Opinion ID: 3024925
Heading Depth: 4
Heading Rank: 1

Heading: Prerequisites for Terminating an Exemption

Text: Section 251(f)(1)(A) explains that a state commission may terminate an exemption for a rural telephone company if a request for interconnection, services, or network elements is not unduly economically burdensome, is technically feasible, and is consistent with section 254 of this title (other than subsections (b)(7) and (c)(1)(D) thereof). The FCC promulgated 47 C.F.R. § 51.405 pursuant to § 251(f). The rule requires the ILECs to offer evidence that the application of the requirements under § 251(c) would be likely to cause undue economic burden beyond the economic burden 25 that is typically associated with efficient competitive entry in order to justify exemption. 47 C.F.R. § 51.405(c). The petitioners contend the rule is invalid because it alters the statutorilymandated criteria that must be met in order for a state commission to terminate a rural ILEC's exemption. The petitioners point out that rule 51.405 refers only to the unduly economically burdensome prerequisite for termination rather than the above-mentioned three criteria. The respondents argue that the rule does not eliminate any statutory criteria regarding rural exemptions. The respondents explain it was not the FCC's intent, nor was it within the FCC's power, to eliminate any statutory requirements. The respondents suggest that state commissions will look to the statute itself, in addition to the FCC's rule, when implementing § 251(f). They further claim that the FCC has stated in a later order that rule 51.405(c) does not in any way affect a state's responsibility to consider all three of the factors set forth in section 251(f)(1)(A), citing to an order entered when the Rural Telephone Coalition sought a stay of rule 51.405(c). See In re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd 20166 (1996) ¶ 15. We agree with the petitioners that the rule impermissibly disregards two of the three statutory requirements that must be met before a state commission can terminate an exemption. A state commission looking at rule 51.405(c) would conclude that if a rural ILEC had failed to show an undue economic burden, the exemption must be terminated, regardless of the existence of the ILEC's companion defenses of technical 26 infeasibility and/or inconsistency with § 254 of the Act. A rule that permits such a result represents an arbitrary and unreasonable interpretation of the governing statute.