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Response to Add. USF Brief, In Re: FCC 11-161, No. 11-9900 (10th Cir.)

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Released: March 19, 2013
FEDERAL RESPONDENTS’ UNCITED RESPONSE TO THE ADDITIONAL
Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 1
UNIVERSAL SERVICE FUND ISSUES BRIEF OF PETITIONERS
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

WILLIAM J. BAER
SEAN A. LEV
ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL


ROBERT B. NICHOLSON
PETER KARANJIA
ROBERT J. WIGGERS
DEPUTY GENERAL COUNSEL
ATTORNEYS


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

WASHINGTON, D.C. 20530
LAURENCE N. BOURNE

JAMES M. CARR
MAUREEN K. FLOOD
COUNSEL

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


Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 2

TABLE OF CONTENTS


Table Of Authorities ......................................................................................... ii
Glossary ............................................................................................................. i
Introduction And Summary Of Argument ........................................................ 1
Argument ........................................................................................................... 4
I.
The FCC Reasonably Offered Price Cap Carriers Universal
Service Support Conditioned On A State-Level
Commitment To Deploy Broadband Facilities. ......................................... 4
II. The FCC Was Not Required By 47 U.S.C. §410(c) To Make
A Joint Board Referral Before Adopting The Reforms In
The Order. ................................................................................................ 11
III. The FCC Was Not Required To Modify ETC Service
Obligations. .............................................................................................. 17
IV. Allband’s Multiple Challenges Are Procedurally Barred
And, In Any Event, Baseless. .................................................................. 22
A. Statement of Additional Facts. ............................................................ 22
B. Allband Has Failed To Demonstrate That The Order Is
Unconstitutional Or Otherwise Unlawful. .......................................... 25
Conclusion ....................................................................................................... 32
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TABLE OF AUTHORITIES

CASES

 
Alenco Commc’ns, Inc. v. FCC, 201 F.3d 608 (5th
Cir. 2000) ....................................................................................................... 6
Bd. of County Comm’rs v. Isaac, 18 F.3d 1492
(10th Cir.1994) ............................................................................................ 30
Chevron USA, Inc. v. Natural Res. Def. Council,
467 U.S. 837 (1984) ...................................................................................... 5
Cordero Mining LLC v. Sec’y of Labor ex rel.
Clapp, 699 F.3d 1232 (10th Cir. 2012) ....................................................... 11
Crockett Tel. Co. v. FCC, 963 F.2d 1564 (D.C. Cir.
1992) ..................................................................................................... 12, 15
FCC v. Fox Television Stations, Inc., 132 S. Ct.
2307 (2012) ................................................................................................. 26
FCC v. Pottsville Broad. Co., 309 U.S. 134 (1940) ........................................ 21
Franklin Sav. Ass’n v. Dir., Office of Thrift
Supervision, 934 F.2d 1127 (10th Cir. 1991) ................................................ 9
Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965
(D.C. Cir. 1999) ............................................................................................. 7
IMC Kalium Carlsbad, Inc. v. Interior Bd. of Land
Appeals, 206 F.3d 1003 (10th Cir. 2000) .................................................... 19
Int’l Telecard Ass’n v. FCC, 166 F.3d 387 (D.C.
Cir. 1999) ..................................................................................................... 27
Landgraf v. USI Film Products, Inc., 511 U.S. 244
(1994) .......................................................................................................... 26
Melcher v. FCC, 134 F.3d 1143 (D.C. Cir. 1998) .......................................... 20
Nuvio Corp. v. FCC, 473 F.3d 302 (D.C. Cir. 2006) ...................................... 20
Qwest Corp. v. FCC, 258 F.3d 1191 (10th Cir.
2001) .............................................................................................................. 7
Qwest Corp. v. FCC, 689 F.3d 1214 (10th Cir.
2012) ....................................................................................................... 9, 22
Rural Cellular Ass’n v. FCC, 588 F.3d 1095 (D.C.
Cir. 2009) ............................................................................................ 4, 7, 31
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Sorenson Commc’ns, Inc. v. FCC, 567 F.3d 1215
(10th Cir. 2009) ........................................................................................... 21
Sorenson Commc’ns, Inc. v. FCC, 659 F.3d 1035
(10th Cir. 2011) ........................................................................................... 26
State Corp. Comm’n of the State of Kansas v. FCC,
787 F.2d 1421 (10th Cir. 1986) ................................................................... 12
Sw. Bell Tel. Co. v. FCC, 153 F.3d 523 (8th Cir.
1998) ..................................................................................................... 12, 14
Texas Office of Public Utility Counsel v. FCC, 183
F.3d 393 (5th Cir. 1999) .............................................................................. 15
Tsosie v. U.S., 452 F.3d 1161 (10th Cir. 2006) ............................................... 29
United States v. Winstar, 518 U.S. 839 (1996) ............................................... 29
Vermont Pub. Serv. Bd. v. FCC, 661 F.3d 54 (D.C.
Cir. 2011) ..................................................................................................... 31
Wade Pediatrics v. Dept. of Health and Human
Svcs., 567 F.3d 1202 (10th Cir. 2009) ......................................................... 29
Walmer v. U.S. Dept. of Defense, 52 F.3d 851 (10th
Cir. 1995) ..................................................................................................... 28

STATUTES

 
28 U.S.C. §2342(1).......................................................................................... 28
28 U.S.C. §2343 .............................................................................................. 28
47 U.S.C. §151 ................................................................................................ 11
47 U.S.C. §152(a) ............................................................................................ 11
47 U.S.C. §152(b)............................................................................................ 11
47 U.S.C. §155(c)(7) ....................................................................................... 27
47 U.S.C. §160 ................................................................................................ 21
47 U.S.C. §160(a) ....................................................................................... 3, 22
47 U.S.C. §214 ................................................................................................ 17
47 U.S.C. §214(e) .............................................................................................. 3
47 U.S.C. §214(e)(2) .............................................................................. 4, 9, 19
47 U.S.C. §214(e)(4) ....................................................................................... 18
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47 U.S.C. §214(e)(5) ....................................................................................... 17
47 U.S.C. §214(e)(6) ......................................................................................... 9
47 U.S.C. §221(c) ............................................................................................ 12
47 U.S.C. §254(b)(2) ......................................................................................... 2
47 U.S.C. §254(b)(3) ......................................................................................... 2
47 U.S.C. §254(b)(7) ......................................................................................... 6
47 U.S.C. §254(e) .............................................................................................. 3
47 U.S.C. §402(a) ............................................................................................ 28
47 U.S.C. §405(a) ............................................................................................ 26
47 U.S.C. §410(c) ....................................................................................... 2, 12

