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

Heading: Explicit Subsidies and the States

Text: Qwest and SBC first argue that 47 U.S.C. § 254 requires both the federal government and the states to replace implicit subsidies with explicit subsidies. Furthermore, the Petitioners posit that the FCC has acted unlawfully by failing to ensure that the states transition to an explicit subsidy system. Finally, Qwest and SBC contend The Government Accounting Office is now the Government Accountability Office. 3 15 that the FCC has acted arbitrarily and capriciously by ignoring its own calls for a transition to explicit support.
As a preliminary matter, the FCC argues that its determination that the statute contains no mandate for states to transition from implicit to explicit subsidies is not a final action suitable for appellate review. In the alternative, the Commission contends that the issue is not presently ripe for consideration. We reject both arguments. In determining whether an agency action is final, we inquire (1) whether the impact of the action is “direct and immediate,” (2) “whether the action marks the consummation of an agency’s decision-making process,” and (3) whether the action settles the rights and obligations of parties, or gives rise to legal consequences. Gordon v. Norton, 322 F.3d 1213, 1220 (10th Cir. 2003). In this case, the FCC has unequivocally stated “that the 1996 Act does not require states to adopt explicit universal service support mechanisms.” Order on Remand ¶ 26. The FCC concedes, as it must, that this statement unambiguously evidences its legal determination with respect to the statutory requirement. However, the Commission contends that because it has yet to decide what measures to adopt, if any, to induce states to remove implicit subsidies from intrastate rates, the action is not final. Further, the FCC argues that SBC has failed to exhaust remedies because it is currently challenging the statutory determination in an on-going 16 rule-making proceeding. As a result, the FCC contends that the matter of a statutory mandate remains before the Commission for consideration. The FCC’s determination that the Act does not mandate state action satisfies our finality inquiry. The Commission has repeatedly stated that the Act does not mandate that states transition from implicit to explicit subsidies.4 See id. (citing Seventh Report & Order and Thirteenth Order on Reconsideration ¶ 45, FCC 99-119, CC Docket Nos. 9645, 96-262 (May 28, 1999)). When the agency has repeatedly stated its interpretive conclusion, an appearance of finality is indeed established. HRI, Inc. v. EPA, 198 F.3d 1224, 1236 (10th Cir. 2000) (noting that in marking the consummation of a decisionmaking process, the challenged action “must not be of a merely tentative or interlocutory nature”). The result is direct and immediate because it rejects concerted action on the part of the FCC to enforce an alleged statutory mandate. Finally, it is plain that the FCC’s determination settles one aspect of its obligation under the act, giving rise to clear legal responsibilities. Turning to ripeness, we consider the following factors when determining whether 4 The Commission’s ongoing efforts to determine what, if any, inducements to adopt to effect state transition are simply not germane in this context. Nor do SBC’s comments in a subsequent, unrelated proceeding before the FCC preclude our inquiry. The FCC’s argument sweeps too broadly and would close the door to the appellate process envisioned by 28 U.S.C. 2342(1) any time a petitioner evidenced disagreement with a final agency decision during a subsequent rule-making. Where, as here, the agency has repeatedly iterated its position and given no indication that it is willing to reconsider its action, exhaustion in a collateral hearing would be futile. 17 an issue is ripe for review under the APA: (1) whether the issues involved are purely legal, (2) whether the agency’s action is final, (3) whether the action has or will have an immediate impact on the petitioner, and (4) whether resolution of the issue will assist the agency in effective enforcement and administration. Gordon, 322 F.3d at 1219. The FCC arguably concedes that the issue here is purely legal, Comm’n Br. at 35, n.43, and we agree. The interpretation of a statute is a purely legal issue. As noted above, we likewise find that the action involved is final. Qwest and SBC allege a direct and immediate impact in that they continue to see an erosion of implicit subsidies as competitors seize low-cost, urban market share. Harm is perpetuated through both the structure of the federal support mechanisms and the Commission’s unwillingness to take action to force the states to transition to explicit subsidies. That the support mechanisms crafted by the FCC would be subject to change under the petitioner’s proposed interpretation cannot be doubted. Qwest and SBC have adequately stated an immediate and ongoing impact in the face of allegedly dwindling implicit support sufficient for our inquiry. Finally, we believe that judicial resolution will promote effective enforcement and administration. Our determination of the issue will necessarily clarify the Commission’s role, thus facilitating its future efforts to preserve and advance universal service. The issue is accordingly ripe for review.
