recover those costs and, under
the approach we adopt today, each carrier will ‘recover’ its costs
from its own end-users or from explicit support mechanisms such
as the federal universal service fund.” Order, ¶775.
Additionally, the FCC holds that bill-and-keep is consistent
with §252(d)’s pricing standard because §252(d)(2)(B) references
“arrangements that waive mutual recovery (such as bill-and-keep
arrangements)”. Id. The FCC’s logic is flawed. The 1996 Act is not
silent as to the entity from whom the carrier shall recover its costs.
Sections 251(b)(5) and 252(d) indicate carriers will recover transport
and
termination
costs
through
reciprocal
compensation
arrangements.” 47 U.S.C. §§251(b)(5), 252(d)(2)(A) (emphasis
added). Even when carriers have a bill-and-keep arrangement, they
still recover their costs “through the offsetting of reciprocal
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obligations.” §252(d)(2)(B)(i) (emphasis added). For compensation to
be “reciprocal” it must, by definition, be given by “each to the
other.” Webster’s New World Dictionary 1120 (3d College Ed. 1988).
By mandating carriers seek compensation from end-user
customers, the FCC’s bill-and-keep rule conflicts with the plain
statutory text, which requires carriers exchanging traffic to
compensate each other.
Second, the FCC acts arbitrarily and capriciously by assuming
that carriers can recover the additional costs of call termination
through end-user compensation and “where necessary, explicit
universal service support.” Order, ¶757; see also id., ¶¶746-47.
While “states retain the authority to regulate the rates that the
carriers will charge their end-users to recover” their costs, id., and
ILECs (but not CLECs) are given a new temporary end-user charge
and universal service support, id., ¶864, ¶921, there is no
assurance that LECs can recover their termination costs from end-
users. To the contrary, the FCC acknowledges that competitive
considerations generally prevent carriers from raising end-user
rates, even where they are given the flexibility to do so. Id., ¶864,
¶908, n.1781. In short, the FCC eliminates cost recovery from
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other carriers based on the finding that recovery through end-user
rates and universal service support is possible, while demonstrating
elsewhere that these possibilities are illusory at best. The FCC’s
internally inconsistent reasoning violates applicable statutory
requirements and renders its rejection of “claims that bill-and-keep
does not allow for sufficient cost recovery”, id. ¶746, arbitrary and
capricious.
Further, although the FCC characterizes call termination costs
as “very nearly zero,” Order, ¶753, it acknowledges that the
“additional” costs of termination may be more than nominal. Id. at
n.1333. The record confirms that termination costs are positive, not
zero. See, e.g., Reply Comments of the Public Service Commission of
Wisconsin, WC Docket No. 10-90 et al., at 2 (filed May 19, 2011).
As the Commission admits, §252(d)(2) assures carriers the right to
recover those “additional costs of termination” through reciprocal
compensation charges. Order, n.1332. Such charges, by definition,
do not recover implicit subsidies, they recover the carrier’s actual
termination costs. It is therefore contrary to the statute and
arbitrary and capricious to relegate recovery of such costs to
increased end-user charges and explicit subsidies that, in reality,
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are not available to LECs who incur such costs.
Adoption of bill-and-keep also conflicts with the “[r]ules of
construction” in §252(d)(2)(B)(i). That provision provides an
exception to the requirement of reciprocal compensation, where
carriers voluntarily agree to net out offsetting costs and forgo the
process of making payments. It provides that the §252(d)(2) pricing
standards should not be construed “to preclude arrangements that
afford the mutual recovery of costs through the offsetting of
reciprocal obligations, including arrangements that waive mutual
recovery (such as bill-and-keep arrangements).” 47 U.S.C.
§252(d)(2)(B)(i).
By referring to arrangements between carriers that “waive
mutual recovery,” the statute establishes an entitlement to the
process of mutual payments but permits carriers voluntarily to
waive such payments through a process of mutual offsets. Such
arrangements are permissible only where carriers agree that “the
mutual recovery of costs” is possible “through the offsetting of
reciprocal obligations.”
Prior to the Order, the FCC consistently interpreted
§252(d)(2)(B) to authorize bill-and-keep only where carrier rates
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were symmetrical and traffic was in balance. Local Competition
Order ¶1116. In the Local Competition Order, the FCC recognized
what the statute unambiguously provides: that in these limited
circumstances, the statutory requirement of “mutual recovery of
costs through the offsetting of reciprocal obligations” is satisfied
through an “in kind” exchange. Id. The FCC found that mandatory
bill-and-keep arrangements outside of these limited circumstances
would not satisfy the statutory requirement of §252(d)(2) that LEC
rates provide “mutual and reciprocal recovery” of carrier costs:
[W]e find that carriers incur costs in
terminating traffic that are not de minimis, and
consequently, bill-and-keep arrangements that
lack any provisions for compensation do not
provide for recovery of costs.

