Court Opinion

ID: 4692960
Source: CourtListenerOpinion
Date Created: 2021-06-04 15:01:10.797588+00
Date Added: 2024-06-11T08:05:19.627913
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 15, 2020                Decided June 4, 2021

                        No. 20-1003

        TRI-COUNTY TELEPHONE ASSOCIATION, INC.,
                     PETITIONER

                             v.

   FEDERAL COMMUNICATIONS COMMISSION AND UNITED
               STATES OF AMERICA,
                  RESPONDENTS

           On Petition for Review of Orders of the
           Federal Communications Commission

    Keenan P. Adamchak argued the cause for petitioner. With
him on the briefs was Donald J. Evans.

     Sarah E. Citrin, Counsel, Federal Communications
Commission, argued the cause for respondents. With her on the
brief were Michael F. Murray, Deputy Assistant Attorney
General, U.S. Department of Justice, Robert B. Nicholson and
Adam D. Chandler, Attorneys, Thomas M. Johnson Jr.,
General Counsel, Federal Communications Commission,
Ashley S. Boizelle, Deputy General Counsel, and Richard K.
Welch, Deputy Associate General Counsel. Matthew C.
Mandelberg, Attorney, U.S. Department of Justice, and Jacob
M.     Lewis,   Associate    General     Counsel,    Federal
                                2
Communications Commission, entered appearances.

   Before: TATEL and GARLAND*, Circuit Judges, and
EDWARDS, Senior Circuit Judge.

    Opinion for the Court filed PER CURIAM.

     PER CURIAM: Hurricanes Irma and Maria devastated
Puerto Rico and the U.S. Virgin Islands (“the Territories”) in
September 2017. Amidst other damage, the storms destroyed
large portions of the Territories’ telecommunications networks.
In response to the emergency, the Federal Communications
Commission issued three orders that provided subsidies to help
rebuild those networks.

     Petitioner Tri-County Telephone Association (“Tri-
County”) challenges two of those orders under the
Administrative Procedure Act (APA) and the Communications
Act. Tri-County argues that in one order, the Commission
bypassed notice and comment without good cause and failed to
justify its chosen amount and allocation of funds. And it argues
that in both orders, the Commission departed from a previous
policy without explanation and contravened several provisions
of the Communications Act. We reject all of Tri-County’s
challenges and deny the petition for review.

                                I.
     Section 254 of the Communications Act directs the
Commission to make policies “for the preservation and
advancement of universal service.” 47 U.S.C. § 254(b). It sets
out six principles to guide those policies, including, as relevant

*
  Then-Judge Garland was a member of the panel at the time
this case was argued but did not participate in the final
disposition of the case.
                                3
here, that consumers in “rural, insular, and high cost areas”
should have access to services and rates that are “reasonably
comparable” to those provided in urban areas, id. § 254(b)(3),
and that “[t]here should be specific, predictable and sufficient
. . . mechanisms to preserve and advance universal service,” id.
§ 254(b)(5). Pursuant to these directives, the Commission
maintains a Universal Service Fund from which it disburses
subsidies to telecommunications carriers in areas that are rural,
insular, or otherwise costly to serve. See 47 C.F.R. §§ 54.1–
54.1612. It finances the Fund with contributions assessed on
interstate carriers, see 47 U.S.C. § 254(e); 47 C.F.R. § 54.706,
and refers to subsidies set aside for high-cost areas as “high-
cost funds” or “high-cost support.” Telecommunications
carriers in the Territories have historically received these high-
cost funds.

    When Hurricanes Irma and Maria devastated the
Territories’ telecommunications networks in September 2017,
the Commission allocated additional resources from the Fund
to help rebuild. Hurricanes Irma and Maria were two of the
worst hurricanes on record to impact the Territories. See The
Uniendo a Puerto Rico Fund and the Connect USVI Fund, 34
FCC Rcd. 9109, 9110 ¶ 4 (Stage II Order). Together, they
caused up to $90 billion in total damage. Id. After the storms,
“88.8 percent of cell sites were out of service in Puerto Rico
and 68.9 percent were out of service in the U.S. Virgin Islands,”
and “large percentages of consumers” lacked cable or wireline
service. Connect America Fund, 32 FCC Rcd. 7981, 7981 ¶ 1
(2017) (Immediate Relief Order) (internal quotation marks
omitted).

