Opinion ID: 2623481
Heading Depth: 3
Heading Rank: 2

Heading: The RCA Erred in Placing the Burden of Proof on ACS, the Incumbent Local Exchange Carrier.

Text: On appeal, ACS argues that the RCA erred in placing the burden of proof on ACS because this is contrary to federal law as announced in the Eighth Circuit's Iowa II decision. In Iowa II, the Eighth Circuit concluded that the plain meaning of 47 U.S.C. § 251(f)(1)(A) and (B) requires the party making the request to prove that the request meets the three prerequisites to justify the termination of the otherwise continuing rural exemption. [29] Given the Eighth Circuit's holding, ACS asserts that federal law squarely places the burden of proof on GCI rather than [ACS]. GCI responds to ACS's contentions with a number of policy reasons for placing the burden of proof on ACS; two of these reasons have some strength. [30] First, GCI notes that ACS, as the incumbent local exchange carrier, controls relevant information on issues including: its financial health and status, its ability to withstand the expected competitive pressures exerted by competition, its ability to withstand the costs of providing the services requested by the competitor, and its network design and ability to facilitate the competitor's requests. GCI asserts that because ACS has superior access to this information, ACS should bear the burden of proof because it is in the best position to produce the relevant information and to explain how competitive pressures could harm the incumbent or service to rural customers. Second, GCI argues that placing the burden of proof on ACS is consistent with the Telecommunications Act's statutory scheme for rural exemption proceedings. This is true, according to GCI, because under 47 U.S.C. § 251(c), after a competitor files notice with the state commission that it seeks to compete with an incumbent, the state commission has 120 days to gather the necessary information to determine whether to terminate the incumbent's rural exemption. [31] GCI argues that this short time frame does not permit rounds of discovery, delay and associated costs frequently tolerated in the traditional model of civil litigation. GCI concludes that the limited time frame and ACS's superior access to information relevant to the continuation of its rural exemption weigh in favor of ACS's shouldering the burden of proof. While we see the logic in GCI's arguments, policy arguments cannot control the outcome in this case. A number of developments suggest to us that we should be guided by the Eighth Circuit's decision in Iowa II. The United States Supreme Court has held that the FCC, a federal agency, has jurisdiction to promulgate regulations under the Telecommunications Act to guide state commissions. [32] After the FCC promulgated regulations under the Telecommunications Act, in its First Report and Order, [33] numerous parties challenged those regulations. [34] Under the Hobbs Act, the federal circuit courts of appeal have exclusive jurisdiction over those challenges. The Hobbs Act provides: The court of appeals (other than the United States Court of Appeals for the Federal Circuit) has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of (1) all final orders of the Federal Communications Commission made reviewable by section 402(a) of title 47.[ [35] ] The parties challenging the FCC regulations brought suits in various federal appellate courts. [36] When agency regulations are challenged in multiple circuits, the panel on multidistrict litigation, acting under 28 U.S.C. § 2112, consolidates the petitions and assigns them to a single court of appeal. [37] The panel assigned the challenges concerning the FCC's Telecommunications Act regulations to the Eighth Circuit. [38] Thus, the Eighth Circuit became the only forum to consider the challenges to the FCC regulations following the FCC's First Decision and Order. [39] In addition to the FCC's jurisdiction to promulgate regulations under the Telecommunications Act and the federal appellate courts' (in this case, Eighth Circuit's) exclusive jurisdiction to hear challenges to those regulations, the United States Supreme Court has recognized the need for a national standard for telecommunications regulation under the 1996 Act, noting that the federal government has unquestionably taken local telecommunications competition regulation away from the States [ ][w]ith regard to the matters addressed by the 1996 Act, and that a federal program administered by 50 independent state agencies [would be] strange. [40] All of these factors suggest that we should look to the only available federal guidance in deciding which party shoulders the burden of proof in a rural exemption proceeding: the Eighth Circuit's decision in Iowa II. The Eighth Circuit is the only federal court to speak to the issue of the burden of proof allocation in rural exemption proceedings under 47 U.S.C. § 251(f)(1). We adopt the Eighth Circuit's holding that the competitor must bear the burden of proof. Therefore, we now turn to the question whether the RCA's error in placing the burden of proof on ACS was harmless.
As discussed above, the superior court implicitly found that any error in the RCA's allocation of the burden of proof to ACS was harmless, noting: The RCA's conclusion [to terminate ACS's rural exemptions] clearly shows that the Commission made its findings based on the weight of the evidence and not because of an unmet burden of proof[.] Despite the superior court's assertion, an examination of the RCA's analysis reveals that the RCA did indeed base a number of its conclusions either on ACS's failure to satisfy the burden of proof or on a general lack of proof. For example, when discussing the economic burden element of section 251(f)(1)(a), the RCA explicitly based its finding in favor of GCI on the fact that [t]he Commission finds that [ACS] did not meet [its] burden of proving undue economic burden. Similarly, with regard to one aspect of universal service, the RCA based its decision in favor of GCI on the fact that [t]here was no showing by [ACS] that customers would have any less access to advanced services than they do now if the rural exemption [were] terminated. The RCA's repeated dependence upon the burden of proof allocation in reaching its decision suggests that this error affected ACS's substantial rights. [41] Because we cannot conclude that the RCA's error was harmless, we remand this case for the RCA to analyze the rural exemption issue with GCI shouldering the burden of proof on the three elements of 47 U.S.C. § 251(f)(1)(A): undue economic burden, technical feasibility, and universal service.
On remand, the RCA may elect to hold a supplemental evidentiary hearing on one or more of the issues, as it sees fit. The RCA is free to consider the current state of the evidence and is not bound by the record before it in 1999 when it issued its last order in these proceedings. As noted above, GCI has expressed concern about its ability to amass the relevant information to shoulder its burden of proof. Specifically, it noted ACS's superior access to information and the short 120-day time frame for the RCA to gather information before making its decision. These concerns can be relieved by the RCA's control and management of the discovery process in the remand proceedings. Generally, the conduct and extent of discovery is left to the sound discretion of the agency.... [42] The RCA may order discovery and require ACS's active participation in assisting GCI to analyze and organize the information, including ordering ACS to produce summaries of information and provide analyses to accompany documents it produces. [43] Moreover, because we are remanding this case to the RCA, there will be a period of time between this decision and the RCA's determination on remand. Thus, we must consider how the parties should proceed during that interim period. ACS asks us to roll the clock back and reinstate APUC's original 1998 order in this case, in which APUC denied GCI's request to terminate ACS's rural exemption. GCI responds that reinstating the 1998 order would not be in the public interest, asserting that if the 1998 order were reinstated, service to its customers in the areas covered by the order would be disrupted. GCI also points out that [s]uch harm and confusion to the public might be entirely unnecessary if the RCA were to subsequently terminate the rural exemption again on remand. We decline to reinstate APUC's original order and instead leave it to the RCA's discretion whether to continue the status quo and allow ACS and GCI to provide service to these areas simultaneously.