Id., ¶1112.

Rather than acknowledging that it is reversing this finding,28
the FCC now concludes bill-and-keep does not preclude cost

28
The FCC’s conclusion in ¶752 that the costs of terminating
calls is “extremely small,” lacks support. The “justification” is a one
paragraph refutation of the prior pricing methodology implemented
by 50 State commissions. Even if the FCC intended to reverse its
prior conclusion that the costs of terminating traffic are not de
minimis, its incomplete defense of this new conclusion is arbitrary
and capricious.
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recovery because carriers can recover these costs from end-users.
Order, ¶775. Because the FCC’s departure from this position
conflicts with the plain meaning of §252(d)(2)(A)(i), it must be
rejected. Chevron, 467 U.S. 842-3 .
The FCC also attempts to justify its revised perspective with a
policy discussion divorced from the statute. The FCC contends bill-
and-keep brings market discipline, is less burdensome, is
consistent with cost causation principles, and will bring consumer
benefits. Order ¶¶741-759. But this policy rationale cannot justify
departing from the plain statutory language. The statute only
permits bill-and-keep when it allows for “the mutual recovery of
costs through the offsetting of reciprocal obligations.” An agency
has only the authority granted it by Congress; it cannot adopt
regulations simply because it believes them to be beneficial. FDA v.
Brown & Williamson Tobacco Corp., 529 U. S.120, 125 (2000).
The FCC also cites 47 U.S.C. §201(b) as a basis to adopt a zero
rate. Order ¶¶760, 770-771. Section 201(b) provides a general
grant of rulemaking authority to the FCC. By contrast, §252(d)(2)
provides specific instructions with respect to pricing for relevant
traffic. As the Supreme Court made clear, “it is a basic principle of
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statutory construction that a specific statute . . . controls over a
general provision.” HCSC Laundry v. United States, 450 U.S. 1, 6
(1981); see also Corley v. United States, 129 S. Ct. 1558, 1568
(2009) (“‘[A] more specific statute will be given precedence over a
more general one . . .’ ”). (internal citation omitted). That principle
forecloses the FCC’s reliance on §201 as a standalone basis for
adopting bill-and-keep.29 Both the 1996 Act and §201 require rates
to be “just and reasonable.” 47 U.S.C. §252(d)(2)(A), §201(b). But
the 1996 Act provides detailed instructions for determining whether
a rate meets that standard. Terms and conditions governing
compensation for call termination are not “just and reasonable”
unless they permit “recovery by each carrier of costs,” based on “a
reasonable approximation of the additional costs of terminating
such calls,” §252(d)(2)(A)(i)-(ii). The 1996 Act thus not only requires
rates to be “just and reasonable,” it also specifies exactly how a rate
must satisfy that standard.

29
This principle also forecloses FCC’s claim in ¶772 of the Order
that §152 (b)(1) has “less practical effect” under the 1996 Act
because that section remains more specific than §201(b). Further,
nothing in the 1996 Act expressly amended §201(b) to impair or
supersede states’ delegated §152(b)(1) authority, so §201(b),
pursuant to §601(c)(1), may not be construed as doing such.
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The FCC relies upon a single court decision to assert “the
Commission’s authority under section 201 to establish interim
rates… [for traffic] which the Commission had found to also be
subject to section 251(b)(5).”30 However, where both apply, (i.e.,
where a rate is both an ICC rate and an interstate rate), the former,
more specific, standard governs. See Nat’l Cable & Telecomms.
Ass’n, Inc. v. Gulf Power Co., 534 U.S. 327, 335-336 (2002) (where a
statute requires rates to be “just and reasonable” and prescribes a
formula for two particular types, “[t]he specific [formula] controls . .
. within its self-described scope”); Ohio Power Co. v. FERC, 954 F.2d
779, 784-785 (D.C. Cir. 1992) (contrasting SEC’s “specific statutory
mandate to establish a cost-based price” with FERC’s “general
charge to establish ‘just and reasonable’ wholesale electric rates”).
Even if §201 could be read to override the specific instructions
Congress reserved to §252(d)(2), the FCC’s §201(b) authority is not
unbounded. The statute limits that authority by requiring “[a]ll
charges, practices, classifications, and regulations” to be “just and
reasonable.” 47 U.S.C. §201(b). The Supreme Court held that a

