‘Embarrassment’

FCC Withdraws Legal Argument in 10th Circuit USF Case

April 25, 2013 by Matthew Schwartz|Top News

Arguing that the commission overstepped its bounds when it required eligible telecom carriers to use USF support to provide broadband service, the carriers claimed Congress didn’t delegate Title II authority to the FCC to regulate broadband. Section 254(b), which the FCC relied on for jurisdiction, is “clearly” not a jurisdiction-conferring provision, the carriers wrote. “Congress conferred no jurisdiction by its references to ‘advanced telecommunications and information services.’ It merely stated principles to guide the FCC in exercising its authority.” In its response, the FCC argued that argument was “not properly before the court because it was not first presented to the FCC.” The commission also attacked petitioners’ “unsound” argument.

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The FCC withdrew one of its arguments in the federal case defending its USF/intercarrier compensation order that made several reforms to its universal service regime. The commission had told the 10th U.S. Circuit Court of Appeals that some carriers couldn’t make a statutory argument about the meaning of Section 254 of the Communications Act because they had failed to make it before the commission. “We hereby inform the Court that respondents FCC and USA no longer press that contention,” the commission said in a filing last week. Legal observers called the move embarrassing but didn’t think it would have an impact on the commission’s case. The FCC declined to comment.

But Cellular South, a party on the carrier brief, did indeed present the argument to the agency, said lawyer Russell Lukas of Lukas Nace, who represents the carriers. Cellular South made the argument in an appendix to comments and an ex parte notice it filed in August 2011, he said. Lukas contacted the commission this month to point that out: “I not only made the same argument in much more detail during the August 30, 2011 meeting at the General Counsel’s offices, but I supported it with a seven-page handout that included the relevant statutory text,” he told the commission in a letter he provided to us. “I assume” that fact was “overlooked in the drafting of the FCC’s brief, and that the brief will be corrected,” he wrote.

"The withdrawal of the argument by the FCC will weaken its already weak case on the issue of its jurisdiction,” Lukas told us. “It will certainly help our wireless clients, since we will not have to expend any of the 4,625 words allowed for our reply brief showing that the FCC’s claim was untrue."

"The FCC’s admission is a bit of an embarrassment, but in the end it likely is inconsequential,” said a communications lawyer who’s not involved in the case: “The argument the commission is withdrawing was that the claim is not proper as a matter of procedure. Nevertheless, it did respond substantively to the argument as well. Since the contention was not a linchpin of its brief, retreating from it will not hurt the FCC’s position much. In any event, this is a large and extremely complicated record, yielding a complicated set of briefs and arguments. I don’t think the court will place much emphasis on the commission’s misstep."

"This is not a significant development,” said Wiltshire & Grannis telecom attorney John Nakahata. He said the FCC still opposes “the argument on the merits.”