Connections-Based Calif. USF Mechanism Not Cooperative Federalism: T-Mobile
California’s shift to connections-based USF contribution is no shining example of cooperative federalism, T-Mobile told the 9th U.S. Circuit Court of Appeals. “It is an unlawful attempt by the CPUC to override the FCC’s policy determination regarding the type of surcharge mechanism that best advances universal service.” Also, in a reply brief Tuesday (case 23-15490), the carrier disagreed with the California Public Utilities Commission that stopping the CPUC order would disrupt nearly every state's USF rules.
T-Mobile wants the 9th Circuit to reverse and remand a lower court’s decision, with instructions to preliminarily enjoin the CPUC rule because it's preempted. The CPUC argued in a May 30 answering brief that state experimentation must be allowed (see 2305310028). T-Mobile and subsidiaries replied Tuesday that the “CPUC and the district court would flip the statutory regime on its head and subordinate the FCC’s authority over universal service policymaking to that of all fifty state PUCs.”
The courts would render meaningless Communications Act Section 254(f)’s requirement that state rules not be inconsistent with federal USF if they decide that FCC policy decisions on USF can’t affect state rules, the carrier said. "Under the CPUC’s flawed logic, state PUCs could always avoid preemption simply by asserting that they are establishing their own state (rather than federal) universal service programs. That is not -- and cannot be -- the law.”
Congress could have said the FCC can't adopt USF rules inconsistent with state PUC regulations, "but it did the opposite instead,” added T-Mobile. “The statutory text, purpose, and structure manifest Congress’s intent to afford the FCC -- not state PUCs -- the primary role in setting national universal service policy.”
Disregard the slippery-slope argument that siding with T-Mobile would disrupt nearly every state's USF rules, the carrier said. Many states cited by the CPUC as using a connections-based method do so for TRS, which is governed by a different section of the Communications Act, T-Mobile said. Three states with a connections-based method for state USF rules “differ from the CPUC's contested rule in important respects,” said the carrier: Whereas the CPUC rule applies to all providers without exception, Utah exempts certain prepaid wireless providers and has other exceptions, Nebraska uses connections-based for some providers and revenue-based for others, and New Mexico exempts business lines from the definition of access line.
"No merit to the CPUC’s alarmist and speculative contention that state universal service regulation will be upended if the Court accepts Appellants’ argument,” T-Mobile wrote. "It is telling that none of the States whose rules are ostensibly in jeopardy under Appellants’ arguments have sought to intervene or appear as amici in support of the CPUC in this case.”
The FCC's 2015 open internet order "recognized that where the FCC has adopted a rule to preserve and advance universal service, any counterpart state universal service rule must align with the FCC rule,” T-Mobile argued. And the agency “has long concluded that a revenues-based methodology best advances universal service, while repeatedly declining to adopt a divergent, connections-based methodology," it said. "But in an attempt at revisionist history, the CPUC seeks to portray the FCC as supposedly well-disposed to a connections-based approach.”
A CPUC argument that the court should apply a presumption against preemption is flawed, the carrier said. "Express preemption -- at issue here -- is different from conflict preemption," and appellants need not show it's impossible to comply with both FCC and CPUC rules. U.S. Supreme Court and 9th Circuit precedent says there's no presumption against preemption in express preemption cases, T-Mobile said: And SCOTUS precedent doesn't require the FCC to make a formal statement to stop states from using connections-based contribution.