    Recognizing    that     “[r]estoring   and    repairing
communications networks [wa]s critical to bringing much
needed immediate relief to these heavily damaged areas,” in
October 2017 the Commission allowed carriers in the
                                4
Territories to immediately receive the high-cost support
subsidies they were scheduled to receive over the next seven
months, totaling up to $76.9 million. Id. at 7981 ¶ 2, 7985 ¶ 14.
The Commission planned to offset these funds against the
carriers’ future subsidies. Id. at 7985 ¶ 14.

     The following May, the Commission found that
restoration was proving slower and more expensive than
anticipated due to “persistent power outages and other
logistical challenges.” The Uniendo a Puerto Rico Fund and
the Connect USVI Fund, 33 FCC Rcd. 5404, 5407 ¶ 10 (2018)
(Stage I Order). Accordingly, the Commission announced that
the previous subsidy payments would not be offset, id., and
allocated an additional $64.2 million for further restoration, id.
at 5408 ¶ 15. The Commission funded both measures with
existing cash reserves it had accumulated in a “high-cost cash
account” between 2012 and 2018. Connect America Fund,
FCC 18-29, 2018 WL 1452720, at *21 ¶ 69 (Mar. 23, 2018)
(describing high-cost cash account); Wireline Competition
Bureau Announces Stage I Restoration Funding for the
Uniendo a Puerto Rico Fund and the Connect USVI Fund, 33
FCC Rcd. 8044, 8045 (Wireline Comp. Bur. 2018)
(announcing use of reserves). The Commission issued the
Stage I Order without notice and comment, determining that
such procedures would be “impracticable and contrary to the
public interest.” Stage I Order, 33 FCC Rcd. at 5411 ¶ 23.

    Finally, the Commission sought comment on various
proposals for more comprehensive relief that would protect the
Territories’ communication networks against future storms. Id.
at 5413–14 ¶¶ 35–36, 5423–24 ¶¶ 81–82. That notice-and-
comment process culminated in the 2019 issuance of the Stage
II Order, which allocated another $934 million over the next
decade for expanding networks in the Territories to
underserved areas and making the networks more storm-
                                5
resistant. Stage II Order, 34 FCC Rcd. at 9110 ¶ 3, 9112–13
¶ 8.

    Petitioner Tri-County is a telecommunications carrier in
Wyoming and Montana that contributes to the Universal
Service Fund. It timely filed a petition for agency
reconsideration of the Stage I Order, which the Commission
denied in the Stage II Order. See id. at 9182–85 ¶¶ 154–61. Tri-
County then timely petitioned for review of both orders.

                               II.
     We first consider whether Tri-County has Article III
standing. To establish standing, Tri-County “must have (1)
suffered an injury in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, 1547 (2016). Tri-County claims that
both orders caused it an injury in fact by increasing its required
contributions to the Universal Service Fund. As the
Commission acknowledges, this is sufficient to establish
standing to challenge the Stage II Order: the Commission will
finance that order by increasing future contributions to the
Fund, including Tri-County’s. See Stage II Order, 34 FCC Rcd.
at 9137 ¶ 45.

     That said, the Commission argues that the Stage I Order
did not increase Tri-County’s contributions because that order
was financed with existing cash reserves rather than future
contributions. Contrary to the Commission’s argument,
spending these reserves caused Tri-County an injury in fact. As
the Commission acknowledges, the existing cash reserves were
being used to finance initiatives within the high-cost program.
See Resp’ts’ Br. 11–12 (citing Universal Service Contribution
Methodology, 34 FCC Rcd. 4143, 4145 ¶ 5 (2019)). Thus, if
the Commission had not used the cash reserves to fund the
                               6
Territories’ restoration efforts, that same money would have
been used to offset some other high-cost funding demand in the
future, which would have, all else being equal, decreased future
funding obligations of Universal Service Fund contributors. In
fact, the Commission announced in December 2018 that
because there was “no excess cash in [the] high-cost account,”
it “w[ould] need to collect additional funds to meet the
requirements of the high-cost program.” Connect America
Fund, 33 FCC Rcd. 11,893, 11,944 ¶ 182 (2018). Because the
Stage I Order did in fact increase future contribution
obligations of Tri-County, it has standing to challenge it.

