TR Daily Groups, FCC Tussle Over Copper Line Shutdown Notice Order
Tuesday, August 27, 2019

Groups, FCC Tussle Over Copper Line Shutdown Notice Order

While the FCC stood behind its decision, the attorney representing four groups challenging the FCC’s 2017 wireline broadband deployment order that rolled back a 2015 order requiring incumbent phone companies to provide timely notice to anyone that might be affected by decisions to retire existing copper lines said during an oral argument today at the U.S. Court of Appeals for the Ninth Circuit (San Francisco) that the FCC failed to justify the decision or follow necessary rules of procedure.

The FCC’s 2017 decision in WC docket 17-84 also eliminated the “de facto retirement” rule and the “functional test” rule instituted by the Democrat-controlled FCC in 2015.

The de facto retirement rule imposed a customer notification requirement for retirement of copper loops, subloops, or the feeder portions of such loops and subloops due to lack of maintenance (TR Daily, Nov. 16, 2017).

The 2015 order also required incumbent providers to offer a “functionally equivalent” service before shutting off legacy copper-delivered service. It also created a process for complaints about phone companies that shut down legacy networks.

Public Knowledge, the Greenlining Institute, The Utility Reform Network (TURN), and the National Association of State Utility Consumer Advocates (NASUCA) argued in their petition that the 2015 rollback order violates the Communications Act and the Administrative Procedure Act (APA) by ignoring the record or rejecting evidence in the proceeding.

The FCC and the Department of Justice argued that Public Knowledge and the others have not established standing for their court challenge, failed to identify claims related to the order’s repeal of requirements for notifying retail customers and state governments in a timely fashion, and said that challenged aspects of the Commission decision were “procedurally proper,” “reasonable,” and “reasonably explained.”

Two of the three judges on the appeals court panel, Circuit judges M. Margaret McKeown and Jay S. Bybee, spent much of the time during the oral argument today in Seattle interjecting queries and comments questioning whether some of the petitioners had standing to participate in the appeal in “Greenlining Institute et al. v FCC” (case no. 17-73283).

During remarks by Public Knowledge Senior Vice President Harold Feld, speaking for the petitioners, Judge McKeown interrupted to say she “didn’t see anything” in the record to indicate how TURN’s “organizational purpose” and its membership would “tie together” to give it standing to participate.

Mr. Feld said that the organizations “have interest in representing their members,” who faced potential harm from the FCC’s 2017 order.

In addition, Mr. Feld also said, the groups have “long-standing” histories of consumer advocacy at the FCC.

Judge Bybee chided the petitioners for not more clearly outlining why they had standing to appeal the FCC’s order.

“It’s really a surprise, counsel, that as sophisticated as you are in matters of the FCC that you neglected to set forth in any clear way the standing of the parties,” Mr. Bybee said. “It just seems like a terrible oversight at this level of sophistication. … I also don’t understand why the organizations that you represent don’t have standing in their own right as consumers. ... They can simply say, ‘We’re subscribers.’”

Mr. Feld later said, “I do apologize for the oversight” and said he had been “hesitant” to simply rely upon the organizations potentially being harmed rather than their members because the organizations themselves might not have been relying on copper-delivered service.

The petitioners thought the justification for their standing to file the appeal had been “fairly traceable” and “obvious” in their filings, Mr. Feld said, adding later he would be willing, if allowed, to provide additional filings to do so.

“We did not believe it was necessary to take the court’s time” in the initial filings to more thoroughly address standing, he said.

Mr. Feld also argued that the court should have a “strong preference” for deciding the appeal on its merits, rather than simply denying it because of standing questions.

"We wouldn’t be spending quite so much time on it if it wasn’t a threshold question,” Ms. McKeown said.

Returning to the merits portion of his argument, Mr. Feld contended the FCC had “simply failed at every level” to properly explain why the 2017 Commission had reversed course from the 2015 decision of the previous Commission and rely on tariffs and service agreements to determine what constitutes a service.

But Mr. Bybee questioned the petitioners’ contentions that the Commission acted capriciously by overriding the previous order.