REGULATIONS

 
47 C.F.R. §36.603 ........................................................................................... 13
47 C.F.R. §36.605(a) ....................................................................................... 14
47 C.F.R. §36.621(a) ....................................................................................... 14
47 C.F.R. §36.621(a)(4) .................................................................................. 14
47 C.F.R. §36.621(a)(5) .................................................................................. 23
47 C.F.R. §54.302 ........................................................................................... 23
47 C.F.R. §54.5 ................................................................................................. 9

ADMINISTRATIVE DECISIONS

 
Connect America Fund, 27 FCC Rcd 4235 (WCB
2012), aff'd in part and modified in part, Connect
America Fund
, 2013 WL 749737 (Feb. 26, 2013) ............................... 23, 27
Federal-State Joint Board on Universal Service, 12
FCC Rcd 8776 (1997) ................................................................................... 6
High-Cost Universal Service Support, 23 FCC Rcd
8834 (2008) ................................................................................................. 18
In the Matter of the Application of Cricket
Communications, Inc. for Designation as an
Eligible Telecommunications Carrier in the State
of Colorado
, 2011 WL 5056349 (Colo. P.U.C.
2011) ............................................................................................................ 19
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In the Matter of the Application of Virgin Mobile
USA, L.P. for Limited Designation as an Eligible
Telecommunications Carrier in the State of
Colorado
, 2012 WL 1038132 (Colo. P.U.C.
2012) ............................................................................................................ 19

OTHER AUTHORITIES

 
Universal Service Monitoring Report, Federal-State
Joint Board on Universal Service, Table 2.12 at
p. 2-16 (2011) .............................................................................................. 18



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GLOSSARY

Act
The Communications Act of 1934
CAF
Connect America Fund
COLR
Carrier of Last Resort
ETC
Eligible Telecommunications Carrier
FCC Federal
Communications
Commission
FNPRM
Further Notice of Proposed Rulemaking
LEC Local
Exchange
Carrier
NPRM
Notice of Proposed Rulemaking
USF
Universal Service Fund
WCB Wireline
Competition
Bureau


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Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 8
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

FEDERAL RESPONDENTS’ UNCITED RESPONSE TO THE ADDITIONAL
UNIVERSAL SERVICE FUND ISSUES BRIEF OF PETITIONERS

INTRODUCTION AND SUMMARY OF ARGUMENT

The Federal Communications Commission (“FCC”) submits this
supplemental brief in response to the miscellaneous challenges to the
1
Order’s universal service reforms asserted in the Additional Universal
Service Fund Issues Brief of Petitioners. These challenges fare no better than
those addressed in the FCC’s Principal USF Brief and the FCC’s Response to
the Wireless Carrier USF Principal Brief, and the Court should reject them.
I. To encourage the deployment of broadband facilities in underserved
areas, the FCC offered incumbent local exchange carriers (“LECs”) subject to
price cap regulation a one-time opportunity to claim federal high-cost

1 Connect America Fund, 26 FCC Rcd 17663 (2011) (“Order”) (JA__).

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 9
universal service support conditioned on a commitment to deploy a
broadband-capable network in a state. Petitioners argue that the Order
violates the FCC’s principle of “competitive neutrality.” But the FCC
reasonably found that principle outweighed by the requirement that Congress
placed in sections 254(b)(2) and (3) of the Communications Act of 1934 (the
“Act”), 47 U.S.C. §254(b)(2), (3), to promote access to advanced
telecommunications and information services.
Moreover, substantial record evidence showed that incumbent LECs,
which have networks serving broad geographic areas, are likely to have the
only wireline facilities in the areas eligible for support, and so are uniquely
well positioned to deploy broadband facilities rapidly and cost-effectively.
The FCC thus reasonably concluded that it could maximize broadband
deployment and minimize the burden on the federal universal service fund
(“USF”) by providing incumbent LECs a limited right of first refusal to high-
cost support.
II. Petitioners claim that the FCC was required by 47 U.S.C. §410(c)
to obtain a recommendation from the Federal-State Joint Board on
Separations before adopting the universal service and intercarrier
compensation reforms in the Order. No Joint Board referral was required,
2

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however, because the Order did not formally amend the FCC’s separations
rules; instead, it revised the distribution of subsidies.
III. The FCC eliminated high-cost universal service support in areas
served by an unsubsidized provider in order to more efficiently support voice
and broadband. Petitioners contend that this violates an alleged quid pro quo
established by 47 U.S.C. §214(e) and 47 U.S.C. §254(e), pursuant to which
eligible telecommunications carriers (“ETCs”) provide and advertise voice
service in exchange for universal service support. That argument fails
because the statute does not entitle a carrier to receive universal service
support merely by virtue of its ETC designation. Nor have petitioners
demonstrated that their ongoing service obligations under section 214(e)(1)
will be too onerous without federal subsidies. Should that situation arise,
petitioners may seek reinstatement of their universal service support through
a waiver process provided by the Order, or they could ask the FCC to forbear
from their section 214(e)(1) obligations under 47 U.S.C. §160(a).
IV. Allband Communications Cooperative’s claims – many of which
duplicate those of other petitioners – are waived or unripe, and all lack merit.
3

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ARGUMENT

I.

THE FCC REASONABLY OFFERED PRICE CAP
CARRIERS UNIVERSAL SERVICE SUPPORT
CONDITIONED ON A STATE-LEVEL COMMITMENT
TO DEPLOY BROADBAND FACILITIES.