     Although Tri-County has standing to challenge the amount
of subsidies authorized by the Stage I Order, it lacks standing
to challenge the Stage I Order’s allocation of funds between
Puerto Rico and the U.S. Virgin Islands. Taking the overall
amount as given, the Commission’s allocation had no effect on
Tri-County’s contributions and thus caused it no injury.

                              III.
     Tri-County brings three APA claims: first, that the
Commission lacked good cause to forgo notice and comment
for the Stage I Order; second, that the Commission failed to
justify the overall funding level the Stage I Order provided; and
third, that in both orders, the Commission changed its position
on using the Universal Service Fund for disaster relief without
adequate explanation. We reject all three arguments.

                               A.
     An agency may forgo notice and comment when it is
“impracticable, unnecessary, or contrary to the public interest.”
5 U.S.C. § 553(b)(B). This exception “is to be narrowly
construed and only reluctantly countenanced,” Mack Trucks,
Inc. v. EPA, 682 F.3d 87, 93 (D.C. Cir. 2012) (internal
                               7
quotation marks omitted), and “the grounds justifying the
agency’s use of the exception should be incorporated within the
published rule,” Tennessee Gas Pipeline Co. v. FERC, 969
F.2d 1141, 1144 (D.C. Cir. 1992) (internal quotation marks
omitted). We review de novo the agency’s legal conclusion that
good cause exists, and we defer to its factual findings unless
they are arbitrary and capricious. Sorenson Communications,
Inc. v. FCC, 755 F.3d 702, 706 & n.3 (D.C. Cir. 2014).

     In the Stage I Order, the Commission determined that
notice and comment would be impracticable and contrary to the
public interest because most customers in the Territories still
lacked reliable services and “the next hurricane season w[ould]
commence on June 1, 2018.” Stage I Order, 33 FCC Rcd. at
5411 ¶¶ 23–24. The Commission found that given the
“emergency situation” in the Territories, providers needed to
receive additional funds as soon as possible. Id. at 5411 ¶ 24.
It also warned that “[d]elaying these funds could result in
serious harm if carriers [we]re not able to restore and fortify
their service before the start of the next hurricane season”
because the public would be unable to contact first responders.
Id.

     Tri-County argues that the prospect of future hurricanes
was too speculative to provide good cause. According to Tri-
County, the upcoming hurricane season did not create a real
emergency. But the Commission’s good-cause justification did
not depend on the prospect of a new hurricane. Rather, the
Commission determined that there was an ongoing “emergency
situation” in the Territories because most customers still lacked
service at the time of the order, and “the sooner providers
receive[d] additional funds, the sooner service c[ould] be
restored.” Id. at 5411 ¶ 24.
                               8
     Still, Tri-County objects, the Commission could have
acted earlier, and so the ongoing emergency was of its own
making. We disagree. To be sure, agencies may not “simply
wait . . . [and] then raise up the ‘good cause’ banner and
promulgate rules without following APA procedures.” Council
of the Southern Mountains, Inc. v. Donovan, 653 F.2d 573, 581
(D.C. Cir. 1981). But this is not a case of unjustified agency
delay. The Commission did act earlier, issuing the Immediate
Relief Order within two weeks of Hurricane Maria’s landfall.
Immediate Relief Order, 32 FCC Rcd. at 7981 ¶ 1. The agency
needed to act again in the Stage I Order because “persistent
power outages and other logistical challenges ha[d] made the
continued operation of restored networks more expensive than
some expected.” Stage I Order, 33 FCC Rcd. at 5407 ¶ 10.
When carriers asked for more help, id. at 5406–07 ¶¶ 8–9, the
Commission reasonably determined that an emergency
continued to exist.

