A/75659771.1 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ____________ NO. 11-9900 ____________ IN RE: FCC 11-161 ____________ ON PETITIONS FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION ____________ INCUMBENT LOCAL EXCHANGE CARRIER INTERVENORS’ REPLY BRIEF IN SUPPORT OF PETITIONERS ____________ Counsel for Intervenors-Petitioners Listed in Alphabetical Order on Following Pages July 30, 2013 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 1 A/75659771.1 By Their Counsel Arlington Telephone Company, The Blair Telephone Company, Cambridge Telephone Company, Clarks Telecommunications Co., Consolidated Telephone Company, Consolidated Telco, Inc., Consolidated Telecom, Inc., The Curtis Telephone Company, Eastern Nebraska Telephone Company, Great Plains Communications, Inc., K. & M. Telephone Company, Inc., Nebraska Central Telephone Company, Northeast Nebraska Telephone Company, Rock County Telephone Company and Three River Telco (the “Nebraska Rural Independent Companies”) Thomas J. Moorman WOODS & AITKEN LLP 2154 Wisconsin Ave. NW, Suite 200 Washington, DC 20007 (202) 944-9502 tmoorman@woodsaitken.com Paul M. Schudel WOODS & AITKEN LLP 301 South 13th Street, Suite 500 Lincoln, NE 68508 (402) 437-8500 pschudel@woodsaitken.com ITTA – The Independent Telephone & Telecommunications Alliance Genevieve Morelli, President 1101 Vermont Ave., N.W. Suite 501 Washington, DC 20005 (202) 898-1519 gmorelli@itta.us Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 2 A/75659771.1 National Exchange Carrier Association (NECA) Gregory J. Vogt LAW OFFICES OF GREGORY J. VOGT, PLLC 101 West Street Suite 4 Black Mountain, NC 28711 (828) 669-2099 gvogt@vogtlawfirm.com Richard A. Askoff, Counsel 80 South Jefferson Road Whippany, NJ 07981 (973) 884-8235 raskoff@neca.org Ronan Telephone Company and Hot Springs Telephone Company Ivan C. Evilsizer EVILSIZER LAW OFFICE, PLLC 2301 Colonial Drive Suite 2B Helena, MT 59601 (406) 442-7115 i.c.evilsizer@gmail.com Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 3 A/75659771.1 Venture Communications Cooperative, Inc., Alpine Communications, LC, Emery Telcom, Penasco Valley Telephone Cooperative, Inc., Smart City Telecom, Smithville Communications, Inc., South Slope Cooperative Telephone Co., Inc., Spring Grove Communications, Star Telephone Company, 3 Rivers Telephone Cooperative, Inc., Walnut Telephone Company, Inc. and West River Cooperative Telephone Company, Inc. Benjamin H. Dickens, Jr. Mary J. Sisak Robert M. Jackson BLOOSTON, MORDKOFSKY, DICKENS, DUFFY, & PRENDERGAST, LLP 2120 L Street, N.W. Suite 300 Washington, DC 20037 (202) 659-0830 bhd@bloostonlaw.com mjs@bloostonlaw.com rmj@bloostonlaw.com Western Telecommunications Alliance Gerard J. Duffy, Regulatory Counsel BLOOSTON, MORDKOFSKY, DICKENS, DUFFY & PRENDERGAST, LLP 2120 L Street, N.W. Suite 300 Washington, DC 20037 (202) 659-0830 gjd@bloostonlaw.com Russell M. Blau Tamar E. Finn BINGHAM MCCUTCHEN, LLP 2020 K Street, N.W. Washington, DC 20006 (202) 373-6000 Russell.Blau@bingham.com Tamar.Finn@bingham.com Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 4 i A/75659771.1 TABLE OF CONTENTS TABLE OF AUTHORITIES ........................................................................ i GLOSSARY.................................................................................................. iii ARGUMENT ................................................................................................. 1 I. THE COMMISSION CANNOT ASSUME JURISDICTION OVER ALL ICC THROUGH STRAINED STATUTORY INTERPRETATIONS. ............................................................................ 1 II. THE FCC FAILED TO COMPENSATE CARRIERS FOR UNIVERSAL SERVICE INVESTMENT. ............................................ 5 A. Failing to Evaluate Whether Any Companies Need Support Violates the Sufficiency Mandate. ..................................................... 5 B. The Agency Cannot Eliminate the Opportunity to Recover Used and Useful Costs. ................................................................................ 8 C. Forced Conversion of RLECs from Rate-of-Return to Price Cap Regulation was Arbitrary and Capricious. ...................................... 9 D. The FCC’s Regression-Based Benchmarks Are Arbitrary and Violate §254’s Predictability Standard. ........................................... 9 III. VACATUR IS APPROPRIATE....................................................... 11 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 5 i A/75659771.1 TABLE OF AUTHORITIES CASES Alenco Communications, Inc. v. FCC, 201 F.3d 608 (5th Cir. 2000). ........... 