“It’s not unusual to have two opposing views” among two Commissions, he said, adding, “The idea that the Commission would flip its views just doesn’t strike me as surprising at all.”

Mr. Feld responded by saying that despite differing opinions among commissioners over time, the agency still must follow the APA and other rules and must properly explain its decisions.

The FCC “consistently” failed in the 2017 order to acknowledge facts in the record and to explain why it was departing from precedents established in earlier orders, Mr. Feld said.

The Commission’s decisions, he said, "must be rational and supported by the record.”

But Judge Bybee also later said, “When you have a policymaking body, an intervening election [in 2016], a change in the composition of the Commission, it’s not unusual that an agency would take a different view of the matter.”

Mr. Feld responded by stating that the FCC should not “merely brush off” previous Commission concerns about potential consumer harm when “it was in fact was demonstrated” that there would be consumer harm.

The FCC “cannot claim that there is no benefit to notification [to consumers] when on an extensive record it found that without notification there were actual incidents and widespread incidents of genuine confusion among consumers,” he said. “It is the essence of arbitrary."

Judge McKeown weighed in that the 2017 decision could have been a case of the Commission deciding that the previous order “did not play out the way [the prior] majority hoped it would play out.”

That would be allowable, Mr. Feld said, if the FCC had established that to be the case.

“But that’s not what the Commission did,” he said.

Mr. Feld contended that the FCC had essentially determined ahead of time the previous order was unnecessary and asked telephone companies to “please tell us this is incredibly burdensome,” which they did.

During her oral argument, FCC counsel Sarah Citrin said the FCC was justified in changing the 2015 order because the agency determined it “created unnecessary regulatory burdens and stood to impede the deployment of modern communications networks and services.”

Addressing the matter of standing that the judges had spent time on earlier, Ms. Citrin reiterated the FCC’s stance that the groups never justified their claims of standing and have not made the “necessary showing” that they have been injured by the 2017 order.

Though Ms. McKeown suggested the petitioners could make additional filings to "tidy up” their standing claims, Ms. Citrin said they would have to do more than simply say they are being harmed because their members would prefer to maintain copper-based service.

“A preference is not an injury,” she said.

Speaking to the merits of the case, Ms. Citrin said the FCC had properly shown why it decided the previous order’s statutory interpretation “had been a mistake” regarding whether advanced approval is necessary.

The FCC in 2017 “didn’t say that the earlier Commission’s interpretation was implausible. … It said the better statutory reading was to recognize [what constitutes a] service in terms of how a carrier has described its offering, whether in its tariff or its service agreements,” she said. “And that interpretation made more sense to this Commission.”

The decision was "a reasonable interpretation as a matter of policy,” Ms. Citrin added.

Absent the rule change, she said, the “carriers would be left guessing” about whether consumers were using copper-based services. In turn that could lead to them needlessly maintaining copper-based services, thus using funds that could otherwise be directed to expanding broadband services, Ms. Citrin said.

The “de facto” notice requirements in the 2015 order “didn’t have any meaningful benefit” and the Commission followed all procedural requirements when it made the 2017 decision, she said.

Because the FCC was interpreting existing law it did not need to hold a notice and comment period, she said.

In response to a question from Judge Joe Gaitan Jr., a senior U.S. District judge for the Western District of Missouri, about what did not work in the previous order, Ms. Citrin pointed to comments from carriers that provided evidence the order was burdensome.

Ms. Citrin also rejected Mr. Feld’s earlier contention the carriers were simply telling the Commission what it asked to be told.

Attorney Collin White, representing USTelecom, argued during his portion of the oral argument that the FCC acted properly during its deliberations in the 2017 proceeding.

"The Commission was right to overturn these rules because they would delay the transition from copper to fiber,” he said.

Telecommunications carriers’ comments were not “rooted in hypothetical concerns,” but rather evidence, he said.

“Every dollar that carriers no longer must spend supporting outdated equipment that fewer and fewer consumers want is a dollar they can spend to roll out services of the future,” Mr. White said.--Jeff Williams

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