Opinion ID: 165579
Heading Depth: 2
Heading Rank: 5

Heading: State Inducements

Text: In Qwest I, we held that the FCC must develop mechanisms to induce the states “to assist in implementing the goals of universal service.” 258 F.3d at 1204. In response, the FCC has drafted a requirement into its support mechanism for non-rural carriers requiring states to certify that rural rates within their boundaries are reasonably comparable. If they are not, the states must develop and present an action plan to the FCC indicating the state’s response. If the state fails to do so, federal funds will be withheld. The Petitioners assert that the certification process constitutes an inadequate inducement. We disagree. We are satisfied that the inducement mechanism contained in the Order on Remand adequately responds to the concerns we expressed in Qwest I. The mechanism requires a careful yearly review, and the prospect of withheld funds will certainly bring pressure to bear on the states. Petitioners have failed to proffer any evidence to suggest that the Commission’s inducement mechanism will prove inadequate. As with any such mechanism, experience may indeed prove the best judge of its efficacy. The Commission 32 is in a unique position to determine what inducements are necessary to effectuate the goals of the Act. While we can envision various approaches to more effectively induce state action, given our deferential standard of review, we cannot say that the Commission’s determination in this case was arbitrary or capricious. Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. Qwest and SBC further argue that the FCC’s failure to adopt inducement mechanisms to specifically effect state transition from implicit to explicit support mechanisms is arbitrary and capricious given the Commission’s repeated statements that implicit mechanisms are untenable in a competitive environment. This is not a case where the Commission has suspended indefinitely its prior regulations, despite acknowledging the importance and need for such action. See Public Citizen v. Steed, 733 F.2d 93, 99 (D.C. Cir. 1984). Nor has the FCC failed to act after identifying a pressing and immediate need for regulation to replace disfavored implicit subsidies. See Farmworker Justice Fund, Inc. v. Brock, 811 F.2d 613, 618-19 (D.C. Cir. 1987), vacated as moot, 817 F.2d 890 (D.C. Cir. 1987). Owing to the complex nature of this regulatory area and shared responsibility between the FCC and the states, we reject this argument. Under these circumstances, it is not our province to dictate the methods and timing employed by the agency to effect the statutory design.