Court Opinion

ID: 9963947
Source: CourtListenerOpinion
Date Created: 2024-04-26 16:01:41.853304+00
Date Added: 2024-06-11T08:25:05.539280
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

ASSURANCE WIRELESS USA,                  No. 23-15490
L.P.; METROPCS CALIFORNIA,
LLC; SPRINT SPECTRUM LLC; T-            D.C. No. 3:23-cv-
MOBILE USA, INC.; T-MOBILE                 00483-LB
WEST LLC,

              Plaintiffs-Appellants,       OPINION
  v.

ALICE B. REYNOLDS, President of
the California Public Utilities
Commission, in her official capacity;
KAREN DOUGLAS, Commissioner
of the California Public Utilities
Commission, in her official capacity;
DARCIE L. HOUCK, Commissioner
of the California Public Utilities
Commission, in her official capacity;
JOHN REYNOLDS, Commissioner of
the California Public Utilities
Commission, in his official capacity;
GENEVIEVE SHIROMA,
Commissioner of the California Public
Utilities Commission, in her official
capacity,

              Defendants-Appellees.
2           ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

        Appeal from the United States District Court
           for the Northern District of California
        Laurel D. Beeler, Magistrate Judge, Presiding

           Argued and Submitted October 17, 2023
                 San Francisco, California

                       Filed April 26, 2024

Before: Eugene E. Siler, * Jacqueline H. Nguyen, and Ryan
              D. Nelson, Circuit Judges.

                  Opinion by Judge R. Nelson

                          SUMMARY **

                    Telecommunications Act

    The panel affirmed the district court’s order declining to
preliminarily enjoin a California Public Utilities
Commission rule changing the mechanism for charging
telecommunications providers to fund California’s universal
service program.
    The Telecommunications Act requires providers of
interstate telecommunications services to “contribute, on an
equitable and nondiscriminatory basis, to the specific,

*
 The Honorable Eugene E. Siler, United States Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation.
**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS          3

predictable, and sufficient mechanisms established by the
Federal Communications Commission to preserve and
advance universal service.” The FCC has interpreted the
“equitable and nondiscriminatory” requirement to require
“competitive neutrality.” Under 47 U.S.C. § 254(f), the Act
places similar requirements on carriers that provide
intrastate services, but, subject to consistency with federal
law and competitive neutrality, it gives states the discretion
to decide the “manner” that will ensure “the preservation and
advancement of universal service in that State.”
    Until recently, universal service in California was funded
based on revenue. Faced with declining revenues, CPUC
issued a rule imposing surcharges on telecommunications
carriers based not on revenue but on the number of active
accounts, called access lines. The carriers sought a
preliminary injunction of the access line rule as expressly
preempted by § 254(f).
    The panel held that the district court properly exercised
its discretion in denying preliminary injunctive relief
because the carriers were unlikely to succeed on the merits
of their express preemption claims. The panel held that
§ 254(f) preempts state regulations that are “inconsistent
with” FCC regulations and that are not “equitable and
nondiscriminatory.” The carriers did not show a likelihood
of success on their claim that the access rule was
"inconsistent with” the FCC rule because, while the access
line rule differed from the FCC’s rule funding interstate
universal service programs, the carriers did not show that the
access line rule burdened those programs. The panel also
rejected the carriers’s likelihood of success on their claim
that the access line rule was preempted because it was
inequitable and discriminatory contrary to § 254(f).
4        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

                       COUNSEL

Peter Karanjia (argued), DLA Piper LLP (US), Washington,
D.C.; Ben C. Fabens-Lassen and Gaspard Rappoport, DLA
Piper LLP (US), Los Angeles, California; Kathleen S. Kizer,
DLA Piper LLP (US), San Francisco, California; for
Plaintiffs-Appellants.
Hien Vo Winter (argued), California Public Utilities
Commission, Legal Division, Sacramento, California;
Vanessa Baldwin, David W. Fermino, Jonathan C. Koltz,
Christine J. Hammond, and Ian Culver, California Public
Utilities Commission, Legal Division, San Francisco,
California, for Defendants-Appellees.
Eric S. Tresh and Alla Raykin, Eversheds Sutherland (US)
LLP, Atlanta, Georgia, for Amici Curiae Multicultural
Media, Telecom, and Internet Council, ALLvanza, the
California Hawaii State Conference of the National
Association for the Advancement of Colored People, and
LatinoJustice PRLDEF.
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS             5

