Sierra Failed to Support Claims Against CPUC, Says Federal Court

A federal court won’t preliminarily enjoin a California Public Utilities Commission order related to rural local exchange carrier (RLEC) ratesetting. Despite finding that Sierra Telephone failed to show likelihood of success on the merits, the U.S. District Court for Eastern California in Sacramento allowed the RLEC to file an amended complaint within 30 days of the Nov. 27 order (docket 1:23-cv-01143). Sierra challenged a CPUC "broadband imputation" policy that attributes ISP affiliates' revenue to the affiliate telephone company to determine the telco's rate design, which affects California High Cost Fund-A support. Here, the plaintiffs said that it was an unconstitutional taking for the CPUC to impute Sierra Internet's revenue for determining Sierra Telephone's rate design. Also, Sierra claimed that the CPUC rate design orders conflict with and are preempted by the FCC's 2018 Restoring Internet Freedom (RIF) order, and that the orders violate the dormant commerce clause because Sierra Internet sells interstate services. "Plaintiffs have not sufficiently included factual allegations as to their takings, preemption, and Dormant Commerce Clause claims,” wrote Judge Barbara McAuliffe. On the preemption claim, the court pointed to the 9th U.S. Circuit Court of Appeals’ 2022 ruling on the RIF order, which said that state law can't be preempted by a federal policy preference. The dormant commerce clause claim fails because no interstate burden was alleged, wrote McAuliffe. "The Court rejects the argument that merely being involved in a service deemed ‘inherently interstate in nature’ results in a burden on interstate commerce, absent any such evidence."