TR Daily Court Upholds FCC’s USF Disaster Support for Puerto Rico, USVI
Friday, June 4, 2021

Court Upholds FCC’s USF Disaster Support for Puerto Rico, USVI

In a per curiam decision issued today, the U.S. Court of Appeals for the District of Columbia Circuit has rejected Tri-County Telephone Association, Inc.’s challenges to two FCC orders establishing the Uniendo a Puerto Rico Fund (Bringing Puerto Rico Together Fund) and the Connect USVI Fund and setting out the allocation of support for the two funds.

The funds were established in the wake of damage to communications networks in Puerto Rico and the U.S. Virgin Islands that was caused by Hurricanes Irma and Maria in 2017.

In 2018 the FCC established the Uniendo a Puerto Rico Fund and the Connect USVI Fund and authorized $64.2 million in "Stage I" emergency funding, with 60% available for fixed network operators and 40% for mobile network operators (TR Daily, May 8 and 29, 2018). The following year, it allocated $950 million in combined Stage II support for fixed and mobile network operators to restore, expand, and improve the resiliency of broadband networks (TR Daily, Sept. 26, 2019).

Tri-County, a telecom and cable system operator in Wyoming and Montana, "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."

The court found that while Tri-County had standing to challenge the amount of subsidies authorized for Stage I funding, it did not have standing to challenge the allocation of that funding between the Uniendo a Puerto Rico Fund and the Connect USVI Fund. "Taking the overall amount as given, the Commission’s allocation had no effect on Tri-County’s contributions and thus caused it no injury," the court said.

The FCC had not sought comments before adopting the Stage I order, determining "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.’ … The Commission found that given the ‘emergency situation’ in the Territories, providers needed to receive additional funds as soon as possible. … 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," the court recalled.

"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,’" the court said.

The court also rejected Tri-County’s argument that the FCC could have acted earlier to avert the need for emergency action, noting that the FCC "did act earlier, issuing the Immediate Relief Order within two weeks of Hurricane Maria’s landfall. … 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.’ … When carriers asked for more help, … the Commission reasonably determined that an emergency continued to exist."

The court also rejected Tri-County’s argument that the FCC failed to justify the amount of the support authorized in the Stage I order, saying that the FCC "sensibly drew on prior experience to provide roughly the same amount as before," that is, in the immediate relief order.

Moreover, the court rejected Tri-County’s argument that the FCC changed its earlier position in its 2005 Hurricane Katrina order that disaster relief was a purpose for which Universal Service Fund high-cost support could be used.

"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)," the court said.

Tri-County argued that the use of high-cost support for disaster relief violated the Communications Act. "[N]othing 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," the court said.

Tri-County also argued that the FCC’s action violated the Communications Act by changing the definition of supported services without first consulting the Federal-State Joint Board on Universal Service.

"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. … 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," the court said.

The case, Tri-County Telephone Association, Inc, v. FCC (case no 20-1003), was heard last fall by Circuit Judge David S. Tatel, then Circuit Judge Merrick Garland, and Senior Circuit Judge Harry T. Edwards. Judge Garland is now the U.S. attorney general and did not take part in the final disposition of the case. —Lynn Stanton, [email protected]

MainStory: FederalNews PuertoRicoNews VirginIslandsNews Courts FCC PublicSafety UniversalServiceLifeline

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