To encourage “the rapid deployment of broadband services over a large
geographic area,” Order ¶177 (JA__), the FCC offered incumbent LECs
subject to price cap regulation a one-time opportunity (akin to a right of first
refusal) to obtain federal high-cost universal service support, conditioned on a
commitment to deploy a broadband-capable network to specified areas within
a state, id. ¶¶171-178 (JA__-__). Should they decline that option, “support
… will be awarded by competitive bidding, and all providers will have an
equal opportunity to seek USF support.” Id. ¶178 (JA__). Moreover, “even
where the [price cap carrier] makes a state-level commitment, its right to
support will terminate after five years,” at which time the FCC expects to
distribute all support through a competitive bidding process. Id. This
“interim rule” is entitled to substantial deference. See, e.g., Rural Cellular
Ass’n v. FCC, 588 F.3d 1095, 1105-06 (D.C. Cir. 2009) (“RCA I”) (affirming
an interim cap on universal service subsidies to competitive ETCs); FCC
Response to Wireless Carrier USF Principal Br. 27 n.6.
Petitioners contend that this interim rule is inconsistent with 47 U.S.C.
§214(e)(2), which provides that a “State commission may, in the case of an
4

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area served by a rural telephone company, and shall, in the case of all other
areas, designate more than one common carrier as an eligible
telecommunications carrier for a service area designated by the State
commission.” Br. 10. According to petitioners, section 214(e)(2) requires
that the statute’s universal service principles be served only by providing
support for multiple ETCs in one area. Br. 9-10. As the FCC explained,
however, “nothing in the statute compels that every party eligible for support
actually receives it.” Order ¶318 (JA__); see also FCC Principal USF Br. 61-
62; FCC Response to Wireless Carrier USF Principal Br. 37-39. Moreover,
“the statute’s goal is to expand availability of service to users,” Order ¶318
(JA__), “not to subsidize competition through universal service in areas that
are challenging for even one provider to serve.” Id. ¶319 (JA__); see also
FCC Response to Wireless Carrier USF Principal Br. 31; id. at 36-37
(discussing the FCC’s decision to distribute universal service support through
a separate Mobility Fund to a single wireless provider in each area eligible for
subsidies). In all events, it was at least reasonable for the FCC to read section
214(e)(2) as it did, and its result should be upheld under Chevron USA, Inc. v.
Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984).
Petitioners further argue, Br. 10-14, that the interim state-level
commitment procedure violates the FCC-created principle of “competitive
5

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neutrality,” which generally holds that “universal service support mechanisms
… should not unfairly advantage nor disadvantage one provider over another,
and neither unfairly favor nor disfavor one technology over another.” Order
¶176 (JA__) (internal quotation marks omitted). But, as the FCC found,
petitioners’ demand that the agency “adher[e] to strict competitive neutrality
at the expense of the state-level commitment process would unreasonably
frustrate achievement of the universal service principles of ubiquitous and
comparable broadband services and promoting broadband deployment.”
Order ¶178 (JA__). It would also “unduly elevate the interests of competing
providers over those of unserved and under-served consumers … as well as
… consumers and telecommunications providers who make payments to
support the Universal Service Fund.” Id.; cf. Alenco Commc’ns, Inc. v. FCC,
201 F.3d 608, 620 (5th Cir. 2000) (“The Act only promises universal service,
and that is a goal that requires sufficient funding of customers, not
providers”).
The FCC adopted the competitive neutrality principle pursuant to 47
U.S.C. §254(b)(7). As such, it is one of several principles that guide its
exercise of discretion in distributing USF support. See Federal-State Joint
Board on Universal Service, 12 FCC Rcd 8776, 8801-03 (¶¶48 & 52) (1997).
In this case, the agency reasonably found its own goal of competitive
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neutrality “outweighed” by the statutorily mandated principles in sections
254(b)(2) and (3), which direct that “[a]ccess to advanced
telecommunications and information services should be provided in all
regions of the Nation,” and that consumers in rural areas should have access
to advanced services that are reasonably comparable to those in urban areas.
Order ¶174-178 (JA__-__). As the FCC explained, incumbent LECs serving
price cap areas are “in a unique position to deploy broadband networks
rapidly and efficiently” because they already have networks serving large
geographic areas. Id. ¶177 (JA__). The FCC, as the expert agency entrusted
by Congress to administer the Act, “enjoys broad discretion when conducting
exactly this type of balancing” of sometimes conflicting objectives. RCA I,
588 F.3d at 1103 (citing Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965,
971 (D.C. Cir. 1999)); see also Qwest Corp. v. FCC, 258 F.3d 1191, 1199
(10th Cir. 2001) (holding that “[t]he FCC may balance the [section 254(b)]
principles against one another”).
Moreover, petitioners’ claim that the FCC failed to “minimize
disparities in treatment” is without merit. Br. 11. The Order does not
“exclude [competitive] ETCs from USF support entirely.” Br. 8. To the
contrary, the support following exercise of an incumbent LEC’s state-level
commitment is available to that LEC for only five years, and during that
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period, competitive ETCs may compete for high-cost support in areas where
the incumbent LEC declines a state-level commitment. Order ¶514 (JA__).
Petitioners further contend that the FCC’s adoption of the interim state-
level commitment procedure “is not supported by the record.” Br. 12.
Petitioners challenge the FCC’s finding in paragraph 175 of the Order (JA__)
that “the incumbent LEC is likely to have the only wireline facilities” capable
of supporting broadband in areas eligible for universal service support. Br.
12-13. Relying on comments filed more than a decade ago, petitioners assert
“that in rural areas, price cap carriers’ facilities are often old and ill-
maintained.” Id.
Petitioners’ arguments miss the mark – the Order adopted the state-
level commitment procedure based on the existing availability of incumbent
LEC facilities, even if those facilities must be upgraded. As the FCC found,
while competitive ETCs “may be well situated to make broadband
commitments with respect to relatively small geographic areas,” “incumbent
LECs have had a long history of providing service throughout the relevant
areas … [and] generally have already obtained the ETC designation necessary
to receive USF support throughout large service areas.” Order ¶177 (JA__).
Thus, the FCC reasonably predicted that it could get more “bang for its buck”
by providing subsidies to incumbent LECs to upgrade their extensive existing
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2
facilities than by providing subsidies to competitive ETCs, once designated,
to deploy entirely new facilities. That predictive judgment is entitled to
deference. See, e.g., Franklin Sav. Ass’n v. Dir., Office of Thrift Supervision,
934 F.2d 1127, 1146-47 (10th Cir. 1991); Qwest Corp. v. FCC, 689 F.3d
1214 (10th Cir. 2012) (“Qwest Phoenix”).
The FCC’s prediction, moreover, was reasonably based on two
findings. First, because the Order eliminates support to all carriers in price
cap areas served by an unsubsidized competitor, the incumbent LEC is likely
to be the only provider with wireline facilities already deployed in the areas
3
where there is no unsubsidized competitor. Order ¶175 (JA__). Second,
because “incumbent LECs generally continue to have carrier of last resort
[“COLR”] obligations for voice services,” id., they must maintain networks
capable of “ensur[ing] service to consumers who request it” throughout their
designated service area. Id. ¶177 n.290 (JA__); see also id. ¶862 (JA__). By
contrast, “competitive LECs typically have not built out their networks
subject to COLR obligations” and, as a consequence, often serve much
smaller geographic areas. Id. ¶864 (JA__).

