Attorneys Impressed by 10th Circuit Judges’ Grasp of CAF Order

Since they asked so many questions, it’s “hard to tell” which way the judges were leaning, Reiter told us. “I'd like to think that their questioning about the order’s negative impact on rural CLECs and their customers indicated interest in that issue.” Reiter downplayed the judges’ focus on whether the FCC was entitled to Chevron deference. “Chevron is kind of an obvious question in a statutory interpretation case,” he said. “You kind of expect courts to ask those kinds of questions."

Reiter said the court seemed “quite interested” in the “sufficiency” arguments raised by Russell Blau of Bingham McCutchen. Blau, who declined to comment for this story, argued on the sufficiency and predictability of universal service support. The FCC simply assumed the then-current spending on universal service was excessive, but made no attempt to determine by how much it was excessive, Blau told the court Tuesday.

Asked Chief Judge Mary Beck Briscoe: Didn’t the commission say in the order the agency looked into how its level of funding would play out but ultimately decided “it’s not going to be so bad? To put it in a nutshell.” The commission said that, responded Blau, but didn’t explain it. Judge Robert Bacharach asked what kind of quantitative data analysis might have been sufficient for the FCC to predict what the costs would be. “It’s predicting the cost of something that hasn’t happened,” Bacharach protested. It’s not hard, Blau said: The FCC has data and a basis for some sort of prediction. It might be hard for the court to draw a line over what kind of analysis was reasonable enough, but “you don’t have to do that in this case, because they made no attempt whatsoever,” said Blau.

"As you probably heard from everyone, this panel was incredibly involved,” said David Bergmann, counsel for the National Association of State Utility Consumer Advocates. Bergman had five minutes to argue the FCC lacked authority to adopt the Access Recovery Charge. “They paid a lot of attention to a whole raft of stuff,” he said. “In that respect, many of the questions that they asked seemed to be more clarification, rather than indicating how they came down” -- on Bergmann’s topic, and generally throughout oral argument, he said: “Their questions were pertinent and relevant."

Predicting the ultimate decision by the questions asked is “virtually impossible to do,” Bergmann said. Generally speaking, though, he’s “cautiously optimistic … about [our topic] and about the petitioners as a whole."

Christopher White, an attorney with the New Jersey Division of Rate Counsel, cautioned that the “405 issue could be a stumbling block if they choose to say it wasn’t raised.” Section 405 of the Communications Act deals with petitions for reconsideration, and gives FCC an opportunity to respond to a dispute before a court hears the case. “Our position is we didn’t have a chance to pass on it because you never gave us notice that you were going to impose an ARC on end users to recover intrastate access charges,” said White, who was in the courtroom but not arguing, in an interview. “And then in our brief we argued that D.C. Circuit says that’s an APA violation,” he said of the Administrative Procedure Act.

"That’s a good way to avoid the issue for the time being” if the court chooses, White said. At one point during oral argument, Briscoe asked an attorney if something the lawyer was challenging had already happened. When the attorney responded the issue was still live, Briscoe responded: “I'm just searching for something that’s moot that we don’t have to do anything on.” That was the one moment of laughter throughout the courtroom in nearly five hours of argument.

Despite the judges’ grasp of many complex concepts, they were “stuck” on Sections 251 and 252 of the Telecom Act during the morning session on intercarrier compensation, even though those have “nothing to do with the core issue of who gets to set intrastate rates,” White said. “They seem to be going off on a different tangent. If they go off on that tangent, the thing’s going to get up for cert to the Supreme Court.” Something else that could affect the case is what the D.C. Circuit Court of Appeals rules in the open Internet order, he said. “Depending on what they say the FCC’s jurisdiction -- ancillary jurisdiction is -- over the Internet, we could be back arguing before this court or at least filing papers. Who knows?"

Don Keskey of the Public Law Resource Center had a few minutes Tuesday afternoon to argue the FCC hurt his client, Allband, when it reversed previous commission orders that the rural Michigan cooperative had relied upon. Now Allband won’t be able to repay its Rural Utilities Service loan, Keskey said. Judges didn’t seem too sympathetic to Keskey’s position. “One can view that as a personal tragedy for Allband, but that’s not what the statute is concerned about,” said Judge Jerome Holmes. Briscoe asked Keskey what due process Allband was deprived of. Keskey responded with emotion in his voice. Keskey said that mere “moments” after creating the telco cooperative that took advantage of earlier funding promises, “the order comes out and they're going to retroactively cut off all the support that Congress intended to provide for this very purpose!” Briscoe replied: If an agency could be found to act in an arbitrary and capricious manner every time an individual party was affected when, “in exercising its regulatory judgment, the FCC has to make policy shifts … then they couldn’t make any policy shifts."

It’s “hard and tricky to predict outcomes based on the arguments, particularly with a 3-judge panel which will likely strive to reach a unified result rather than have a dissent,” Keskey told us in an email where he declined to comment on the merits of oral argument. “Also, sometimes judges may ask questions that may be the opposite of their initial views to draw out information to support or test their views. Overall, a remand as to some issues seems fairly likely, but again, it is speculative to predict an outcome at this time.” FCC attorneys declined to comment.