                          OPINION

R. NELSON, Circuit Judge:

    Federal law requires both the Federal Communications
Commission and the states to charge telecommunications
providers to fund universal service programs. Facing
declining revenues under its prior funding mechanism,
California enacted a new rule charging per access line to
advance its own universal service program. A group of
carriers claim that the new rule is preempted as “inconsistent
with” federal law, which charges by revenue. The district
court declined to enjoin the California rule. We affirm.
                                I
    Congress enacted the Communications Act of 1934 to
“make available, so far as possible, to all the people of the
United States . . . a rapid, efficient, Nation-wide, and world-
wide wire and radio communication service with adequate
facilities at reasonable charges.” 47 U.S.C. § 151. This is
known as universal service. In 1996, Congress enacted the
Telecommunications          Act,     which     amended      the
Communications Act. Under the Telecommunications Act,
“[e]very telecommunications carrier that provides interstate
telecommunications services shall contribute, on an
equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient mechanisms established by the
[FCC] to preserve and advance universal service.” Id.
§ 254(d).
    The Telecommunications Act places similar
requirements on telecommunications carriers that provide
intrastate services. But it does not tell the states how to
achieve that goal. Instead, it leaves to the states the right “to
6         ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

adopt regulations not inconsistent with the [FCC]’s rules
[that] preserve and advance universal service” on an
“equitable and nondiscriminatory basis.” Id. § 254(f). The
FCC has interpreted the “equitable and nondiscriminatory”
requirement to require “competitive neutrality.” Matter of
Universal Serv. Contribution Methodology: A Nat’l
Broadband Plan for Our Future, 27 FCC Rcd. 5357,
5373, ¶ 10 (2012). Competitive neutrality, in turn, requires
universal service rules (1) to “neither unfairly advantage nor
disadvantage one provider over another” and (2) to “neither
unfairly favor nor disfavor one technology over another.”
Id. at 5361.
    Subject to those two narrow limitations—consistency
with federal law and competitive neutrality—the
Telecommunications Act gives states, not the FCC, the
discretion to decide the “manner” which will ensure “the
preservation and advancement of universal service in that
State.” 47 U.S.C. § 254(f). Through this “system of
cooperative federalism,” Congress recognized states as “key
partners to the federal government in regulating the
telecommunications industry.” MetroPCS Cal., LLC v.
Picker, 970 F.3d 1106, 1118 (9th Cir. 2020) (quotations
omitted). Guided by this recognition, Congress “called upon
[the states] to apply their expertise and judgment” to advance
intrastate universal service and gave them “freedom to do
so.” Id. at 1118–19 (cleaned up).
    To follow § 254, the FCC established a “universal
service fund” to subsidize universal service. 47 C.F.R. Part
54. As § 254(f) allows, “California requires its own
universal service contributions.” Picker, 970 F.3d at 1109.
Its California Public Utility Commission (CPUC) issues
rules to determine how such contributions are to be
calculated. Id. at 1109–10. Until recently, universal service
           ASSURANCE WIRELESS USA, L.P. V. REYNOLDS                  7

in California was funded based on revenue. Id. Revenue, in
turn, was calculated using rules requiring “all prepaid
providers to apply a uniform, flat rate” equation “to
determine their intrastate revenues.” Id. at 1110. Postpaid
services “were free to use any of the three FCC-recognized
methods to determine their intrastate revenues for purposes
of calculating surcharges owed to the CPUC.” Id. CPUC
faced a problem as funding universal service using a revenue
system proved unsustainable. As time passed, the base of
chargeable     surcharges—which        largely    comprised
landlines—declined.  1

    Faced with declining revenues inadequate to support
CPUC’s universal service programs, CPUC considered other
options for funding the federally mandated universal service
programs. It landed on a rule that imposed surcharges on
telecommunications carriers based not on revenue but on the
number of active accounts, called access lines. An access
line is:

        [A] wire or wireless connection that provides
        a     real    time     two     way      voice
        telecommunications service or [voice over
        internet protocol] service to or from any
        device utilized by an end user, regardless of
        technology, which is associated with a 10-
        digit NPA-NXX number or other unique
        identifier and a service address or Place of
        Primary Use in California.

Assurance Wireless USA, L.P. v. Reynolds, No. 23-CV-
00483-LB, 2023 WL 2780365, at *3 (N.D. Cal. Mar. 31,
1
 Between 2012 and 2020, the “intrastate revenue billing base” decreased
by fifty-eight percent, from $15.4 billion to $6.433 billion.
8         ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