2 See 47 U.S.C. §214(e)(2), (6); FCC Principal USF Br. 24-25.
3 An “unsubsidized competitor” is “a facilities-based provider of residential
fixed voice and broadband service that does not receive high-cost support.”
47 C.F.R. §54.5.
9

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Indeed, wireline competitive ETCs, like the members of the Rural
Independent Competitive Alliance, received only $23 million of high-cost
universal service support annually prior to the Order. By contrast, price cap
carriers received more than $1 billion annually. Id. ¶¶7, 158, 501, 503 n.834
(JA__, __. __, __). That differential underscores the fact that competitive
ETCs serve very few lines relative to the price cap carriers.
There is likewise no basis for petitioners’ claim that the FCC ignored
evidence that price cap carriers have “underperformed in rural communities.”
Br. 14. Although evidence in the record showed that “more than 83 percent”
of the areas in the nation that remain unserved by broadband are in locations
subject to price cap regulation, the FCC attributed the lack of broadband
deployment in those areas not to price cap carriers’ lack of commitment, but
to flaws in the pre-existing system. Order ¶158 (JA__). In particular, price
cap carriers have only “received approximately 25 percent of high-cost
support,” despite serving 95 percent of the Nation’s access lines. Id. By
contrast, annual funding for rate-of-return carriers, which serve “less than five
percent of access lines in the U.S.,” totals nearly one-half of annual high-cost
support (i.e., approximately $2 billion of the $4.5 billion budget). Id. ¶¶26,
126 (JA__, __).
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In other words, the record showed the need for the very broadband-
promoting reforms that the FCC adopted. To address the shortcomings of the
existing system, which “fail[ed] to direct money to all parts of rural America
where it is needed,” the Order reasonably increased high-cost universal
service support for price cap areas (from approximately $1 billion to $1.8
billion annually). Id. ¶¶7, 158 (JA__-__). Moreover, price cap carriers that
accept a state-level commitment must meet certain broadband deployment
milestones, id. ¶¶160-163 (JA__-__), and like all USF recipients, they will be
subject to oversight and accountability measures, id. ¶¶74-114 (JA__-__).
In short, the FCC’s expert judgments about how to best promote
universal service were consistent with the statutory principles and supported
by substantial evidence. See, e.g., Cordero Mining LLC v. Sec’y of Labor ex
rel. Clapp, 699 F.3d 1232, 1236 (10th Cir. 2012).

II.

THE FCC WAS NOT REQUIRED BY 47 U.S.C. §410(c) TO
MAKE A JOINT BOARD REFERRAL BEFORE
ADOPTING THE REFORMS IN THE ORDER

.
The FCC has exclusive jurisdiction to regulate, among other things,
interstate common carrier services, including rates, 47 U.S.C. §§151, 152(a),
while the states generally regulate intrastate services and rates, 47 U.S.C.
§152(b). “[T]elephone carriers often use the same facilities to provide both
intrastate and interstate service.” Crockett Tel. Co. v. FCC, 963 F.2d 1564,
11

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1566 (D.C. Cir. 1992). Thus, “[t]he cost of these facilities,” which are
“obviously significant components of the ratebase in each system, must be
apportioned between the federal and state jurisdictions.” Id.
Pursuant to section 221(c) of the Act, 47 U.S.C. §221(c), the FCC
“may adopt rules governing the apportionment of the costs between state and
federal jurisdictions under a formal regulatory process known as
‘jurisdictional separation.’” Crockett Telephone, 963 F.2d at 1566. Before
exercising that authority, however, the FCC must “refer any proceeding
regarding the jurisdictional separation of common carrier property and
expenses between interstate and intrastate operations … to a Federal-State
Joint Board.” 47 U.S.C. §410(c). The Joint Board “shall prepare a
recommended decision” for the FCC’s consideration, id., but “the states are
not entitled to vote on final separation decisions.” State Corp. Comm’n of the
State of Kansas v. FCC, 787 F.2d 1421, 1426 (10th Cir. 1986).
Under section 410(c), however, “[j]oint board consultation is required
only in proceedings regarding the jurisdictional separation of common carrier
property and expenses between interstate and intrastate jurisdictions.” Sw.
Bell Tel. Co. v. FCC, 153 F.3d 523, 556 (8th Cir. 1998) (emphasis added);
see also State Corp. Comm’n, 787 F.2d at 1423 (explaining that the “process
of ‘jurisdictional separations’ determines how the[] costs” of “items of
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telephone equipment [that] are used for both interstate and intrastate calls”
will be “allocated for ratemaking purposes”). There was no such
jurisdictional separation here: the Order did not reallocate costs for any type
of telecommunications plant or any operating expense between the federal
and the state jurisdictions. See also FCC Principal ICC Br. 41 n.17.
Petitioners nevertheless claim that the FCC violated section 410(c)
because it made changes to its rules at 47 C.F.R. Part 36 without first making
a Joint Board referral. Br. 19. Petitioners are mistaken. Not all the rules
contained in Part 36 concern jurisdictional separations of costs. Part 36 also
contains universal service rules governing high-cost loop support (“HCLS”)
for rate-of-return carriers. See 47 C.F.R. Part 36 Subpart F (entitled “High
Cost Loop Support”). These are the only Part 36 rules that the FCC changed,
and they have nothing to do with jurisdictional separations.
Thus, although petitioners assert that “[t]he FCC limited the portion of
nationwide loop cost expense that certain carriers could allocate to the
interstate jurisdiction,” Br. 19, the rule petitioners challenge (47 C.F.R.
§36.603) simply adjusted the amount of universal service funding that is
prospectively available for HCLS. The rule change did not involve cost
allocation.
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Likewise, the Order did not change the amount “carriers c[an] allocate
to the interstate jurisdiction” by eliminating Safety Net Additive Support, or
by imposing new limits on recoverable corporate operations expenses, capital
expenses, and operating expenses. Br. 19-20 (citing 47 C.F.R. §§36.605(a),
36.621(a)(4), 36.621(a)); see also FCC Principal USF Br. 40-46, 48-50
(explaining the substantive rule amendments). Those amended rules merely
prohibit carriers from obtaining universal service subsidies to cover certain
costs already allocated to the federal jurisdiction. The amended rules did not
change the jurisdictional allocation of costs. Because the FCC’s rule changes
do not involve jurisdictional separations, they do not implicate the Joint
Board process specified in section 410(c).
Petitioners alternatively argue that, by reducing universal service
support and intercarrier compensation revenues, the Orderessentially
reassigned” costs “to the intrastate jurisdiction.” Br. 21-23 (emphasis added).
The Eighth Circuit in Southwestern Bell, 153 F.3d at 556, however, rejected a
similar argument, holding that only formal changes to the allocation of costs
require consultation with the Joint Board. In that case, the petitioner argued
that section 410(c) obliged the FCC to make a referral to the Joint Board
before requiring local telephone companies to apply federal universal service
funds to their interstate revenue requirements – a policy the petitioner
14