30
Order ¶771, citing Core Communications. The court’s decision
was limited to the special case of ISP-bound traffic. See discussion,
supra at 20-21.
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carrier subject to §201 “is entitled to cover its reasonable expenses
and a fair return on its investment through the rates it charges its
customers.” Louisiana, 476 U.S. at 364-65.
A mandatory bill-and-keep approach fails to satisfy §201’s
“just and reasonable” standard for the same reasons that it fails
under §252(d)(2)’s “just and reasonable” standard. In the context of
intercarrier exchanges of traffic, a regulated carrier’s “customer” is
not an end-user but rather an interconnecting carrier, such as a
LEC, IXC or CMRS provider. The interconnecting carrier has a
legally binding relationship with a LEC to purchase carrier services
from the LEC, typically from a tariff or interconnection agreement.
Order ¶828.
Yet the FCC’s new bill-and-keep rule mandates that a LEC is
entitled to zero compensation for certain termination services it
provides to another carrier, regardless of circumstances (and the
LEC cannot refuse to provide such services). Order ¶¶755-59. The
FCC’s rule therefore violates §201(b)’s just and reasonable standard
because it does not allow the LEC to recover its reasonable ICC
related expenses and a fair return from “its customers,” i.e., the
carriers terminating traffic on the LEC’s network.
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The FCC’s ultimate justification for mandatory bill-and-keep-
that a regulated carrier can “cover its reasonable expenses and a
fair return on its investment through the rates it charges its [other]
customers” -- stands the notion of just and reasonable charges on
its head. A LEC has ongoing contractual relationships with other
LECs, IXCs, and CMRS providers to exchange traffic. Id. ¶¶1322-
23. Carriers enter these relationships because the parties seek a
mutual exchange of obligations and benefits from each other. But
the FCC’s bill-and-keep rule guarantees that a carrier will not
receive just compensation from the carrier with which it has a
contractual relationship. Under the FCC’s interpretation, a LEC
providing services to another carrier must look elsewhere for fair
compensation: from the universal service program, id. ¶747, or from
its other customers, id. ¶746, not from the entity with which it has a
commercial relationship to provide service. But, as discussed,
supra, the possibility that a carrier could recover its costs from end-
users and universal service is illusory. Because the bill-and-keep
rule denies a carrier just and reasonable compensation from its
carrier-customer, the entity with which it has a legally binding
relationship for service, the rule is invalid under §201(b).
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The FCC’s reliance on §201(b) as an independent basis for
ratemaking authority fails for another reason. Although §201(b)
requires all charges to “be just and reasonable,” it specifies no
procedures for the FCC to prescribe any rate as just and
reasonable. The FCC’s authority to set rates is 47 U.S.C. §205,
which provides that the “Commission is authorized and empowered
to determine and prescribe what will be the just and reasonable
charge” only “after full opportunity for hearing, upon a complaint or
under an order for investigation and hearing made by the
Commission on its own initiative.” None of the §205 procedures
has been utilized.31 Rather, the FCC asserts it need not satisfy
§205 hearing requirements because it has rulemaking authority to
determine the just and reasonable rate. Order n.1390. But, in
determining whether the FCC has prescribed a rate, courts evaluate
the impact of the FCC’s action rather than its characterization of it.
Southwestern Bell Tel Co. v. FCC, 168 F.3d 1344, 1350 (D.C. Cir.
1999). As the Second Circuit explained when holding that an FCC

31
The ordering paragraph lists §205 as authority. Order ¶1412.
Section 205 applies only to interstate traffic. Nothing in §251(i)
expands §205 authority to prescribe rates for intrastate traffic. 47
U.S.C. §251(i).
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prohibition on tariff revisions violated §205’s rate prescription
requirements, §§203-205 “establish precise procedures and
limitations” regarding the FCC’s authority to set rates. AT&T Co. v.
FCC, 487 F.2d 865, 873 (2d Cir. 1973). The AT&T Court held that
“[t]here is no regulatory authority granted to the Commission . . .
which permits it to circumvent the statutory plan of carrier initiated
rate changes, a limited suspension period, rate refunds and rate
prescriptions only after a full hearing and specific findings.” Id. at
875.
The FCC also asserts it has independent authority under
§332(c) to establish bill-and-keep as a default methodology for
CMRS-LEC traffic. Order ¶779. But §332(c)(1)(B) provides that
LECs shall interconnect with CMRS providers “pursuant to the
provisions of section 201.” 47 U.S.C. §332(c)(1)(B). As a result,
§332(c) authorizes the FCC to mandate bill-and-keep for LEC-CMRS
traffic only if that approach satisfies the “just and reasonable”
standard set forth in §201. Because §201 does not authorize the
FCC’s bill-and-keep rule, the FCC cannot impose a default bill-and-
keep methodology on CMRS-LEC traffic.
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D. The FCC Lacks Authority to Effect Changes to Part

36 without a Joint Board Recommended Decision.