                              B.
     Tri-County next claims that the Commission failed to
justify the amount of funding it provided in the Stage I Order.
In that order, the Commission first declined to offset the $65.8
million it had provided in the Immediate Relief Order because
doing so would “substantially delay, if not prevent” those
efforts. Id. at 5407 ¶ 10. It then set aside an additional $64.2
million, reasoning that an amount “roughly equal to the amount
[it] ha[d] decided not to offset against existing support
payments . . . should help restore and maintain service as
quickly as possible for as many people as possible during th[e]
interim period” before the Stage II Order. Id. at 5408 ¶ 14.

     These explanations were perfectly reasonable. Requiring
carriers to repay the funds they had already received would
have delayed urgently needed restoration. And since the
Commission could not know exactly how much more funding
                               9
would be needed, it sensibly drew on prior experience to
provide roughly the same amount as before. See AT&T v. FCC,
886 F.3d 1236, 1252–53 (D.C. Cir. 2018) (finding that the
burden to explain is relaxed when the Commission left existing
levels in place for an interim period). The Commission also put
oversight mechanisms in place to ensure that recipients spent
the funds properly, which helped guarantee that any excess
funds would not be disbursed. Stage I Order, 33 FCC Rcd. at
5410 ¶¶ 20–21.

     Tri-County argues that the Commission’s justification
contradicted itself, claiming that the Commission decided to
allocate additional support that was “‘about equal’ to the
carriers’ existing frozen high-cost support” but then dismissed
the frozen high-cost support amount as irrelevant to its
determination. Pet’r’s Br. 25 (quoting Stage I Order, 33 FCC
Rcd. at 9183 ¶ 158). That is incorrect: the Commission’s
number was equivalent to the emergency advance funds it had
provided in the Immediate Relief Order, not to the carriers’
frozen regular high-cost support. See Stage I Order, 33 FCC
Rcd. at 5408 ¶ 14; see also id. at 5410 ¶ 22 (“[W]e are not
allocating the new funding in proportion to frozen high-cost
support”). Tri-County’s claim that the Commission failed to
make the “explicit empirical finding[]” that service had not
been restored, Pet’r’s Br. 27 (internal quotation marks
omitted), is likewise inaccurate. See, e.g., Stage I Order, 33
FCC Rcd. at 5407 ¶ 10 (“Restoration efforts are still ongoing
rather than largely complete.”); id. at 5411 ¶ 24 (“Even after
months of recovery efforts, the majority of citizens in Puerto
Rico     lack     access    to   continuous      and    reliable
telecommunications services.” (internal quotation marks
omitted)).
                                10
                                C.
     Tri-County next argues that the Commission changed its
prior position without adequate explanation when it concluded
that disaster relief was a purpose for which high-cost funds
were intended under section 254(e) of the Communications
Act. See Stage I Order, 33 FCC Rcd. at 5410 ¶ 20 (concluding
that appropriate purposes under section 254(e) included
addressing damages done “during the hurricanes”); Stage II
Order, 34 FCC Rcd. at 9169 ¶ 118, 9149 ¶ 172 (same).
According to Tri-County, the Commission had determined in
its 2005 Hurricane Katrina Order that disaster relief was not a
purpose for which high-cost funds were intended.

     Tri-County mischaracterizes the Commission’s earlier
determination. In the Hurricane Katrina Order, the
Commission stated that “using high-cost support to repair and
rebuild facilities and services damaged by Hurricane Katrina
[wa]s consistent with the statutory directive contained in
section 254(e).” 20 FCC Rcd. 16,884, 16,912 ¶ 55 (2005). As
Tri-County points out, the Commission also “[a]lternatively”
forbore from section 254(e) and waived its implementing
regulation “[t]o the extent necessary and for only the relief
provided herein.” Id. But it did so only in the alternative. Thus,
since the Commission took the position in the Hurricane
Katrina Order that disaster relief was an eligible purpose under
the Communications Act, and it maintained that position in the
Stage I and Stage II Orders, no change in position occurred.