2023). Under the new rule, all carriers apply an objective
standard to “count and report access lines” to ensure that “all
end users (residential, small business, large business) and all
service types will pay the same amount.” Id. (cleaned up).
By design, this standard was “more sustainable, technology
neutral, unambiguous, and equitable” than the prior system
under which the “disproportionate burden” fell on landline
users. Id. (internal quotations omitted).
    Plaintiff carriers sued, unsuccessfully seeking a
preliminary injunction of the access line rule as expressly
preempted by § 254(f)’s text. The district court concluded
that the “new rule is different from the FCC rule, but the
plaintiffs did not establish that it is inconsistent and
preempted.” Assurance Wireless USA, L.P., 2023 WL
2780365, at *6. It rejected the carriers’s claim that, because
the FCC had declined to adopt a connection-based approach
to fund the federal universal service program, states needed
to do the same. Id. at *6–7. It also spurned the carriers’s
attempts to “evoke[] conflict preemption” despite “argu[ing]
only express preemption.” Id. at *7.
    The district court also concluded that the new rule is both
equitable and nondiscriminatory. Id. at *7–9. It explained
that “end users, not carriers, pay the surcharges.” Id. at *9.
And it concluded that it was not unfair because all carriers
were subject to the rule. Id. The court also rejected attempts
from the carriers to find unfair discrimination in CPUC’s
decision to subsidize providers of services to low-income
wireless users that participate in California’s LifeLine
Program but not those who provide services to low-income
recipients of subsidies under the FCC’s Affordable
Connectivity Program (ACP). Id. Unlike the ACP, the
LifeLine Program “applies to only one member” of a
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS             9

household. Id. This difference rendered the two programs
“materially distinct.” Id.
    Although the district court concluded that the carriers’s
preemption arguments were unlikely to succeed on the
merits, it also decided the other preliminary injunction
factors. It found the question of irreparable harm close
because the carriers could not get damages from the state and
would lose customer goodwill if they tried to pass to their
customers the new charges from the new rule. Id. at *10. It
found that the merged public interest and the balance of
equities factors did not favor an injunction because CPUC
was trying to save its universal service program with the
access line rule. Id. at *11.
                               II
    “Denial of a motion for a preliminary injunction is
reviewed for abuse of discretion and the underlying legal
principles de novo.” Int’l Franchise Ass’n, Inc. v. City of
Seattle, 803 F.3d 389, 398 (9th Cir. 2015). To qualify for an
injunction, the moving party must establish a likelihood of
success on the merits, that it will suffer irreparable harm in
the absence of injunctive relief, that the balance of the
equities tips in its favor, and that the public interest supports
relief. All. for the Wild Rockies v. Petrick, 68 F.4th 475, 490
(9th Cir. 2023). As to the merits, our cases apply a “sliding
scale test” that “permits plaintiffs to satisfy this requirement
with a ‘serious question’ on the merits when the balance of
hardships tips sharply in their favor.” Where Do We Go
Berkeley v. California Dep’t of Transp., 32 F.4th 852, 863
(9th Cir. 2022). Serious questions are issues that “cannot be
resolved one way or the other at the hearing on the injunction
because they require more deliberative investigation.”
Manrique v. Kolc, 65 F.4th 1037, 1041 (9th Cir. 2023)
10          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

(cleaned up). Thus, parties do not show serious questions
when they raise a “merely plausible claim,” nor can a district
court “forgo legal analysis just because it has not identified
precedent that places the question beyond debate.” Where
Do We Go Berkeley, 32 F.4th at 863. This “less demanding”
merits standard requires serious factual questions that need
to be resolved in the case. All. for the Wild Rockies, 68 F.4th
at 497. 2 The final two injunction factors—the balance of
equities and the public interest—merge where a government
agency is a party. Nken v. Holder, 556 U.S. 418, 435 (2009).
                                   III
    We conclude that the carriers are unlikely to succeed on
the merits of their claims. And “if a movant fails to meet
this threshold inquiry, we need not consider the other
factors.” California v. Azar, 911 F.3d 558, 575 (9th Cir.
2018) (internal quotations omitted).
                                    A
    We begin with a word on preemption. Federal
regulations can preempt state law. Fid. Fed. Sav. & Loan
Ass’n v. de la Cuesta, 458 U.S. 141, 152–53 (1982). We
recognize three types of preemption: “express preemption,
field preemption, and conflict preemption.” Ass’n des
Éleveurs de Canards et d’Oies du Quebec v. Bonta, 33 F.4th
1107, 1113–14 (9th Cir. 2022). Express preemption “arises
‘when the text of a federal statute explicitly manifests
Congress’s intent to displace state law.’” Id. at 1114
(quoting Valle del Sol Inc. v. Whiting, 732 F.3d 1006, 1022
(9th Cir. 2013)). Field preemption is when Congress takes
exclusive control over a particular issue. Id. at 1114.