8 AT&T v. Iowa Utils. Bd., 525 U.S. 366 (1999). ............................................. 3 City of Arlington v. FCC, 81 U.S.L.W. 4299 (May 20, 2013). ...................... 1 Core Communications, Inc. v. FCC, 592 F.3d 139 (D.C. Cir. 2010). ............ 2 Core Communications, Inc. v. Verizon Pa., Inc. 493 F.3d 333 (3d Cir. 2007). ..................................................................................................................... 2 Dolan v. United States Postal Service, 546 U.S. 481 (2006). ........................ 4 FCC v. Fox TV Stations, Inc., 556 U.S. 502 (2009). ...................................... 9 FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944). ................................ 5, 8 Iowa Utils. Bd. v. FCC, 219 F.3d 744 (8th Cir. 2000), on remand from AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999). ............................... 3 Louisiana PSC v. FCC, 476 U.S. 355 (1986). ................................................ 3 Qwest Communications International, Inc. v FCC, 398 F.3d 1222 (10th Cir. 2005). ................................................................................................ 5, 7, 11 Rural Cellular Ass’n v. FCC, 588 F.3d 1099 (D.C. Cir. 2009). ..................... 7 Rural Cellular Ass’n v. FCC, 685 F.3d 108 (D.C. Cir. 2012). ....................... 7 Secretary of Labor v. Excel Mining, LLC, 334 F.3d 1 (D.C. Cir. 2003). ....... 3 Smith v. Illinois Bell Tel. Co., 282 U.S. 133 (1930). ...................................... 8 Southwestern Bell Tel. Co. v. FCC, 153 F.3d 523 (8th Cir. 1998). ................ 4 Vermont PSB v. FCC, 661 F.3d 54 (D.C. Cir. 2011). .................................... 8 STATUTES 47 U.S.C. § 201(b). ......................................................................................... 1 47 U.S.C. § 205(a). ......................................................................................... 4 47 U.S.C. § 251(b)(5). ............................................................................ 1, 2, 5 47 U.S.C. § 251(d)(3). .................................................................................... 1 47 U.S.C. § 251(g). ......................................................................................... 1 47 U.S.C. § 251. .................................................................................. 1, 2, 3, 4 47 U.S.C. § 252(a)(1). ..................................................................................... 3 47 U.S.C. § 252(b). ......................................................................................... 3 47 U.S.C. § 252(c)(2). ..................................................................................... 3 47 U.S.C. § 252(c). ......................................................................................... 4 47 U.S.C. § 252(d)(2)(B)(i). ........................................................................... 3 47 U.S.C. § 252(d)(2). .................................................................................... 3 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 6 ii A/75659771.1 47 U.S.C. § 252(d). ..................................................................................... 3, 4 47 U.S.C. § 252(e)(5). ..................................................................................... 2 47 U.S.C. § 252. .................................................................................. 1, 2, 3, 4 47 U.S.C. § 254(b)(5). .................................................................................... 5 47 U.S.C. § 254. .............................................................................................. 9 47 U.S.C. § 601(c). ......................................................................................... 4 Administrative Procedures Act, 5 U.S.C. §§ 551, et. seq. .............................. 7 Communications Act of 1934, 47 U.S.C. §§ 1, et seq. ............................... 2, 5 OTHER Joint Response of Rural Carriers in Opposition to Motion to Hold in Abeyance, No. 11-9900 (Jul. 9, 2012). ............................................... 11, 12 Letter from Joe A. Douglas, National Exchange Carrier Association, Inc., to Marlene Dortch, FCC, CC Docket No. 96-45, et al., (Dec. 30, 2010) (NECA Ex Parte Letter) (JA at 1774-75). .................................................. 5 LEGISLATIVE MATERIALS Connect America Fund, 26 FCC Rcd 17663 (2011) (JA at 390-1141). ..... 1, 6 High Cost Universal Service Support, 25 FCC Rcd. 4072 (2010). ................ 8 Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, 11 FCC Rcd. 15499 (1996) (Local Competition Order). ................................................................................ 