18 Under 47 U.S.C. § 254(b), the FCC must base its policies for the preservation and advancement of universal service on several enunciated principles. Relevant here, Congress stated that “[t]here should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.” 47 U.S.C. § 254(b)(5). Under a separate provision, Congress noted that federal support “should be explicit and sufficient to achieve the purposes of [universal service].” Id. § 254(e) (emphasis added). As we explained in Qwest I, the Act “plainly contemplates a partnership between the federal and state governments to support universal service.” 258 F.3d at 1203. The terms of the Act evidence recognition of concurrent state authority, providing: A State may adopt regulations not inconsistent with the Commission’s rules to preserve and advance universal service. . . . A state may adopt regulations to provide for additional definitions and standards to preserve and advance universal service within that State only to the extent that such regulations adopt additional specific, predictable, and sufficient mechanisms to support such definitions or standards that do not rely on or burden Federal universal service support mechanisms. 47 U.S.C. § 254(f). From these excerpts, Qwest and SBC5 deduce a statutory mandate requiring states to transition from implicit to explicit support mechanisms. We reject this argument. In drafting the statute, Congress unambiguously imposed an explicit subsidy requirement on federal support mechanisms; no such requirement is expressly imposed on the states. These Petitioners are joined by the Wyoming Public Service Commission (“WPSC”). 5 WPSC Br. at 8. 19 Generally, when Congress includes a specific term in one provision of a statute, but excludes it in another, it is presumed that the term does not govern the sections in which it is omitted. United States v. Atandi, 376 F.3d 1186, 1188 (10th Cir. 2004) (citing Russello v. United States, 464 U.S. 16, 23 (1983)). We see no reason to disturb this cannon of statutory construction here. To the extent this arrangement may be considered ambiguous, our review of the statute leads us to conclude that the FCC’s interpretation is not arbitrary, capricious, or contrary to Congress’s intent. Hammons, 323 F.3d at 1267. We agree with the Commission that, having required explicit federal support mechanisms, Congress certainly knew what language to use to impose a similar requirement on the states. We do not find, as urged by the Petitioners, that Congress’s requirement that state and federal funding be “specific, predictable and sufficient,” 47 U.S.C. § 254(b)(5), provides a backdoor to federal manipulation of state support mechanisms. The Petitioners’ argument that implicit subsidies are inherently non-specific, unpredictable, and insufficient is unavailing. We find no support in the plain meaning of these terms or in the relevant statutory history for the Petitioners’ construction. Petitioners further urge that the Act’s requirement that “[e]very telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, in a manner determined by the 20 State to the preservation and advancement of universal service,” 47 U.S.C. § 254(f), requires that the states replace existing implicit subsidies with explicit support mechanisms. Otherwise, single carriers may be forced to bear a disproportionate and inequitable share of the burden in supporting their own high-cost consumers. We agree with the FCC that the plain text of the statute merely imposes an obligation on the carriers to contribute to universal service funds; it does not impose a requirement of parity with respect to internal functioning and the distribution of funds between and among carriers. Moreover, the language of the provision evidences an express commitment of the contribution issue to the states. In keeping with the dual regulatory scheme embraced by the Act, Congress intended that the states retain significant oversight and authority and did not dictate an arbitrary time line for transition from one system of support to another. Compare Nat’l Ass’n of State Util. Consumer Advocates v. FCC, 372 F.3d 454, 459 (D.C. Cir. 2004) (holding that the Act did not require an immediate transition in federal support from implicit to explicit subsidies). Nor did Congress expressly foreclose the possibility of the continued existence of state implicit support mechanisms that function effectively to preserve and advance universal service. Under these circumstances, we will not disturb the Commission’s statutory interpretation.