                               IV.
    Tri-County also challenges both orders under the
Communications Act. It argues that the Commission
contravened various sections of the statute by using high-cost
funds for disaster relief, a purpose for which it alleges the funds
are not intended, and by failing to consult the Federal-State
                              11
Joint Board before issuing the orders. These claims also lack
merit.

                              A.
     Section 254(b) of the Communications Act sets out six
principles to guide the Commission’s universal service
policies. 47 U.S.C. § 254(b). The Commission receives
Chevron deference in interpreting these principles and has
“broad discretion” in balancing them. Rural Cellular Ass’n v.
FCC, 588 F.3d 1095, 1101–03 (D.C. Cir. 2009) (citing
Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 843 (1984)).

     In support of its argument that the Stage I and Stage II
Orders misused high-cost funds, Tri-County appeals to two
specific 254(b) principles. First, it argues that the orders
contravened the principle that “rural, insular, and high cost
areas[] should have access to . . . services . . . that are
reasonably comparable to those services provided in urban
areas and that are available at rates that are reasonably
comparable to rates charged for similar services in urban
areas.” 47 U.S.C. § 254(b)(3). According to Tri-County, the
Commission “erroneously focus[ed]” on restoring comparable
services rather than on ensuring both comparable services and
rates. Pet’r’s Br. 41. But nothing in the statute’s language
requires that each of the Commission’s actions “focus” on both
rates and services. In any case, the orders met such a
requirement, because to ensure that an area has access to
comparable services and rates, the Commission must ensure
that it has some services to begin with. Tri-County also argues
that the Commission may use the Universal Service Fund only
to preserve services that already exist, not to create new
services. Id. at 43. But the Communications Act is to the
contrary: it provides that the Commission’s “policies for the
preservation and advancement of universal service” should
                               12
support consumers in high-cost areas. 47 U.S.C. § 254(b)
(emphasis added).

       Second, Tri-County appeals to the Communications Act’s
principle that universal service mechanisms be “predictable
and sufficient.” Id. § 254(b)(5). Tri-County argues that the
orders violated the predictability part of this principle because
“[h]urricanes are by their very nature unpredictable.” Pet’r’s
Br. 14. This inference does not follow. Even if it is hard to
predict a particular hurricane, it is predictable that some
hurricanes will periodically disrupt service in a hurricane-
prone region. Moreover, as the Commission points out, the
Commission established these funds with set ceilings for their
disbursement over defined periods of time, thereby satisfying
the predictability requirement. Resp’ts’ Br. 34 n.10. Tri-
County also argues that the Stage I and Stage II Orders violated
the same principle by providing excessive funding, which
“may itself violate the sufficiency requirements of the Act by
. . . pricing some consumers out of the market.” Rural Cellular
Ass’n, 588 F.3d at 1103 (internal quotation marks omitted). But
Tri-County offers no evidence that the subsidies authorized by
the orders priced any consumers out of the market.

                               B.
     Tri-County finally argues that the orders violated the Act’s
requirement that the Commission “institute and refer to a
Federal-State Joint Board . . . to recommend changes to . . . the
definition of the services that are supported by Federal
universal service support mechanisms.” 47 U.S.C. § 254(a)(1).
According to Tri-County, the Commission changed the
definition when it used the Universal Service Fund for the
supposedly new and distinctive purpose of “disaster relief.”
Pet’r’s Br. 32.
                                13
     We reject this premise. As noted, the Commission had
previously used the Universal Service Fund for disaster relief
in the Hurricane Katrina Order. And in the two orders at issue
here, the Commission simply applied the principles in section
254(b) to the circumstances found in the Territories. The statute
contains no special carve-out for natural disasters, and Tri-
County offers no principled distinction between a hurricane
and any other cause of lost service. At oral argument, Tri-
County’s counsel stated that the Commission may use the
Universal Service Fund when “the economics are not
working,” such as when a supplier goes bankrupt. Oral Arg.
Rec. 20:09. This line fails to distinguish the orders because the
economics of providing service were “not working” in the
Territories after the hurricanes, either. Given that the orders did
not change the definition of the services supported by the Fund,
the Commission was not required to consult the Joint Board.

                                V.
    For the foregoing reasons, the petition for review is denied.

                                                      So ordered.