2
 Although the carriers pay lip-service to this lesser merits standard, they
do not explain why they succeed under it.
            ASSURANCE WIRELESS USA, L.P. V. REYNOLDS                  11

Conflict preemption arises when state law conflicts with
federal law, such that “it is impossible for a private party to
comply with both state and federal law.” Id. (citations
omitted).
    The carriers exclusively argue express preemption. 3
When a statute contains an express preemption clause, we
look only to the text “without any presumptive thumb on the
scale for or against preemption.” Cal. Rest. Ass’n v. City of
Berkeley, 89 F.4th 1094, 1101 (9th Cir. 2024) (citation
omitted). 4
    “[T]he task of statutory construction must in the first
instance focus on the plain wording of the [preemption]
clause” and then consider “the surrounding statutory
framework[.]” Nat’l R.R. Passenger Corp. v. Su, 41 F.4th
1147, 1152 (9th Cir. 2022) (citations omitted). Our analysis
of the carriers’s express-preemption argument thus begins
with the Telecommunications Act’s text. Section 254(f)
preempts state regulations that are “inconsistent with” FCC
regulations and that are not “equitable and
nondiscriminatory.” We treat each in turn.
                                   B
   The Telecommunications Act allows states to “adopt
regulations not inconsistent with the [FCC]’s rules.” 47
U.S.C. § 254(f). The carriers argue that the CPUC rule is
3
 We held that there was no conflict preemption the last time the carriers
challenged a CPUC rule vis-à-vis this very statute. See Picker, 970 F.3d
at 1117–20.
4
  The presumption against preemption does not apply when there is an
express preemption clause, particularly as here where the statute is not
ambiguous. See Puerto Rico v. Franklin Cal. Tax-Free Tr., 579 U.S.
115, 125 (2016); see also R.J. Reynolds Tobacco Co. v. County of Los
Angeles, 29 F.4th 542, 553 n.6 (9th Cir. 2022).
12        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

“inconsistent with” the FCC’s rules because it differs from
them. They also explain that the FCC considered—and
ultimately rejected—a rule functionally equivalent to the
CPUC rule they now challenge.
                               1
    To determine when a state regulation is “inconsistent
with” a federal regulation, we would normally start by
looking at the meaning of “inconsistent” at the time
Congress enacted the Telecommunications Act. But we are
not working from an entirely blank slate.
    Although we have never interpreted § 254(f)’s use of
“inconsistent with,” in Metrophones Telecommunications,
Inc. v. Global Crossing Telecommunications, Inc., we
interpreted its use in 47 U.S.C. § 276(c), another provision
of the Telecommunications Act. 423 F.3d 1056 (9th Cir.
2005).     We first explained that Congress’s use of
“inconsistent with” “signaled its intent not to occupy the
entire field.” Metrophones, 423 F.3d at 1072 (emphasis
added). We then concluded that when Congress uses the
term “inconsistent with” in an express preemption clause, its
meaning is “substantially identical to the analysis of implied
conflict preemption.” Id. at 1073. We thus concluded that
state law is only inconsistent with federal law if it “stands as
an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” Id. (quoting Gade v.
Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992)).
And even then, we explained that state law was only
preempted “to the extent it actually interferes with the
methods by which the federal regulatory scheme was
designed to reach its goal.” Id. (citations and internal
punctuation omitted).
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS           13

    We could rest on Metrophones and conclude—as we did
there—that Congress’s use of “inconsistent with” merely
codifies what would otherwise be implied conflict
preemption. After all, “identical words and phrases within
the same statute should normally be given the same
meaning.” Does 1-6 v. Reddit, Inc., 51 F.4th 1137, 1143 (9th
Cir. 2022) (subsequent history and internal citations
omitted). Applied here, it would mean that whenever the
Telecommunications Act uses “inconsistent with,” it means
the same thing.
     But we would reach the same conclusion even without
the helpful gloss in Metrophones because that interpretation
is also correct. At the time the Telecommunications Act was
enacted, “inconsistent” meant “[m]utually repugnant or
contradictory.” Inconsistent, BLACK’S LAW DICTIONARY
766 (6th ed. 1990). Under that definition, two ideas are
inconsistent only if they are “[c]ontrary, the one to the other,
so that both cannot stand, but the acceptance or
establishment of the one implies the abrogation or
abandonment of the other.” Id. Another definition required
“incompatibility of elements” or a lack of “agreement.”
Inconsistent, RANDOM HOUSE WEBSTER’S COLLEGE
DICTIONARY 660 (2d ed. 1997).
    These contemporary dictionary definitions suggest that
the term “inconsistent” requires some level of mutual
exclusivity. This is the most intuitive reading. And if
dictionaries were not enough, the rest of the statute provides
helpful context, as it clarifies that state rules are allowed if
they “are paired with ‘specific, predictable, and sufficient
mechanisms’ that ‘do not rely on or burden Federal universal
service support mechanisms.’” WWC Holding Co. v. Sopkin,
488 F.3d 1262, 1277 (10th Cir. 2007) (quoting 47 U.S.C.
§ 254(f)). The statute’s prohibiting reliance on or the
14        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