Part 36 of the FCC’s rules (47 C.F.R. §36.1 et seq.) implements
the requirement that a carrier’s revenues and costs must be split
between State and federal jurisdictions. Because the Order, at
Appendix A (pp. 495-499), revises Part 36 rules that impact
intrastate revenue requirements without the Joint Board referral on
the changes and recommended decision mandated by 47 U.S.C.
§410(c), it must be vacated.

E. The FCC Lacks Authority to Instruct States not to

grant §251(f)(2) Relief from Bill-and-Keep.

Even if the FCC can establish a new framework, the Order
unlawfully circumscribes carrier §251(f)(2) rights and infringes on
State jurisdiction to address lawful suspension and modification
requests. In 47 U.S.C. §251(f)(2), Congress specifies that States
review LEC requests to suspend or modify obligations imposed
under §251(b) or (c) that could result in “significant adverse
economic impact on users of telecommunications services
generally,” be “unduly economically burdensome,” or “technically
infeasible.” A State may grant relief if the carrier meets these
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criteria and the requested change “is consistent with the public
interest, convenience and necessity.” Id. In the face of these clear
directives, the FCC attempts to block State action, concluding:
[I]t [is] highly unlikely that any attempt by a
state to modify or suspend the federal bill-and-
keep regime would be ‘consistent with the
public interest, convenience and necessity’ as
required under section 251(f)(2)(B), and we
urge states not to grant any petitions seeking
to modify or suspend the bill-and-keep
provisions.

Order ¶824. This portion of the Order must be vacated.
The FCC’s pre-judgment of all potential §251(f)(2) requests
lacks either a statutory or evidentiary basis. Congress assigned
States, not the FCC, to determine if suspension or modification of a
§251(b)(5) bill-and-keep requirement satisfies §251(f)(2) standards.32
The FCC’s de facto prohibition on State §251(f)(2) determinations is
one more jurisdictional land grab that is inconsistent with

32
It is settled that §251(f)(2) allows States to modify federal
pricing regimes. See New Cingular Wireless PCS, LLC v. Finley, 674
F. 3d 225, 249-50 (4th Cir. 2012) (§251(f)(2) relief encompasses
modification of FCC TELRIC methodology related to §251(b)(5)
pricing).

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Congressional intent.33 Rather than allowing States to make an
individualized public interest determination based on facts, the FCC
pre-determines that any modification of its §251(b)(5) regime is not
in the public interest. Order ¶824. Even if it does not rise to the
level of a de facto prohibition, the Order adopts a governing
standard that dictates public interest factors that a State must
weigh when evaluating §251(f)(2) requests.34
Moreover, the FCC’s de facto prohibition on individualized
suspension determinations is inconsistent with governing law that
limits the FCC’s §201(b) rulemaking authority to adopting “rules to
guide the state-commission judgments.” Iowa Utilities Board, 525

33
Even the FCC admits, Order ¶824, it could not adopt the rule
that would state its conclusion. If the limited record is insufficient
to adopt governing rules, then – even assuming the FCC can
demonstrate it is within its authority to make a determination
(which it did not and cannot) it is insufficient for the FCC to
determine the adverse impacts a particular §251(f)(2) determination
would have on the public interest.

34
The question of whether the FCC’s direction to States violates
§251(f)(2), §251(d), and §201(b) and the Administrative Procedures
Act is ripe. The FCC has not just forecasted that individual petitions
will fail the statutory criteria, it has determined which factors a
State must weigh against the public interest, regardless of the facts.
See Farm-to-Consumer Legal Defense Fund v. Sebelius, 734
F.Supp.2d 668, 693-94 (N.D. Iowa 2010) (finding ripe for review a
case involving legal questions not contingent on future possibilities).

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U.S. at 385 (emphasis added). This directive bars the FCC’s effort
to direct States how to apply 251(f)(2) standards in specific factual
circumstances,35 or to make purely legal determination of what is
against the public interest without a record that justifies adopting
governing standards.36
Finally, the FCC’s focus on public harms, to the exclusion of
the other prongs of the §251(f)(2) review, is also inconsistent with
the statute. In a similar context, the FCC’s efforts to pigeon-hole
demonstrations under §251(f) to only one prong of the applicable
statutory test were found to “impermissibly disregard[]” some of the
statutory criteria and therefore were “an arbitrary and
unreasonable interpretation of the governing statute.” Iowa Util.
Board v. FCC, 219 F.3d 744, 759-60 (8th Cir. 2000), aff’d in part,
rev’ in part, 535 U.S. 467 (2002). Here, the FCC seeks to direct an

35
Congress rejected concurrent State and federal jurisdiction
over §251(f)(2) requests. See S.Rep. No. 104–23, 1995 WL 142161
at 206–07 (§251(i)(3)) (1995); H.R. 1555, 104th Cong. §242(e) (1995)
(discussing draft legislation that would have provided concurrent
jurisdiction to the FCC and State commissions under §251(f)).