4, 5 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 7 iii A/75659771.1 GLOSSARY Access Charges Fees charged to IXCs by LECs for exchange access, i.e., charged for toll calls that begin and end in different calling areas. Act Communications Act of 1934, as amended APA Administrative Procedure Act FCC, Commission Federal Communications Commission ICC Intercarrier Compensation ILEC Incumbent Local Exchange Carrier IntRespICCBr Intervenor-Respondent Principal ICC Brief JA Joint Appendix LEC Local Exchange Carrier PetICCBr Petitioners Joint Principal Intercarrier Compensation Brief PetICCRepBr Petitioners Joint Principal Intercarrier Compensation Reply Brief PetUSFBr Petitioners Joint Principal Universal Service Fund Brief PetUSFRepBr Petitioners Joint Principal Universal Service Fund Reply Brief RespICCBr Respondent Principal Intercarrier Compensation Brief RespUSFBr Respondent Principal Universal Service Fund Brief RLEC Rate-of-Return ILEC USF Universal Service Fund Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 8 1 A/75659771.1 ARGUMENT Petitioners and Intervenors demonstrated that Respondent ? disregarded Congress’s statutory scheme by setting all ICC rates, ? failed to provide sufficient and predictable USF support where cost recovery is not otherwise allowed, and ? abandoned rate-of-return regulation without taking into account its precedent or long-standing statutory and regulatory principles. Respondent ignored or mischaracterized important arguments advanced by Petitioners and Intervenors, essentially admitting it has no explanation for these statutory violations. The Court should vacate the Order. I. THE COMMISSION CANNOT ASSUME JURISDICTION OVER ALL ICC THROUGH STRAINED STATUTORY INTERPRETATIONS. As City of Arlington v. FCC confirms, the issue is “whether the statutory text forecloses the agency’s assertion of authority, or not.” 81 U.S.L.W. 4299, slip op. at 18 (May 20, 2013). The FCC’s assertion of jurisdiction over intrastate ICC rates1 violates §§251-52. 1 The FCC’s preemption of all intrastate ICC rates violates the Act’s structure. PetICCBr 7-13. Respondent cannot expand §251(b)(5) to include intrastate exchange access. Respondent’s construction disregards that §251(d)(3) addresses all LEC intrastate “access and interconnection obligations.” Likewise, it cannot use §251(g) for preemption authority because no FCC jurisdiction existed over intrastate exchange access on the date of enactment. Further, because the FCC lacks jurisdiction to set prices for intrastate traffic, §201(b) does not trump §252’s pricing standards. Core Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 9 2 A/75659771.1 The Act divides responsibilities “between the state and federal governments, making it ‘an exercise in what has been termed cooperative federalism.’”2 Sections 251-52 accomplish jurisdictional cooperation by allowing the FCC to adopt certain regulations for traffic lawfully subject to §251(b)(5) but expressly reserving for state commissions actual rate-setting authority in arbitration proceedings if carrier negotiations fail. The FCC cannot preempt states: the FCC may only set specific rates if “a State fails” to act. 47 U.S.C. §252(e)(5). Hence, there is no statutory basis for the FCC to preempt state rate-setting for traffic lawfully subject to §251(b)(5). PetICCRepBr 14-16. Citing Supreme Court precedent, Respondent attempts to evade this jurisdictional limitation by claiming it only established a rate methodology, not specific rates. RespICCBr 10. This manipulative characterization disregards the impact of FCC actions, PetICCRepBr 14-15, and is plainly erroneous. By establishing a precise schedule of interim rates during every year of the transition, plus the ultimate rate of zero, nothing is left for Communications, Inc. v. FCC only involved FCC rates for interstate ISP- bound traffic. 592 F.3d 139, 143-44 (D.C. Cir. 2010). 2 Core Communications, Inc. v. Verizon Pa., Inc. 493 F.3d 333, 335 (3d Cir. 2007) (citations omitted). Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 10 3 A/75659771.1 companies to negotiate under §252(a)(1)3 or for States to arbitrate under §252(b) and thus nullifies the statutory structure. This is exactly the type of action the courts invalidated in the Iowa cases.4 PetICCRepBr 15-16. Contrary to IntRespICCBr 14-16, the FCC cannot avoid Iowa. The Eighth Circuit, in addition to its judicial estoppel holding, found that FCC proxy prices were unlawful under the Supreme Court’s decision. 