burdening of federal funding mechanisms highlights
Congress’s key concern in allowing the states to set their
own rules for funding universal service within their borders.
The words Congress used reflect its desire for states to
ensure state-level universal service to best meet their unique
needs, but only if they do not harm the FCC’s efforts.
    Our reading is also consistent with how “inconsistent” is
used in other areas of federal law. In Goldfarb v. Mayor and
City Council of Baltimore, the Fourth Circuit considered a
challenge brought under the Resource Conservation and
Recovery Act (RCRA) against “current and former owners
of an industrial property in Baltimore alleged to have been
contaminated by hazardous waste.” 791 F.3d 500, 502 (4th
Cir. 2015). The RCRA included an “anti-duplication
provision” with language remarkably like § 254(f). It
provided that if the Clean Water Act (CWA) regulated an
activity, that activity cannot also be regulated by the
RCRA—“except to the extent that such application (or
regulation) is not inconsistent with the requirements” of the
CWA, among other statutes. 42 U.S.C. § 6905(a).
    Like us, the Fourth Circuit was required to determine
what it meant for the RCRA to be “inconsistent with” other
provisions of federal law. And like us, the Fourth Circuit
gave “inconsistent” “its ordinary dictionary meaning,”
ultimately concluding that “[t]o be ‘inconsistent’ for
purposes of § 6905(a), . . . the CWA must require something
fundamentally at odds with what RCRA would otherwise
require.” Goldfarb, 791 F.3d at 509–10 (collecting
dictionary definitions).
    In a different challenge interpreting the same statute, the
D.C. Circuit faulted a party for claiming that something was
“inconsistent with” the Atomic Energy Act while being
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS         15

“unable to point to any direct conflict between” the
challenged position “and any specific provision of the
AEA.” Edison Elec. Inst. v. EPA, 996 F.2d 326, 337 (D.C.
Cir. 1993). The carriers here face the same problem. They
rely on the undisputed point that the surcharge rule differs
from the FCC rule. But that is not enough.
    Other examples establishing that “inconsistent” does not
mean “different” abound. The Supreme Court has explained
that “a later statute repeals former ones when clearly
inconsistent with the earlier enactments.” United States v.
Yuginovich, 256 U.S. 450, 463 (1921) (citing United States
v. Tynen, 78 U.S. (11 Wall.) 88, 93 (1870)). The
presumption thus recognizes that two statutes can differ
without the later-enacted statute destroying the former. It is
only when the two conflict that the former yields.
    Likewise, parties are judicially estopped from taking
inconsistent litigating positions by litigating on one theory,
and then seeking “an inconsistent advantage by pursuing an
incompatible theory.” 18 C. Wright, A. Miller, & E. Cooper,
Federal Practice and Procedure § 4477, p. 782 (1981). Each
of these examples, and countless others, point in one
direction—“inconsistent” requires more than “different.”
The carriers provide no reason for us to afford § 254(f)’s
definition of “inconsistent” a different understanding from
the meaning we apply in other areas of federal law.
    Moreover, the cases on which the carriers rely to redefine
“inconsistent” to mean “different” require more than mere
difference. One such case, Ecological Rights Foundation v.
PG&E Company, held that “inconsistent with” requires two
rules to be “mutually repugnant or contradictory, such that
the application of one implies the abrogation or
abandonment of the other.” 874 F.3d 1083, 1095 (9th Cir.
16        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

2017) (cleaned up).        That undermines the carriers’s
argument.
    Their other cited sources fare no better. Justice Scalia’s
partial concurrence in Decker v. Northwest Environmental
Defense Center, for example, explained that “whenever the
agency’s interpretation of the regulation is different from the
fairest reading, it is in that sense ‘inconsistent’ with the
regulation.” 568 U.S. 597, 617 (2013) (Scalia, J., concurring
in part and dissenting in part). But the next sentence—
omitted from the carriers’s briefing—explains that such
difference is “[o]bviously . . . not enough.” Id.
    Thus, even the carriers’s cases require a rule to
undermine another for the two rules to be inconsistent. We
thus conclude that the Telecommunications Act’s use of
“inconsistent with” unambiguously requires abrogation or
abandonment of the federal rule.
                              2
    Guided by our interpretation of “inconsistent with,” we
conclude that the carriers have failed to show a likelihood of
success on their claim that the access line rule is
“inconsistent with” the FCC rule. The FCC rule—imposed
on carriers for funding the federal universal service
program—says nothing about the funding of state universal
service programs. And the carriers concede that they cannot
prove impossibility preemption. That concession is fatal
given our conclusion in Metrophones that when Congress
uses “inconsistent with,” it invokes conflict preemption. But
even without that concession, the carriers’s arguments fail.
   First, they argue that a state cannot evade preemption
simply by declaring that its own rule is best designed to
advance universal service. We agree, but that is beside the
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS         17