36
See 5 U.S.C. §553(a)-(b) (requiring agencies to undertake
rulemaking through notice and comment procedures, and “after
consideration of the relevant matter presented,” the agency shall
issue a statement of the rule’s “basis and purpose”).
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outcome of a §251(f)(2) request by suggesting the State avoid the
technical feasibility and economic harms prongs of §251(f)(2). This
FCC interpretation of public harm, necessarily excluding other
statutory criteria, violates the governing statute and is arbitrary and
capricious.

II. The New §251(b)(5) Framework is Arbitrary and

Capricious.



Supreme Court precedent and FCC rules require ILECs to
apportion investments and expenses between jurisdictions, and to
recover interstate costs via specific rates and USF support. By
eliminating intercarrier charges for exchanging interstate traffic,
and reducing and/or eliminating USF support, the Order creates a
“regulatory black hole” into which interstate revenue requirements
are parceled, but disappear. This is unlawful, arbitrary and
capricious and must be vacated and remanded.
More than 60 years ago, the Supreme Court required that
telephone exchange property be apportioned between intrastate and
interstate jurisdictions to avoid placing “undue burden” upon
intrastate service. Smith v. Illinois Bell Telephone, 282 U.S. 133,
151 (1930). Both the Commission and courts long recognized that
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separated local telephone costs and customer rates are inextricably
linked. Id. at 149 (“The proper regulation of rates can be had only
by maintaining the limits of State and federal jurisdiction, and this
cannot be accomplished unless there are findings of fact underlying
the conclusions reached with respect to the exercise of each
authority.”). Under Smith, “there must be some determination by
which the federal regulator computes rates based on the carrier’s
property apportioned to interstate usage and the State regulator
conducts ratemaking based on that portion allocated to intrastate
usage.” Crockett Telephone Co. v. FCC, 963 F.2d 1564, 1573 (D.C.
Cir. 1991) (emphasis added); accord Competitive Telecomms Ass’n v.
FCC, 87 F.3d 522, 530 (D.C. Cir. 1996) (remanding FCC’s
challenged treatment of access charge elements, noting that related
costs “are real costs that would not otherwise be recovered.”).
Regulators must provide carriers with a reasonable
opportunity to recover the costs assigned to their respective
jurisdictions, including a fair return. See, e.g., FPC v. Hope Natural
Gas Co., 320 U.S. 591, 603 (1944). This is essential because
carriers are required to serve all customers “upon reasonable
request.” 47 U.S.C. §201(a). See also Policy and Rules Concerning
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Rates for Competitive Common Carrier Services and Facilities
Authorizations Therefor, Further Notice of Proposed Rulemaking, 84
F.C.C.2d 445, 457 (1981).
Consistent with these principles, the FCC adopted uniform
access charge rules to “provide for the recovery of the incumbent
LEC’s costs assigned to the interstate jurisdiction by the
separations rules.” Access Charge Reform; Price Cap Performance
Review for Local Exchange Carriers; Low-Volume Long Distance
Users; Federal-State Joint Board on Universal Service, Sixth Report
and Order, 15 FCC Rcd 12962, 12966 (2000). These rules included
both “access” charges and a new, flat-rate “end-user common line”
charge. Id., 12966-71. Subsequently, the Commission deemed
certain costs to be “implicit subsidies” and removed them from
interstate access charges, but allowed their recovery via federal USF
mechanisms. See, e.g., id., ¶3; Multi-Association Group (MAG) Plan
for Regulation of Interstate Services of Non-Price Cap Incumbent Local
Exchange Carriers and Interexchange Carriers, Second Report &
Order, 16 FCC Rcd 19613, 19664 (2001).
Regardless of the precise means for recovery, the Commission
made clear that regulated costs subject to its separations and
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accounting rules “will be included in some revenue requirement.”
MTS and WATS Market Structure; Amendment of Part 67 of the
Commission’s Rules and Establishment of a Joint Board, 1 FCC Rcd
615, 616 (1986).
The Order abandons this approach. RLECs must continue to
serve as “carriers of last resort” and expand their service offerings to
include broadband services as a condition of receiving USF
support.37 They must continue to allocate their interstate costs to
specific categories and rate elements, in compliance with the
Commission’s rules, which remain largely unaltered by the Order.38
The Commission recognizes that carriers will be unable to fully
recover their costs. Its ICC recovery mechanism, for example, bases
“eligible recovery” on costs associated with providing intercarrier
call termination services, but decreases that amount annually by
five percent. Order, ¶894.39 It permits RLECs to recover their