219 F.3d at 757. The Supreme Court’s determination that a FCC rate methodology does not negate state rate-setting relied on §252(c)(2) and §252(d) generally, not just §252(d)(2). See AT&T, 525 U.S. at 384. The Iowa cases preclude FCC’s bill-and-keep prescription. Nor can Respondent expand federal jurisdiction by claiming that §§251-52 are “ambiguous”. Violating both Louisiana5 and Excel Mining,6 3 Respondent contends §252(d)(2)(B)(i) permits FCC-mandated bill-and- keep. RespICCBr 36-37. That section specifically provides that states may not “preclude” bill-and-keep, a negative mandate that can only apply to voluntary carrier arrangements. PetICCBr 36-37. 4 Iowa Utils. Bd. v. FCC, 219 F.3d 744 (8th Cir. 2000), on remand from AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999). 5 Louisiana PSC v. FCC, 476 U.S. 355, 371-72 (1986) (“technical terms of art should be interpreted by reference to the trade or industry to which they apply.”). 6 Secretary of Labor v. Excel Mining, LLC, 334 F.3d 1, 7 (D.C. Cir. 2003) (Court prefers agency interpretation made “when the origins of both the statute and the finding were fresh” over a subsequent interpretation.). Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 11 4 A/75659771.1 Respondent’s dictionary definition of “reciprocal,” RespICCBr 34, is inconsistent with that term of art historically used in the industry and previously interpreted by the FCC. See Local Competition Order, 11 FCC Rcd. 15499, ¶¶1094 n.2633, 1116 (1996). An “[i]nterpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute.” Dolan v. United States Postal Service, 546 U.S. 481, 486 (2006). The agency may not bootstrap jurisdiction for itself by creating a national ICC policy and manipulating statutory language in order to conclude it is authorized to preempt states. Respondent points to nothing in §§251-52 that either grants it jurisdiction over intrastate services or reconciles the Order with §601(c)’s prohibition against implied state preemption. PetICCRepBr 3-4. Respondent claims it can disregard §252’s pricing requirements because “most” of the traffic is not controlled by §§252(c)-(d).7 RespICCBr 43-45. However, intrastate access traffic exchanged with an ILEC constitutes approximately 56 percent of total access revenues, a significant 7 Because the Commission did not find that interstate access rates violate the Act, §205(a) does not “permit[] the FCC to take the extreme action of prescribing” rates. Southwestern Bell Tel. Co. v. FCC, 153 F.3d 523, 547 (8th Cir. 1998). Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 12 5 A/75659771.1 type of ICC traffic.8 State arbitration of ICC rates for other traffic that is properly governed by §251(b)(5) is lawful as previously employed by Respondent. Local Competition Order, ¶1023 (allowed state arbitration of wireless rates subject to federal jurisdiction). II. THE FCC FAILED TO COMPENSATE CARRIERS FOR UNIVERSAL SERVICE INVESTMENT. Decades of constitutionally based communications law require Respondent to provide rate-of-return ILECs a reasonable opportunity to recover “used and useful” investment. PetICCBr 50-58. Protecting this investment is the quid pro quo for FCC regulations. FPC v. Hope Natural Gas Co., 320 U.S. 591, 603 (1944). The Act buttresses this requirement by directing the FCC to establish “specific, predictable, and sufficient” USF support. 47 U.S.C. §254(b)(5). The FCC fails to abide by these principles. A. Failing to Evaluate Whether Any Companies Need Support Violates the Sufficiency Mandate. By focusing almost exclusively on saving money, the FCC overemphasized one factor out of several it must consider, never quantifying what existing used and useful investment was imprudent, a failure that is inconsistent with the statute. Qwest Communications International, Inc. v FCC, 398 F.3d 1222, 1234 (10th Cir. 2005) (“Qwest II”). Paying lip service 8 NECA Ex Parte Letter, GN Docket No. 09-51, Attachment (Dec. 30, 2010) (JA at 1775). Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 13 6 A/75659771.1 to statutory factors, e.g., RespUSFBr 33-35, does not comply with the statute. Respondent admits there was no empirical support for the FCC’s sufficiency finding, claiming that because the rules had not been finalized, quantification was unavailable and thus its “predictive judgment” could be substituted to justify its conclusions. Id. 38. This claim obscures the FCC’s failure to adduce evidence which, if examined impartially, would have shown insufficient USF support.9 First, the FCC did not analyze the support amounts to be expected by any company under the new rules, even though that data was reasonably knowable. PetUSFBr 31-32. Second, while Respondent admits it never evaluated, and thus did not know, the costs of meeting the FCC’s additional broadband requirement (RespUSFBr 36-37), it nonetheless asserts it had a reasonable basis for expecting the Order’s USF support to be sufficient. Third, the FCC never examined rates for broadband services to determine whether its rules met the statute’s comparability goal. Although the FCC may proceed incrementally (RespUSFBr 22 n.5), it cannot claim it engaged 9 The retroactive application of its new USF rules to investment that previous rules had compelled is arbitrary and capricious, an argument Respondent simply side-steps. RespUSFBr 47-48. Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 14 7 A/75659771.1 in a rational predictive analysis when it ignored available data or failed to obtain necessary information. The remainder of Respondent’s predictive judgment is speculation. Portraying unsubstantiated suppositions as predictive judgment cannot meet Qwest II’s quantification requirement. The FCC seeks deference by asserting the rules are necessary to “eliminate waste and inefficiency.” RespUSFBr 40-41. But the FCC assumed carriers whose costs exceeded certain levels were engaged in wasteful spending without determining whether specific carriers’ costs were in fact imprudent. Likewise, the FCC admits it may not rely on a waiver process to justify irrational rules: it nonetheless defends its conclusions by claiming a special APA principle applies to universal service waivers. RespUSFBr 36 n.7. There is no such special APA principle. RCA I and II did not involve waivers, but rather permitted wireless carriers to demonstrate individual costs to justify USF support. Rural Cellular Ass’n v. FCC, 588 F.3d 1099, 1104 (D.C. Cir. 2009) (“RCA I”); Rural Cellular Ass’n v. FCC, 685 F.3d 1083, 1095 (D.C. Cir. 2012) (“RCA II”). FCC rules already require ILECs to demonstrate their own costs to justify support; here, the FCC arbitrarily Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 15 8 A/75659771.1 determined that such cost-justified support should be reduced unless a waiver’s heightened burden of proof is met.10 B. The Agency Cannot Eliminate the Opportunity to Recover Used and Useful Costs. The FCC admits that it did not permit full recovery of revenues previously allowed to defray regulated costs, pleading for deference because it “reasonably predicted” that support would be “more than sufficient.” RespICCBr 50. Mere conjecture neither justifies an expert prediction defense nor supports a finding that carriers have a reasonable opportunity to recover used and useful costs. Although the FCC denies the relevancy of Smith v. Illinois Bell Tel. Co., 282 U.S. 133 (1930), RespICCBr 48, it ignores Petitioner’s argument that once costs are identified and separated under Smith, regulatory law requires that agencies permit rate-of-return carriers a reasonable opportunity to recover them. Hope, 320 U.S. at 603. The FCC’s mere “expectation” that carriers will be able to recover costs in some other, undefined manner violates both Smith and Hope. Past access charge financial data or possible 10 Respondent’s additional cases—Alenco Communications, Inc. v. FCC, 201 F.3d 608, 621-22 (5th Cir. 2000); Vermont PSB v. FCC, 661 F.3d 54, 65 (D.C. Cir. 2011)—only deal with support for a single company. And the latter case involved no waiver, despite contrary court language. High Cost Universal Service Support, 25 FCC Rcd. 4072, ¶¶84-92 (2010). In contrast, the instant rules affect over half of RLEC USF recipients. PetUSFRepBr 15. Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 16 9 A/75659771.1 future reductions in the allowed rate of return do not justify denying individual companies a reasonable opportunity to recover used and useful costs. The gap between the FCC’s “incentives” and “expectations” and decades of constitutionally based regulatory law is enormous. C. Forced Conversion of RLECs from Rate-of-Return to Price Cap Regulation was Arbitrary and Capricious. Petitioners cited historical orders to show that the FCC consistently rejected converting rate-of-return carriers to price cap regulation for interstate switched access. PetICCBr at 50-58. While Respondent argues its recovery mechanism permits “reasonable recovery for regulated services,” RespICCBr 50, it fails to explain what statutory or technical changes justify the FCC’s departure from past precedent.11 Such failure is arbitrary and capricious. FCC v. Fox TV Stations, Inc., 556 U.S. 502, 515 (2009). D. The FCC’s Regression-Based Benchmarks Are Arbitrary and Violate §254’s Predictability Standard. The regression rule limits support to many carriers because the FCC presumed carriers incurred wasteful spending. Respondent ignores, RespUSFBr 47-55, Petitioner’s argument that the FCC failed to examine any 11 Even when the agency makes factual findings, they are incorrect: the record evidence shows that termination costs are not “very nearly zero”. PetICCRepBr 19-20. Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 17 10 A/75659771.1 facts or make findings on imprudent spending. PetUSFBr 42-45. Further, the FCC did not know the precise impacts of the caps until months after the rule was adopted because implementation of the single-sentence rule was delegated to staff. Thus, any predictive judgment was utter speculation. The actual “regression” limitations are not published rules, and can be changed annually through a public announcement.12 This open-ended, changeable formulation is not a predictable rule, and thus cannot be a fair implementation of the predictability factor, even if balanced against other statutory factors. PetUSFRepBr 17-19. Respondent never answers Petitioners’ arguments that the text of the rule is hopelessly vague, and the regression limitation on USF support can be changed at will without further proceedings. PetUSFBr 36-39. Whether the FCC has yet to do anything illegal (RespUSFBr 46) is irrelevant since the FCC‘s rule and methodology are arbitrary and capricious. The FCC argues that the new rule is no more unpredictable than previous rules. Id. 45-46. But the FCC must engage in a reasonable quantification of the results of its rules to demonstrate that its balancing of 12 Because the delegation rule contains no exception to the prohibition against the Bureau conducting rulemakings, the FCC cannot sub silentio conclude that order-by-order delegation is permissible. PetUSFRepBr 19- 20. Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 18 11 A/75659771.1 competing interests achieves the statutory purpose. Qwest II, 398 F.3d at 1237. That has not occurred. Likewise, Respondent’s claim that Petitioners seek guaranteed outcomes (RespUSFBr 44-45) is a straw man because Petitioners made no such claim either before the Commission or this Court. PetUSFRepBr 19. Petitioners are entitled to a predictable rule, which the FCC failed to adopt. III. VACATUR IS APPROPRIATE. Given the FCC’s manipulation of statutory directives and failure to respond to important Petitioner arguments, vacating the illegal rules is necessary to preserve the status quo ante. Intervenor-Respondents’ claim of financial disruption and regulatory uncertainty if the rules are vacated (IntRespICCBr 20) should be rejected because their windfall comes at the expense of serious damage to rate-of-return ILECs. A remand will unreasonably allow the agency to keep the illegal rules in effect, exacerbating regulatory uncertainty and undermining universal service to consumers. The FCC has a long history of delaying Court remands. Joint Response of Rural Carriers in Opposition to Motion to Hold in Abeyance, Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 19 12 A/75659771.1 No. 11-9900, 13-19 (Jul. 9, 2012). Therefore, vacatur is the appropriate remedy. Respectively submitted, By: /s/ Gregory J. Vogt Gregory J. Vogt LAW OFFICES OF GREGORY J. VOGT, PLLC 101 West Street Suite 4 Black Mountain, NC 28711 (828) 669-2099 gvogt@vogtlawfirm.com On behalf of Intervenors-Petitioners listed on the cover of this filing July 30, 2013 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 20 A/75659771.1 CERTIFICATE OF COMPLIANCE 1. This filing complies with the type-volume limitation of the Amended First Briefing Order because it contains 2249 words, excluding the parts of the filing exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This filing complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and 10th Cir. R. 32(a) and the type style requirements of Fed. R. App. P. 32(a)(6) because this filing has been prepared in a proportionally spaced typeface using Microsoft Word for Mac 2008 in 14-point Times New Roman font. 3. All required privacy redactions have been made. 4. This filing was scanned for viruses with Symantec Endpoint Protection, version 12, updated on July 30, 2013, and according to the program is free of viruses. /s/ Russell M. Blau July 30, 2013 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 21 A/75659771.1 CERTIFICATE OF SERVICE I hereby certify that, on July 30, 2013, I caused the foregoing document to be filed with the Court. I also certify this document was furnished through ECF electronic service to all parties in this case through a registered CM/ECF user. This document is available for viewing and downloading on the CM/ECF system. /s/ Russell M. Blau July 30, 2013 Appellate Case: 11-9900 Document: 01019100649 Date Filed: 07/30/2013 Page: 22