point. A state, of course, could never adopt a rule that it
determined would harm universal service. But that speaks
more to their obligation under § 254(f) to advance universal
service than it does to their obligation to advance universal
service consistent with FCC rules.
    Next, they argue that the rule undermines the FCC’s
explicit policy objectives of ensuring that universal service
support mechanisms are predictable, competitively neutral,
and easily administrable, while avoiding economic
distortions. In support, they cite the FCC’s consideration—
and ultimate rejection—of its own connections-based rule in
2012. At the time, the FCC declined to “create a definition
of ‘connection’ for purposes of moving to a new
connections-based contribution methodology” without first
obtaining industry-wide consensus.          Universal Serv.
Contribution Methodology, 27 FCC Rcd. 5357, 5439, ¶ 226
(2012). But that decision does not impose a state-level
consensus requirement. What is good for the goose is not
always good for the gander. We agree with the D.C.
Circuit’s conclusion—to borrow from Judge Williams’s
summary—that the FCC can “act[] lawfully in rejecting”
one action without “each of the 50 states” being similarly
required to reject that action. Mozilla Corp. v. FCC, 940
F.3d 1, 95 (D.C. Cir. 2019) (Williams, J., concurring in part
and dissenting in part) (emphasis in original). As we
explained above, the relevant question is whether CPUC’s
adopting a connections-based rule would burden,
undermine, or rely on the FCC’s universal service efforts.
By rejecting an access line rule for funding federal universal
service programs, all that the FCC necessarily concluded
was that such rules would not work at the federal level.
California may conclude otherwise if it can do so without
harming the FCC’s efforts.
18        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

    The carriers then argue that the new rule assesses
surcharges without distinguishing whether the underlying
services are surchargeable. They point to broadband, which
is unsurchargeable. But it is not clear that intrastate
broadband services are unsurchargeable. CPUC explains
that the prohibition on such surcharges was ephemeral—the
D.C. Circuit rejected the FCC’s “effort to kick the States out
of intrastate broadband regulation” and vacated its rule
prohibiting “any state or local requirements that are
inconsistent with [the FCC’s] deregulatory approach.”
Mozilla Corp., 940 F.3d at 74, 81.
    The parties dispute whether the D.C. Circuit’s Mozilla
opinion, in vacating the preemption provision, vacated a
related FCC conclusion that “any state requirements to
contribute to state universal service support mechanisms that
might be imposed on such broadband Internet access
services would be inconsistent with federal policy and
therefore are preempted by section 254(f).” Protecting &
Promoting the Open Internet, 30 FCC Rcd. 5601, 5837
n.1477 (2015) (Open Internet Order). We have our
reservations about that conclusion given our holding that
“inconsistent with” mirrors the requirements of conflict
preemption. The Open Internet Order did not conduct a
statutory analysis of “inconsistent with” and did not
meaningfully address how states would undermine its efforts
by surcharging broadband. But we need not wade into that
controversy here.
   At oral argument, CPUC explained that its definition of
access line is limited to voice telecommunications services,
meaning that it “does not and cannot surcharge broadband”
            ASSURANCE WIRELESS USA, L.P. V. REYNOLDS                   19

services. 5 Put differently, since CPUC does not surcharge
broadband qua broadband, there is no conflict even if the
FCC’s preemption-by-fiat were lawful. Thus, the continued
validity of the Open Internet Order’s preemption of
broadband universal service surcharges does not control our
analysis.
    Finally, the carriers point to Metrophones. There, we
considered whether three state-law claims were preempted
by the Telecommunications Act. We concluded that the
implied-contract-in-fact and unjust-enrichment claims were
not preempted because they cleanly aligned with what the
FCC had done. 423 F.3d at 1076.
    Things were different for the negligence claim. We held
that it was preempted because it sought to assign liability
differently from the FCC’s compensation rules. Id. at 1079.
By seeking to assign liability to one party where the FCC
assigned liability to another, the negligence claim in effect
was “inconsistent with” the relevant FCC regulations. But
far from providing the carriers harbor, our conclusion in
Metrophones only underscores the correctness of our
conclusion that two rules must be in conflict—
irreconcilable—for one to be “inconsistent with” the other.
5
  Moreover, even if the carriers are correct that (1) the access line rule
surcharges broadband and (2) that states are preempted from surcharging
broadband services—a tall order—they face an additional hurdle. They
raise a facial challenge to the access line rule. But to answer “whether
the CPUC resolutions at issue . . . are facially preempted, we use the
‘rules that apply to facial challenges’ to statutes.” Picker, 970 F.3d at
1122 (quoting Puente Ariz. v. Arpaio, 821 F.3d 1098, 1104 (9th Cir.
2016)). Those rules require the carriers to show that there are “no set of
circumstances . . . under which the resolutions were valid.” Id. (cleaned
up). They cannot succeed on their facial claim because even if
broadband surcharges are preempted, the access line rule does not
otherwise conflict with FCC rules.
20        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

