FCC Accused of Misdirection, Straw Man Arguments in 10th Circuit USF/ICC Order Challenge

The FCC showed “self-aggrandizement rivaled only by the FDA’s attempt to regulate tobacco products” when it decided to regulate broadband “under the flimsiest of pretexts,” said a coalition of wireless carriers that includes US Cellular. They're challenging the commission’s reform of its USF program to “refocus” billions of dollars in support toward broadband, even though Congressional limitations on its authority “left it powerless to provide USF support directly to broadband.” The carriers cited Arlington v. FCC (CD May 21 p1) for the proposition that Chevron deference doesn’t apply when an agency goes beyond unambiguous statutory limitations on its authority. The FCC did just that “when it refocused the USF program to support a service that cannot be supported under Title II, and is not subject to the agency’s delegated authority under the Act,” they said.

The FCC essentially admitted it has “no explanation” for disregarding Congress’s statutory scheme by setting all ICC rates; failing to provide sufficient and predictable USF support where cost recovery is not otherwise allowed; and abandoning rate-of-return regulation without taking into account its own precedent or “long-standing statutory and regulatory principles,” wrote several ILECs and the Independent Telephone & Telecommunications Alliance, which represents mid-sized ILECs. The groups urged the court to vacate the rules, rather than remanding them back to the commission. “A remand will unreasonably allow the agency to keep the illegal rules in effect, exacerbating regulatory uncertainty and undermining universal service to consumers,” they said. Plus, “the FCC has a long history of delaying Court remands."

The FCC devoted much of its response brief to defense of a “strawman argument” that it has the power to prevent duplicative USF support, said a group of rural CLECs. But that’s not the issue, they said. “The fault in the Order is its failure to tackle objections to the only two proffered justifications for the agency’s actions -- that CLECs can simply raise their rates to cover any shortfall from lost ICC revenues or limit their services to profitable customers.”

"Agatha Christie once noted that, to perform a magic trick, ‘you've got to make people look at the wrong thing and in the wrong place,'” AT&T said. “The FCC and its intervenors have followed that advice, focusing on FCC decisions that AT&T does not challenge and distracting attention from the decision that AT&T does challenge.” In a series of diagrams, AT&T explained how it opposes the “regulatory asymmetry” of rules allowing wireless-oriented CLECs to collect access charges only for the functions they perform, while letting cable-oriented CLECs collect for the functions performed “by their tariff-ineligible VoIP partners.” AT&T isn’t asking the court to substitute its own policy judgment for the FCC’s, it said, but only to “hold the FCC to its basic APA obligation to consider objections, face up to trade-offs, and provide a reasoned explanation for whatever decision it reaches.”