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 22
contended would lead to an “intrastate revenue shortfall.” Id. at 554-56. The
Eighth Circuit found no merit in petitioner’s claim, explaining that “the FCC
was not allocating jointly used plant, nor was it changing the proportions for
jointly used plant to interstate and intrastate jurisdictions.” Id. at 556. Here,
as in Southwestern Bell, none of the rule changes identified by petitioners
formally “allocat[ed] jointly used plant” or “chang[ed] the proportions for
allocating jointly used plant to interstate and intrastate jurisdictions.” Id.

Therefore, a referral to the Joint Board was not necessary.
Petitioners are thus wrong when they argue that “even where the
proposed rule changes do not explicitly change the separations rules, but
nevertheless effect allocations between jurisdictions, Joint Board referral is
required.” Br. 18. Crockett Telephone, 963 F.2d 1564, Br. 18, is not to the
contrary. That case simply notes that a section 410(c) referral is only
“mandatory when the Commission chooses to adopt a formal separations
methodology,” which the FCC did not do here. Id. at 1571. Likewise, Texas
Office of Public Utility Counsel v. FCC, 183 F.3d 393, 416 (5th Cir. 1999),
Br. 18, concerned whether the FCC properly obtained the Joint Board’s
recommendation concerning certain rule changes, not whether the statute
required a referral to the Joint Board in the first place.
15

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 23
In any event, petitioners’ argument is based on a misunderstanding of
the Order, because the FCC made clear that states need not ensure that
carriers recover reductions in intercarrier compensation revenues under the
agency’s reforms. Thus, petitioners’ assertion that states have been “left”
with the responsibility to recover certain carrier access costs, Br. 22-23,
overlooks the Order’s explicit holding that “states will not be required to bear
the burden of establishing and funding state recovery mechanisms for
intrastate access reductions.” Order ¶795 (JA__).
Rather, that responsibility lies with the FCC. To that end, the Order
established a federal recovery mechanism to “provide carriers with recovery
for reductions to eligible interstate and intrastate [intercarrier compensation]
revenue.” Id.; see generally id. ¶¶847-920 (JA__-__). And the backstop
Total Cost and Earnings Review process permits a carrier to make a
comprehensive cost showing to the FCC that additional recovery is needed to
avoid a taking. Id. ¶924 (JA__); see also FCC Principal ICC Br. 48-49.
Further, the Order’s waiver process allows “any carrier negatively
affected by the universal service reforms … to file a petition for waiver that
clearly demonstrates that good cause exists for exempting the carrier from
some or all of those reforms, and that waiver is necessary and in the public
interest to ensure that consumers in the area continue to receive voice
16

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 24
service.” Order ¶¶539-44 (JA__-__). The FCC has already granted two
such waivers. See FCC Principal USF Br. 35.

III. THE FCC WAS NOT REQUIRED TO MODIFY ETC

SERVICE OBLIGATIONS.

The FCC found that “USF support should be directed to areas where
providers would not deploy and maintain network facilities absent a USF
subsidy, and not in areas where unsubsidized facilities-based providers
already are competing for customers.” Order ¶281 (JA__) (internal quotation
marks omitted). The FCC thus adopted rules that eliminate universal service
support in areas where an “unsubsidized competitor” offers voice and
4
broadband service. See FCC Principal USF Br. 58-61.
According to petitioners, “[t]he Order is contrary to [47 U.S.C.] §214
because it requires ETCs to provide services for which the carrier is not
receiving, and cannot receive, support.” Br. 25. As the FCC explained, and
as is addressed in more detail in other FCC briefs, “nothing in the statute
compels that every party eligible for support actually receive it.” Order ¶318

4 In areas served by price cap carriers, an ETC will be ineligible to receive
support in CAF Phase II for any census block in which an “unsubsidized
competitor” offers services. Order ¶¶103-04, 170-171 (JA__-__, __-__). In
areas served by rate-of-return carriers, an ETC will be denied support, after a
three-year transition period, only if one or more “unsubsidized competitors”
serve an entire service area as designated under 47 U.S.C. §214(e)(5). Id. ¶¶
281-284 (JA__-__).
17

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 25
(JA__); see FCC Response to Wireless Carrier USF Principal Br. 37-39; FCC
Principal USF Br. 61-62. This is true even where a carrier is the only ETC
designated in a service area until the state designates another ETC. See Br.
25-26 (citing 47 U.S.C. §214(e)(4)).
While every “community or any portion thereof” must be served by at
least one ETC, see 47 U.S.C. §214(e)(3), ETC designation does not
necessarily entitle a carrier to federal subsidies. In some areas, like the
District of Columbia, the designated ETC receives no high-cost universal
service support, even though it must comply with the service obligations in
5
section 214(e)(1) of the Act. This reflects the fact that there are “advantages
to obtaining and maintaining an ETC designation regardless of whether a[n]
… ETC receives high-cost support.” High-Cost Universal Service Support,
23 FCC Rcd 8834, 8847-48 (¶30) (2008) (emphasis added). “In particular,”
an ETC could be eligible to receive “low-income universal service support”
from a separate federal mechanism and “universal service support at the state

5 See Universal Service Monitoring Report, Federal-State Joint Board on
Universal Service, Table 2.12 at p. 2-16 (2011), available at:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-311775A1.pdf
18