After all, if the FCC imposed liability on one party for an
action, a state law under which the other party would be
liable for the same action would directly conflict with the
federal law. Metrophones, while insightful, thus cuts against
the carriers’s preemption argument.
                      *       *       *
    The access line rule differs from the FCC’s rule funding
interstate universal service programs. But the carriers have
not shown that it burdens those programs, and they have thus
failed to show that they are likely to succeed on their claim
that it is inconsistent with those rules.
                              C
    We also reject the carriers’s claim that the surcharge rule
is preempted because it is inequitable and discriminatory
contrary to § 254(f). The FCC interpreted the “equitable and
nondiscriminatory” requirement to impose a “principle of
competitive neutrality.” In re Fed.-State Joint Board on
Universal Serv., 12 FCC Rcd. 8776, 8801 (1997).
    In Picker, we recognized that neutrality means “that
universal service support mechanisms and rules neither
unfairly advantage nor disadvantage one provider over
another, and neither unfairly favor nor disfavor one
technology over another.” 970 F.3d at 1120 (internal
quotations omitted). The keyword there is “unfairly.” And
though we did not in Picker—and do not here—detail all the
ways a state could act unfairly to certain providers or
technologies, we explained that it would not be unfair for
regulators to treat “competitors whose circumstances are
materially distinct” differently. Id. (internal quotations
omitted). We thus recognized, albeit in different words, that
whatever else competitive neutrality requires, it “does not
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS        21

require precise parity of treatment.” Rural Cellular Ass’n v.
FCC, 588 F.3d 1095, 1105 (D.C. Cir. 2009) (quoting TCG
New York, Inc. v. City of White Plains, 305 F.3d 67, 80 (2d
Cir. 2002)). Like our sister circuits, we conclude that
competitive neutrality “only prohibits [states] from treating
competitors”—and,        by     extension,    technologies—
“differently in ‘unfair’ ways.” Id. at 1104.
                             1
    Applying that principle, we conclude that the surcharge
rule is not unfairly discriminatory. The carriers argue that
they are harmed more than local exchange carriers. But the
access line rule treats “all customers (wireline, voice over
internet protocol, and wireless) regardless of service type”
the same and, if anything, is more equitable than the prior
rule, under which most of the surcharges came only from
ever-dwindling landline services. Assurance Wireless USA,
L.P., 2023 WL 2780365, at *3 (cleaned up). And it applies
to all carriers. Cf. Alenco Commc’ns, Inc. v. FCC, 201 F.3d
608, 623 (5th Cir. 2000) (“The Commission reasonably
applied the principle of equitable and nondiscriminatory
contribution by requiring contributions from all
telecommunications providers.”). Even if the carriers are
correct that they are more burdened by the surcharge rule
than others, that is only because they do not provide as many
landline services, and thus were disproportionately benefited
by the prior rule.
   Nor is it dispositive that the carriers derive more than
75% of their wireless service revenues from unsurchargeable
broadband. As we have already explained, the carriers have
not shown a likelihood of success on their claim that
broadband is being surcharged at all. See supra at 18–19.
But more to the point, as CPUC clarified at oral argument,
22          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

the surcharge only applies to “voice telecommunication
services on a standalone basis” or, if bundled with other
services, the “connection to the voice telecommunication
service.” If most of the carriers’s services are not being
surcharged, it is hard to see how they are being unfairly
discriminated against by the access line rule. And, of course,
competitive neutrality “does not prohibit regulators from
according different treatment to competitors”—like local
exchange carriers and wireless providers such the carriers
here—“whose circumstances are materially distinct.”
Picker, 970 F.3d at 1120.
    CPUC’s course correction, designed to “address the
sustainability of the state’s universal-service funding[] given
the decrease in revenue generated from landline services”
is—though far from the only possible response—a fair
response to a real problem. Assurance Wireless USA, L.P.,
2023 WL 2780365, at *9. In a world of ever-evolving
telecommunications technologies, competitive neutrality
must allow some play in the joints. To hold otherwise would
hamstring California’s ability to satisfy its statutory mandate
of providing universal service.
                                   2
    The carriers also argue that the rule treats providers who
receive support under the federal ACP—such as carriers
Assurance Wireless and MetroPCS—differently than those
who serve low-income participants in the California
LifeLine Program. 6 CPUC responds that the LifeLine
program and the ACP are not comparable and are funded
differently, that the relevant carriers could join LifeLine if
6
  This argument was relegated to “a footnote in [the carriers’s] opening
brief” below. See id. at *9. Despite this inadequate briefing, we address
it on the merits as the district court did.
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS          23