37
See USF Brief, 11-12.

38
See USF Brief, 44.

39
The five percent figure was based in part on record evidence of
a three percent annual average decline in costs, which was adjusted
to five percent to provide an incentive to carriers to reduce costs
further. Id., ¶902.
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remaining “eligible recovery” from intercarrier compensation
revenues, which decline precipitously over a nine-year period,40 and
the ARC, which is strictly limited annually and subject to an
absolute cap by rule. Id. ¶¶852-53. Recovery of interstate costs
allocated to federal USF mechanisms is likewise sharply limited
without regard to costs as determined by the Commission’s rules.
See USF Brief at V. Although costs will be allocated to the
interstate jurisdiction, the federal regulator will no longer “compute
rates” on that apportionment, gutting the requirement in Smith.
Agency rules may not be arbitrary and capricious. 5 U.S.C.
§706(2). Fundamental to this analysis is whether the rules are
logical, internally consistent, and supported by the record. See
Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 378 (1989)
(rule must be rational); Thomas Brooks Chartered v. Burnett, 920
F.2d 634, 643-44 (10th Cir. 1990) (agency decision must consider
important aspects of the problem and not be implausible); NorAm
Gas Transmission Co. v. FERC, 148 F.3d 1158, 1165 (D.C. Cir.
1990) (agency must address arguments before it).

40
Although RLECs may continue to receive transport revenue,
their end office switching and reciprocal compensation revenues
decline to zero by July 1, 2020. Order ¶801.
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Instead of responding to comments pointing out the conflict
with Smith’s requirements,41 the Commission simply announced
that the new cost recovery mechanism “takes rate-of-return carriers
off of rate-of-return based recovery specifically for interstate
switched access revenues.” Order, ¶900. It did not explain how
imposition of this new “incentive” system is rational based on past
precedent. Instead of acknowledging and justifying this change in
position, the FCC cites its decisions adopting incentive price cap
regulation for larger carriers several years ago—decisions the FCC
had stated could not apply fairly to smaller LECs. Order, ¶900
n.1758; Policy and Rules Concerning Rates for Dominant Carriers, 5
FCC Rcd 6786, 6799 (1990).

Important differences distinguish the Commission’s earlier
decision to impose price cap incentive regulation on the RBOCs in
the 1990’s and the current Order. Most significantly, the FCC
concluded in prior orders that carriers subject to incentive
regulation would have a fair opportunity to recover their costs. Id.

41
See, e.g, Comments of John Staurulakis, Inc., WC Docket No.
10-90, at 11-13, 17 (filed Apr. 18, 2011); Reply Comments of
Alexicon Telecommunications Consulting, WC Docket No. 10-90 at 10
(filed May 20, 2011),
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¶120. For example, price cap regulation allowed large LECs to
increase interstate rates in connection with the occurrence of
certain exogenous changes. Southwestern Bell Tel. Co., 7 FCC Rcd
2906, ¶32 (1992). The price cap rules also contain a provision
permitting large carriers in certain circumstances to increase their
rates when their earnings fall below a “low-end adjustment factor.”
47 C.F.R. §§61.45(d)(1)(vii), 69.731.42
In stark contrast, the FCC’s new reform scheme, when fully
implemented, will prevent RLECs from charging carriers any ICC
rates for many switched access services, block them from
increasing other interstate rates to compensate for the loss of ICC
revenues, and sharply limit alternative recovery of costs from
capped and shrinking universal service mechanisms.43

42
The Commission also analyzed in detail the rates, costs, and
productivity expectations implicated by the shift in the methodology
of regulation. See Nat’l Rural Telecom Ass’n v. FCC, 988 F.2d 174
(D.C. Cir. 1993). A “productivity factor” was applied to rates, based
on multiple studies used to project the ability of larger carriers to
reduce costs. The courts carefully evaluated these details, and
reversed and remanded issues the FCC did not adequately explain.
See United States Tel. Ass’n v. FCC, 188 F.3d 521 (D.C. Cir. 1999);
Texas Office of Pub. Util. Counsel v. FCC, 265 F.3d 313, 328-29 (5th
Cir. 2001). No similar analysis was conducted here.