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 26
6
level.” Id.; see FCC Response to Wireless Carrier USF Principal Br. 39.
Thus, it is not correct that ETC status confers no benefits if a carrier does not
obtain high-cost support.
Tellingly, while petitioners claim that they are entitled to high-cost
universal service support, they fail to explain why they need it to serve
consumers. The FCC reasonably found that, if an area is served by a carrier
without federal subsidies, there is no need to provide high-cost support to any
carrier. Order ¶281 (JA__); see FCC Principal USF Br. 58-61. That
common-sense policy judgment is entitled to substantial deference. IMC
Kalium Carlsbad, Inc. v. Interior Bd. of Land Appeals, 206 F.3d 1003, 1012
(10th Cir. 2000).
Nor is there merit to petitioners’ argument that, because the
unsubsidized competitor has no legal obligation to advertise and offer service
to every customer, it will engage in “cream skimming” and only serve the
low-cost portions of the relevant area, leaving the ETC with the burden to

6 For example, several ETCs that have been designated by the Colorado
Public Utilities Commission pursuant to 47 U.S.C. §214(e)(2) are only
eligible for federal low-income support and not the federal high-cost support
demanded by petitioners. See, e.g., In the Matter of the Application of
Cricket Communications, Inc. for Designation as an Eligible
Telecommunications Carrier in the State of Colorado
, 2011 WL 5056349
(Colo. P.U.C. 2011); In the Matter of the Application of Virgin Mobile USA,
L.P. for Limited Designation as an Eligible Telecommunications Carrier in
the State of Colorado
, 2012 WL 1038132 (Colo. P.U.C. 2012).
19

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 27
serve the high-cost portions. Br. 26-27. In areas served by rate-of-return
carriers, a new rule eliminates high-cost support only where an unsubsidized
competitor already serves 100 percent of the relevant service area. Order
¶283 (JA__). Likewise, in areas served by price cap carriers, a new rule
eliminates high-cost support in a census block only where an unsubsidized
competitor already serves that census block. Id. ¶¶170-171 (JA__-__). The
FCC predicted that an “unsubsidized competitor” – which, by definition, is a
facilities-based provider that is not eligible for support yet serves the
incumbent LEC’s geographic service area, see p.9 n.3, above – would have an
incentive to recover its investment by continuing to serve every possible
customer. This was reasonable. See FCC Principal USF Br. 59-60, citing
Nuvio Corp. v. FCC, 473 F.3d 302, 309 (D.C. Cir. 2006), Melcher v. FCC,
134 F.3d 1143, 1152 (D.C. Cir. 1998).
Nonetheless, the Order recognized the possibility that ETCs may be
required to provide service in areas where they no longer receive support, or
receive reduced support. Accordingly, in an attached Further Notice of
Proposed Rulemaking (“FNPRM”), the FCC sought comment on whether it
should “relax or eliminate ETCs’ voice service obligations” under section
214(e)(1) in those circumstances. Order ¶1095 (JA__).
20

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 28
Petitioners contend that it was arbitrary and capricious for the FCC to
defer consideration of that issue. Br. 27-29. However, that decision was well
within the agency’s broad discretion to define the scope of its own
proceedings, see FCC v. Pottsville Broad. Co., 309 U.S. 134, 138 (1940), and
to proceed incrementally, see Sorenson Commc’ns, Inc. v. FCC, 567 F.3d
1215, 1222 (10th Cir. 2009). And petitioners have not suffered any harm as a
result: while the Order adopted rules that eliminate support in areas served by
an unsubsidized competitor, those rules have yet to be implemented.
Once the rules become effective, petitioners have avenues to seek relief
should their continuing section 214(e)(1) obligations prove too onerous.
First, petitioners may ask the FCC to exempt them from universal service
support reductions if they can show that those reductions would imperil their
financial viability and threaten service to consumers. Order ¶¶539-544
(JA__-__). Second, petitioners may seek forbearance from the requirements
in section 214(e)(1) under section 10 of the Act, 47 U.S.C. §160. Pursuant to
that provision, the FCC “shall forbear from applying any regulation or any
provision of [the] Act to a telecommunications carrier … in any or some of
21

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 29
7
its geographic markets,” if certain conditions are met. The FCC has forborne
from imposing other section 214(e) requirements in the past, see Order ¶1097
& n.2226 (JA__) (citing FCC precedent), and sought comment in the Order
on “us[ing] case-by-case forbearance to adjust carriers’ section 214(e)(1)
service obligations,” id. ¶1097 (JA__).

IV.

ALLBAND’S MULTIPLE CHALLENGES ARE
PROCEDURALLY BARRED AND, IN ANY EVENT,
BASELESS.

A. Statement of Additional Facts.

Petitioner Allband presents a series of discrete claims which, as we
demonstrate below, are both procedurally barred and fail on the merits. We
include the following brief supplemental statement of facts to place these
claims in context.
The Order adopted various reforms to more efficiently support voice
and broadband services with federal universal service support. Among other
reforms, the Order imposed a presumptive per-line cap of $250 per month –

7 These conditions are: “(1) such regulation or provision is not necessary to
ensure that the charges [or] practices … for, or in connection with that
telecommunications carrier … are just and reasonable … [;] (2) enforcement
of such regulation or provision is not necessary for the protection of
consumers; and (3) forbearance from applying such provision or regulation is
consistent with the public interest.” 47 U.S.C. §160(a); see also Qwest
Phoenix
, 689 F.3d at 1217.
22

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 30
to be phased in over three years – on total high-cost universal service support
for all ETCs. See Order ¶¶274, 279 (JA__,___); 47 C.F.R. §54.302.
The Order also adopted a new rule (the “benchmarking rule”), which
uses regression analysis to establish “benchmarks,” or caps, to limit the
reimbursable capital and operating expenses in the formula used to determine
HCLS for rate-of-return carriers. Id. ¶214 (JA__); 47 C.F.R. §36.621(a)(5);
FCC Principal USF Br. 40-46, 48-49. The FCC delegated authority to its
Wireline Competition Bureau (“WCB”) to establish the precise methodology
to implement the rule. Order ¶217 (JA__). WCB completed that task in an
April 25, 2012 Order, see Connect America Fund, 27 FCC Rcd 4235 (WCB
2012) (“Benchmarking Order”), that was subsequently affirmed in part, and
modified in part, by the full Commission. See Connect America Fund, 2013
WL 749737 (Feb. 26, 2013) (“Sixth Order on Reconsideration”).
Finally, the Order provides a waiver process for carriers that can
demonstrate that “reductions in current support levels would threaten their
financial viability, imperiling service to consumers in the areas they serve.”
Order ¶539 (JA__); see generally id. ¶¶539-544 (JA__-__). The FCC did not
“expect to grant waiver requests routinely.” Id. ¶540 (JA__). With respect to
the $250 per-line cap, the FCC also warned carriers that it “d[id] not
anticipate granting any waivers” for an “undefined duration,” and “expect[ed]
23

