NTCA Says FCC Rate Floor Order Violated APA
The FCC violated the Administrative Procedure Act in refusing to reconsider how the agency sets its rate floor to determine some types of USF support, said NTCA and rural carriers in an application for review. The agency declined comment on the application, filed Wednesday by the NTCA, Eastern Rural Telecom Association, National Exchange Carrier Association and WTA.
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Michael Romano, NTCA senior vice president-policy, declined to say whether it would consider legal action if the application is denied. Reversing the Wireline Bureau decision “puts the matter to rest and we can move onto other important aspects of the universal service debate,” Romano said in a statement to us.
The application is the latest round in a more than three-year dispute since the 2011 USF transformation order (see 1110280088) reduced high-cost loop and high-cost model support when carriers’ local exchange voice rates are below a rate floor, and said it intended to base the floor on the national average for urban rates for fixed local voice services, the application said. Concerned that setting the floor too high would mean the loss of funding, rural carriers in 2011 asked the agency to reconsider calculating it based on a national average, and instead suggested using a statistical analysis. The agency declined to reconsider, according to the application.
The bureau, based on data it collected, set the rate floor at $20.46 a month on March 20 (see 1403210058), “dramatically higher” than the previous $14 floor, and higher than the $15.62 level anticipated in the 2011 order. But it didn't release the data used to calculate the rate floor until April 18, five days before the commission formally approved the method for calculating the rate floor in last year's Connect America Fund order (see 1404240072). The order also said “’it would not reconsider or amend any other aspects of its rate floor policy or calculation methods,’” the application said. Had the data been available earlier, NTCA and the rural carriers argued, “it is entirely possible the Commission would have reached a different conclusion.” The statistical analysis the rural carriers had suggested would have resulted in a rate floor of between $12.44 and $16.45, “much closer” to the amount expected in the 2011 USF transformation order, the application for review said.
After the $20.46 floor was announced, NTCA and the rural carriers sought the reconsideration Aug. 4, but that was denied by the bureau in a Dec. 22 order. In dismissing the petition as “untimely,” the bureau said the method used to calculate the rate floor was decided in the 2011 order, and the “window for requesting reconsideration of that Order closed over two years ago.”
The denial didn't address the groups' argument -- that the commission may have selected a different way to calculate the rate floor if the data had been available earlier, the application for review said. An agency violates the APA when it “’fails to consider an important aspect of the problem,’” the application for review said. Instead, the bureau’s order “pointedly ignores” the arguments NTCA and the rural carriers made, the application said, and the “failure to consider ‘an important aspect of the problem’ warrants reversing the December order.