43
The prospect of obtaining waiver of support limitations based
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No amount of cost-cutting or efficiency gains will enable rate-
of-return carriers to overcome these reductions and remain
financially viable, let alone realize higher earnings, as the
Commission unreasonably appears to expect. See Order ¶ 902
The Commission believes rate-of-return regulation provides
incentives for wasteful spending and investment, see, e.g., Order
¶903. But it found no facts to justify a conclusion that specific
RLEC costs were imprudently incurred or not “used and useful” in
the provision of regulated services, and thus cannot justify
shortfalls in cost recovery in this manner.44 Finally, the
Commission’s cavalier suggestion that RLECs can recover some of
their interstate costs from unregulated services, id., ¶750, ignores
its own rules requiring strict separation of costs and revenues
between regulated and non-regulated services. See, e.g., 47 C.F.R.

on very difficult-to-meet standards does nothing to ameliorate
concerns of companies facing drastic revenue shortfalls resulting
from the Order. See USF Brief at 45-46.

44
The FCC has in the past investigated whether specific costs
claimed by an RLEC are “used and useful” in the provision of
regulated services and has, after hearings, disallowed recovery
when such costs were not justified. See, e.g., Beehive Telephone
Company, Inc., Order Designating Issues for Investigation, 13 FCC
Rcd 20204 (1998); Memorandum Opinion & Order, 14 FCC Rcd
1224 (1998).
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§§64.901-5.
The Court accordingly should vacate the Commission’s rules
insofar as they require mandatory reductions and eventual
elimination of ICC switched access charges without opportunity for
RLECs to recover costs assigned to the interstate jurisdiction
elsewhere. The Court should instruct the agency to explain how
elimination of such charges, in combination with limits imposed on
end-user rates and alternative universal service mechanisms, can
be harmonized with constitutional and statutory ratemaking
requirements and the Commission’s cost accounting and allocation
rules.

III. The Order Violates Due Process and Raises Serious

Constitutional Questions.


A. The Order Violates Due Process.


Review for compliance with the Administrative Procedures Act
is de novo. National Coal v. Dir., OWCP, 854 F.2d 386, 389 (10th
1988). Courts vacate APA rulemakings that fail to substantially
comply with the requirement for public participation or which
provide no meaningful opportunity for comment. Prometheus Radio
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v. FCC, 652 F.3d 431, 450-454, n. 25 (3rd Cir. 2011).

Section 553(c) of the Administrative Procedures Act, 5 U.S.C.
§553(c), requires an agency to establish disciplined decision-making
by providing a meaningful opportunity for participation and
addressing relevant and significant comments. Grand Canyon Air
Tour Coalition v. FAA, 154 F.3d 455, 468 (D.C. Cir. 1998). While
someone always seeks the last word, a “meaningful opportunity for
comment” cannot preclude parties with substantial claims and
property interests from being heard. It is a “fundamental
proposition” that parties be given an effective chance to respond to
crucial facts. American Ass'n of Meat Processors v. Bergland, 460
F.Supp. 279, 282 (D.D.C. 1978).

Here, the FCC relied on ex parte practices to decide matters in
a comingled rulemaking and adjudicatory proceeding that went well
beyond “informal rulemaking of a policymaking sort.”45 It decided
substantial financial and property interests by relying in part on
unchallenged ex parte filings submitted so late in the decision-
making process as to deny due process by precluding a meaningful
opportunity to be heard.

45 Sierra Club v. Costle, 657 F.2d 298, 398, 400 (D.C. Cir. 1981).
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From October 7 through October 19, just two days before the
October 21 blackout date, the FCC inserted over 110 documents.
They were voluminous and complex filings on issues decided in this
comingled proceeding.

At least 775 additional ex parte contacts occurred from
July 29 to October 21, 2011. Many involved quantitative data and
analyses, some of it confidential and unavailable unless a party
executed a confidentiality agreement in anticipation of the deluge.
Ex parte filings increased as the October 21, 2011, “blackout”
loomed.

AT&T alone made five contacts on that date discussing
intercarrier compensation, IP-to-IP interconnection, quantitative
USF high-cost support, federal subscriber line charge caps, and
eligible telecommunications carrier obligations.

On October 19, 2011, Verizon filed an ex parte. Verizon
addressed access recovery charges “addressed in the Commission’s
draft order…” which provided “modest additional revenues from
their own end-users (at the holding company level) as part of
changes to the intercarrier compensation system.” Verizon
concluded that flexibility in surcharges was allowed under 47
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U.S.C. §202. The meeting also addressed the critical State issue of
allowing a holding company to impose surcharges compared to an
intrastate affiliate.