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 31
carriers to periodically re-validate any need for support above the cap.” Id.
¶278 (JA__).
Shortly after the Order was released, Allband sought waivers of both
the $250 per-line cap and the benchmarking rule. See Allband
Communications Cooperative Petition for Waiver of Certain High-Cost
Universal Service Rules, 27 FCC Rcd 8310 (WCB 2012) (“Allband Waiver
Order”). After evaluating Allband’s request pursuant to its delegated
authority, see Order ¶544 (JA__), WCB found “good cause to grant a waiver
of [the $250 per-line cap] for three years,” Allband Waiver Order ¶10.
“During this time,” WCB “expect[ed] Allband to actively pursue any and all
cost-cutting and revenue generating measures in order to reduce its
dependency on federal high-cost USF support.” Id. ¶14. It also noted
Allband’s “willingness … to work with RUS [Rural Utilities Service] to
rework its loan terms.” Id.
WCB, however, “d[id] not find it to be in the public interest to grant
Allband an unlimited waiver,” as Allband had requested. Allband Waiver
Order ¶13. “[C]onsistent with the [FCC’s] direction,” WCB found that it
should “reassess [Allband’s] financial condition to determine whether a
waiver remains necessary in the future.” Id. (citing Order ¶278 (JA__)). To
24

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 32
that end, WCB set forth the showing required should Allband seek further
relief at the end of the three-year waiver period. Id. ¶16.
WCB separately dismissed Allband’s request for a waiver of the
benchmarking rule as moot, because “under the specific methodology
ultimately adopted by [WCB], which occurred after Allband filed its petition,
Allband is not capped.” Allband Waiver Order ¶17.
Allband sought full Commission review of WCB’s Order and asked the
FCC to waive both the $250 per-line cap and the regression rule until 2026,
8
when Allband’s RUS loan will be repaid. Allband’s petition remains
pending before the agency.

B. Allband Has Failed To Demonstrate That The Order

Is

Unconstitutional Or Otherwise Unlawful.

Allband launches a scattershot attack on the Order. Allband’s claims –
many of which duplicate claims raised by other petitioners – are waived or
unripe, and all lack merit.
1. Allband argues that the Order effects an unconstitutional taking of
property. Br. 33-34. This contention is not ripe for judicial review because,
among many other things, the agency has exempted Allband from the reforms

8 Petition of Allband Communications Cooperative for Waiver of Part
54.302 and the Framework to Limit Reimburseable Capital and Operating
Costs, WC Docket 10-90 et al. (filed Aug. 24, 2012).
25

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 33
in the Order for three years, and provided the opportunity for a further waiver
at the end of that period. See Allband Waiver Order ¶¶10-16; FCC Principal
USF Br. 38-39.
2. Allband also seems to argue that the Order constitutes improper
retroactive rulemaking – i.e., governmental conduct that “impair[s] rights a
party possessed when he acted, increase[s] a party’s liability for past conduct,
or impose[s] new duties with respect to transactions already completed,”
Landgraf v. USI Film Products, Inc., 511 U.S. 244, 280 (1994). Br. 32, 33,
35-36. Allband’s claim fails because the Order is entirely prospective: it
does not mandate the return of USF disbursements already made, but only
reduces or eliminates federal subsidies going forward. See FCC Principal
USF Br. 46-48.
3. Allband attacks the Order on a variety of other grounds. Allband,
however, did not raise these arguments before the agency in a petition for
reconsideration of the Order, and so they are waived. See 47 U.S.C. §405(a);
Sorenson Commc’ns, Inc. v. FCC, 659 F.3d 1035, 1048 n.8 (10th Cir. 2011).
In any event, all of these claims lack merit.
a. Allband contends that the benchmarking rule is impermissibly
vague, in violation of the Fifth Amendment. Br. 32-33 (citing FCC v. Fox
Television Stations, Inc., 132 S. Ct. 2307 (2012)). But Allband’s complaint is
26

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 34
with the methodology WCB adopted in Benchmarking Order, 27 FCC Rcd
4235, not with the rule that the FCC adopted in the Order on review. See Br.
9
32. Indeed, the rule adopted in the Order had no effect on HCLS
disbursements to rate-of-return carriers like Allband until WCB adopted the
methodology required to implement it in the Benchmarking Order, 27 FCC
Rcd at 4235, 4236 (¶¶1, 5).
As a staff-level decision issued on delegated authority, the
Benchmarking Order was not a “final” order when Allband filed its brief.
See 47 U.S.C. §155(c)(7) (“The filing of an application for review … shall be
a condition precedent to judicial review of any order, decision, or action made
or taken pursuant to a delegation” of authority to FCC staff); Int’l Telecard
Ass’n v. FCC, 166 F.3d 387, 388 (D.C. Cir. 1999). That changed when the
full Commission, on February 26, 2013, adopted the Sixth Order on
Reconsideration, 2013 WL 749737. That Order granted in part, and denied in
part, applications for review of the Benchmarking Order. As relevant to
Allband’s vagueness claim, the FCC in the Sixth Order on Reconsideration
substantially modified the methodology adopted by WCB in the
Benchmarking Order.