they wanted to, and that the prior rule also exempted
LifeLine while not exempting those enrolled in the ACP.
    We agree with CPUC. The FCC recognizes that ACP is
“fundamentally different” than LifeLine. Rep. on the Future
of the Universal Serv. Fund, 2022 WL 3500217, at *22
(Aug. 15, 2022). The carriers are quick to point out that this
FCC decision was discussing the federal LifeLine program.
But they have no answer to CPUC’s showing that
California’s LifeLine program is based on the federal
program and so differences between ACP and LifeLine at
the federal level exist at the state level as well.
    The carriers also try to refute CPUC’s showing that the
way the two programs, federal ACP and California’s
LifeLine, is relevant to whether they are “materially distinct”
for purposes of the discrimination inquiry. Picker, 970 F.3d
at 1120. Section 254 deals with the way that the FCC and
states fund their universal service programs. But neither the
FCC nor the states fund ACP—Congress does. Pub. L. No.
117-58, 135 Stat. 429, 1382 (2021). We disagree with the
carriers’s claim that the different funding mechanisms lack
legal significance. At the very least, the fact that Congress
funds ACP but not universal service shows that ACP’s
different treatment is not forbidden discrimination for
purposes of § 254(f). Further, only one member of a given
household is eligible for LifeLine benefits. Thus, it is
materially distinct from ACP. Given the differences
between LifeLine and ACP and that the relevant carriers can
always join LifeLine, the carriers’s claims fall short of
establishing a likelihood of success on their claim that the
rule is discriminatory and thus preempted. See Picker, 970
F.3d at 1120.
24        ASSURANCE WIRELESS USA, L.P. V. REYNOLDS

                               D
    We also briefly note the preliminary nature of our
conclusions here. Our interpretation of what is required for
a state rule to be “inconsistent with” FCC rules or inequitable
and discriminatory, of course, should govern further
consideration on the merits. But “[w]e have repeatedly
emphasized the preliminary nature of preliminary injunction
appeals.” Ctr. for Biological Diversity v. Salazar, 706 F.3d
1085, 1090 (9th Cir. 2013). Thus, our legal conclusion on
what is required to show inconsistency says nothing about
what facts—if any—may arise in discovery.
    While the carriers have not established a likelihood of
success on the merits of their claim that the CPUC rule is
actually “inconsistent with” FCC regulations or that it is
unfairly discriminatory or inequitable, they may be able to
as the case progresses. Factual development could change
the final analysis. Since the rule has been in effect for over
a year, the carriers may have new evidence about how the
new rule interacts with FCC rules in practice. If, for
example, the access line rule does surcharge broadband, the
district court will be able to conduct, in the first instance, an
analysis as to whether the FCC was acting within its
authority when it concluded that states were preempted from
surcharging broadband—guided by our interpretation of
“inconsistent with.” We express no opinion on that question,
nor do we prejudge how the fully developed factual record
may influence the merits.
                               E
    Because the carriers have failed to establish a likelihood
of success on the merits, they cannot obtain a preliminary
injunction. We have explained that “[l]ikelihood of success
on the merits is the most important factor.” Azar, 911 F.3d
          ASSURANCE WIRELESS USA, L.P. V. REYNOLDS         25

at 575 (cleaned up). And where, as here, a party fails to meet
this “threshold inquiry,” we are not even required to address
the other factors. Id. (citation omitted).
    Likelihood of success on the merits is a necessary
precondition to injunctive relief. Here, that means that the
carriers cannot obtain injunctive relief even though we
conclude that they face irreparable harm. No matter how the
carriers respond to the surcharge rule, they face harms that
damages cannot remedy. As the district court explained, if
the carriers here pass on the surcharge to their customers,
they face a loss of goodwill and an injury to their pro-
consumer brands. See Disney Enters., Inc. v. VidAngel, Inc.,
869 F.3d 848, 865–66 (9th Cir. 2017). If, by contrast, the
carriers swallow the added access line costs, they will be
unable to recover those costs later from California because
of its Eleventh Amendment immunity. U.S. Const. amend.
XI.
    But this irreparable harm does not help them. Their
failure to show a likelihood of success on the merits
precludes injunctive relief.
                             IV
    The district court correctly concluded that the carriers
were unlikely to succeed on the merits. The surcharge rule
is not “inconsistent with” federal law, and it is neither
unfairly discriminatory nor inequitable. Because the carriers
have failed to show a likelihood of success or serious
questions on the merits, they cannot obtain injunctive
relief—regardless of the irreparable harm they face.
   AFFIRMED.