The Verizon and AT&T contacts are two examples of numerous
similar occurrences that cumulatively deny adequate due process.
Interested parties could not (1) timely detect and respond to these
ex parte contacts; (2) arrange and hold a meeting or telephone
conversation to dispute them; or (3) file a substantive response
before the October 21, 2011, “blackout period.”

While a confidentiality agreement might provide access to
proprietary information and the FCC’s rules may permit a two-day
response period for “blackout” date filings, those options were
insufficient given the timing, volume, and complexity of filings made
so proximate to the blackout date as to deny due process. This
Order reveals a systematic abuse of the “permit but disclose” ex
parte process that produced a deeply flawed order that contravenes
federal law.

Courts have previously vacated FCC rulemakings where there
was no realistic notice or opportunity to be heard. Prometheus
Radio, 652 F.3d at 450-454. A similar due process violation occurs
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here in a proceeding that was a rulemaking and a determination on
conflicting private claims to a valuable privilege. This Court should
review de novo, vacate the accompanying rules, and reinstate the
existing rules. Prometheus Radio, 652 F.3d at 453, n. 25.

B. The Order Usurps State Sovereignty



The preemption of State authority over intrastate
telecommunications raises serious constitutional issues; it erodes
State sovereignty on matters critical to economic regulation. Such
constitutional issues are not subject to Chevron deference. U.S.
West, Inc. v. FCC, 182 F.3d 1224, 1231 (10th Cir. 1999).

The FCC preempts State laws regulating State certified
carriers governed under State law and policy. Sovereigns must
implement local rate changes for these carriers to receive support.
This coercion replaces State rates with federal rate floors, ceilings,
and surcharges. It undermines State authority over intrastate
revenues, broadband deployment and services, and universal
service.

This undermines sovereignty because it destroys political
accountability; State officials are responsible to prevent harm while
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federal officials dictate policy. An FCC rule allowing an interstate
holding company to shift an intrastate affiliate’s costs among
sovereigns without those sovereign’s consent also undermines
sovereignty because the sovereigns retain public accountability but
lack control over the intrastate rate results.

The FCC replaces State rate law and broadband network
deployment benchmarks with federal mandates that force States to
act -- even though not even Congress can force a State to regulate.

In Nat’l Fed’n of Ind. Businesses v. Sibellius, 132 S.Ct. 2566
(2012), the Supreme Court struck down a provision in Congress’
health care legislation. The provision shifted from encouragement
to a coercion that undermines our co-equal federal-State structure
because it creates a system that vests power in one central
government. The Order does that.


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This Court must invalidate this FCC regulatory “gun to the
head” which initially strikes at regulated carriers but hits at the
heart of the States’ sovereignty.


Respectfully submitted,



On behalf of Joint Petitioners and Intervenors listed inside


the cover.



BY: /s/ James Bradford Ramsay



James Bradford Ramsay


General Counsel


National Association of Regulatory Utility Commissioners


1101 Vermont Avenue, Suite 200


Washington, DC 20005


Tel. 202.898.2207


jramsay@naruc.org



October 23, 2012
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CERTIFICATE OF COMPLIANCE


Certificate of Compliance With Type-Volume Limitations,

Typeface Requirements, Type Style Requirements, Privacy

Redaction Requirements, and Virus Scan


1. This filing complies with the type-volume limitation of the
Amended First Briefing Order because it contains 11805 words,
excluding the parts of the filing exempted by Fed. R. App. P.
32(a)(7)(B)(iii).

2. This filing complies with the typeface requirements of Fed. R.
App. P. 32(a)(5) 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 Bookman Old Style font.

3. All required privacy redactions have been made.

4. This filing was scanned for viruses with Symantec Endpoint
Protection, version 11.0.6200.754, updated on October 19, 2012
r22, and according to the program is free of viruses.


/s/ James Bradford Ramsay


October 23, 2012




Appellate Case: 11-9900 Document: 01018937585 Date Filed: 10/23/2012 Page: 90

CERTIFICATE OF SERVICE


I hereby certify that, on October 23, 2012, consistent with the
Court’s October 17, 2012 filed “Order Governing Procedures for the
Electronic Filing of All Briefs in the Consolidated Proceeding,” I
caused the foregoing document to be sent electronically to

FCC_briefs_only@ca10.uscourts.gov

in Adobe format with the
subject line containing the 11-9900 case number and specifying
that this is the Joint Uncited Intercarrier Compensation Brief of
Petitioners. I also certify, that, consistent with that October order,
this document will be furnished through ECF electronic service to
all parties in this case through a registered CM/ECF user. This
document is available for viewing and downloading on the CM/ECF
system.

/s/ James Bradford Ramsay

October 23, 2012




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