9 By contrast, the Joint Universal Service Fund Principal Brief of
Petitioners, at 36-39, challenges the FCC’s delegation of authority to WCB to
implement the rule, not the rule itself.
27

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 35
If Allband, after reviewing the revised benchmarking methodology,
still finds it impermissibly vague, Allband may challenge the methodology on
vagueness grounds – but only if it invokes the jurisdiction of a court with
venue by properly filing a Hobbs Act challenge to the Sixth Order on
10
Reconsideration. See 47 U.S.C. §402(a); 28 U.S.C. §2342(1). That is
because the Sixth Order on Reconsideration is the only “final” order subject
to judicial review – and Allband has not challenged that order. Until then, no
court has jurisdiction to consider Allband’s challenge to the benchmarking
methodology.
b. Allband, citing no authority, also asserts that the benchmarking rule
is “an unconstitutional Bill of Attainder.” Br. 34-35. Allband’s claim fails,
because the prohibition against bills of attainder applies to legislative acts and
not to the regulatory actions of administrative agencies, like the FCC. See
Walmer v. U.S. Dept. of Defense, 52 F.3d 851, 855 (10th Cir. 1995).
c. Allband further contends that the Order is an unlawful breach of its
loan agreement with RUS, citing United States v. Winstar, 518 U.S. 839

10 The venue test in 28 U.S.C. §2343 provides that in a properly filed Hobbs
Act appeal, venue “is in the judicial circuit in which the petitioner resides or
has its principal office or in the United States Court of Appeals for the
District of Columbia Circuit.” Allband, which states that it operates in
northern Michigan, Br. 29, thus has venue to challenge the Sixth Order on
Reconsideration
in the Sixth Circuit or the D.C. Circuit – but not this circuit.
28

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 36
(1996). Br. 37. However, the FCC is not a party to that agreement, and it
never entered into any contract agreeing to provide universal service support
to Allband in the future. Nor did RUS agree to provide Allband universal
service support (indeed, it had no authority to do so). For all these reasons,
11
Allband’s breach of contract claim fails.
d. Allband, without support, next asserts that “[t]he Order should be
reversed as applied to Allband based on estoppel principles.” Br. 35. As this
Court has explained, “winning an equitable estoppel argument against the
government is a tough business.” Wade Pediatrics v. Dept. of Health and
Human Svcs., 567 F.3d 1202, 1206 (10th Cir. 2009). Thus, a party must
establish that: “(1) the party to be estopped must know the facts; (2) he must
intend that his conduct will be acted upon or must so act that the party
asserting the estoppel has the right to believe that it was so intended; (3) the
latter must be ignorant of the true facts; and (4) he must rely on the former’s
conduct to his injury.” Tsosie v. U.S., 452 F.3d 1161, 1166 (10th Cir. 2006).
The party must further show “affirmative misconduct on the part of the
government.” Wade, 567 F.3d at 1206.

11 Under Allband’s contract theory, the FCC is prohibited from changing its
universal service support amounts for the duration of its RUS loan. But
Allband did not enjoy such a guarantee either before or after the Order. See
id.
¶220 (JA__). No FCC rule or order guaranteed indefinite universal
service support to parties that have RUS loans.
29

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 37
Allband cannot make that showing, because the FCC never represented
that Allband would receive federal universal service support for the duration
of its RUS loan, and Allband does not even cite any such purported
representation. Nor does the Order’s prospective reduction of Allband’s
federal universal service subsidies constitute “affirmative misconduct” under
this Court’s precedent. See Bd. of County Comm’rs v. Isaac, 18 F.3d 1492,
1498 (10th Cir.1994) (“Affirmative misconduct means an affirmative act of
misrepresentation or concealment of a material fact.”).
e. Finally, Allband asserts that “[t]he Order is … arbitrary because it
fails to recognize that the destructive impacts upon Allband (or similar small
rural carriers) are wholly unnecessary to achieve the stated goals or objectives
of the Order.” Br. 35-36. Allband further claims that the Order violates
sections 254(b)(5) and (e) of the Act, which require “sufficient” universal
service support, on similar grounds. Br. 31.
These arguments lack merit. As we explain elsewhere, the Order
structured universal service reform to mitigate the financial impact on small,
rate-of-return carriers like Allband. See FCC Principal USF Br. 34-36. It
also provides a waiver process for carriers that can demonstrate that
“reductions in current support levels would threaten their financial viability,
imperiling service to consumers in the areas they serve.” Order ¶¶539-544
30

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 38
(JA__-__). And, while Allband seems to contend that the FCC’s generally
applicable universal service rules must produce sufficient support
everywhere, the courts have uniformly held that it is reasonable for the
agency to rely on a waiver process to address any unforeseen shortfalls. See
Vermont Pub. Serv. Bd. v. FCC, 661 F.3d 54, 65 (D.C. Cir. 2011); RCA I, 588
F.3d at 1104; FCC Principal USF Br. 35; FCC Response to Wireless Carrier
USF Principal Br. 41.


31

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 39

CONCLUSION

The petitions for review should be dismissed in part and otherwise
denied.
Respectfully
submitted,
WILLIAM J. BAER
SEAN A. LEV
ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL


ROBERT B. NICHOLSON
PETER KARANJIA
ROBERT J. WIGGERS
DEPUTY GENERAL COUNSEL
ATTORNEYS


RICHARD K. WELCH
UNITED STATES
DEPUTY ASSOCIATE GENERAL
DEPARTMENT OF JUSTICE
COUNSEL
WASHINGTON, D.C. 20530


/s/ Maureen K. Flood

LAURENCE N. BOURNE
JAMES M. CARR
MAUREEN K. FLOOD
COUNSEL

FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
March 19, 2013
32

Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 40

CERTIFICATE OF COMPLIANCE

Certificate of Compliance With Type-Volume Limitations, Typeface

Requirements, Type Style Requirements, Privacy Redaction

Requirements, and Virus Scan


1.
This brief complies with the type-volume limitation of the Second Briefing
Order. It does not exceed 15% of the size of the brief to which it is responding. The
Uncited Additional Universal Service Fund Issues Brief was certified to be 7,785
words in length. Therefore, the FCC may file a response brief up to 8,952 words in
length. This brief contains 6,454words, excluding the parts of the brief exempted
by Fed. R. App. P. 32(a)(7)(B)(iii).

2.
This brief 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 Times New Roman font.

3.
All required privacy redactions have been made.

4.
This brief was scanned for viruses with Symantec Endpoint Protection,
version 11.0.7200.1147, updated on March 18, 2013, and according to the program
is free of viruses.




/s/ Maureen K. Flood
Maureen K. Flood
Counsel


March 19, 2013









Appellate Case: 11-9900 Document: 01019021567 Date Filed: 03/19/2013 Page: 41

CERTIFICATE OF SERVICE



I hereby certify that on March 19, 2013, I caused the foregoing Federal
Respondents’ Uncited Response to the Additional Universal Service Issues Brief to
be filed by delivering a copy to the Court via e-mail at
FCC_briefs_only@ca10.uscourts.gov. I further certify that the foregoing document
will be furnished by the Court through (ECF) electronic service to all parties in this
case through a registered CM/ECF user. This document will be available for
viewing and downloading on the CM/ECF system.




/s/ Maureen K. Flood
Maureen K. Flood
Counsel


March 19, 2013 

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