IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT NO. 11-9900 IN RE: FCC 11-161 ON PETITION FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION RESPONSE OF THE FEDERAL COMMUNICATIONS COMMISSION AND THE UNITED STATES OF AMERICA TO THE PETITION FOR REHEARING EN BANC OF ALLBAND COMMUNICATIONS COOPERATIVE AS TO ISSUES RAISED IN THE ADDITIONAL UNIVERSAL SERVICE FUND ISSUES BRIEFS WILLIAM J. BAER ASSISTANT ATTORNEY GENERAL ROBERT B. NICHOLSON ROBERT J. WIGGERS ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 JONATHAN B. SALLET GENERAL COUNSEL DAVID M. GOSSETT ACTING DEPUTY GENERAL COUNSEL JACOB M. LEWIS ASSOCIATE GENERAL COUNSEL RICHARD K. WELCH DEPUTY ASSOCIATE GENERAL COUNSEL LAURENCE N. BOURNE JAMES M. CARR MAUREEN K. FLOOD COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 1 i TABLE OF CONTENTS TABLE OF AUTHORITIES ........................................................................... ii  BACKGROUND ............................................................................................... 1  ARGUMENT .................................................................................................... 6  CONCLUSION ............................................................................................... 16  Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 2 ii TABLE OF AUTHORITIES CASES  Adler v. Wal-Mart Stores, Inc., 144 F.3d 664 (10th Cir. 1998) ..................................................................................................... 13 Alenco Commc’ns, Inc. v. FCC, 201 F.3d 608 (5th Cir. 2000) ..................................................................................................... 15 Alto Eldorado P’ship v. County of Santa Fe, 634 F.3d 1170 (10th Cir. 2011) .......................................................................... 11 Atkins v. Parker, 472 U.S. 115 (1985) ............................................................ 12 Bluefield Waterworks & Improvement Co. v. Pub. Serv. Comm’n of W. Va., 262 U.S. 679 (1923) ........................................... 11 Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988) .......................................................................................................... 10 DirecTV, Inc. v. FCC, 110 F.3d 816 (D.C. Cir. 1997) ............................................................................................................ 10 FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307 (2012) ................................................................................................. 12 FTC v. Standard Oil Co. of California, 449 U.S. 232 (1980) ..................................................................................................... 8 Landgraf v. USI Film Prods., Inc., 511 U.S. 244 (1994) .......................................................................................................... 10 Resolution Trust Corp. v. FSLIC, 25 F.3d 1493 (10th Cir. 1994) ............................................................................................. 9 Rural Cellular Ass’n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009) ..................................................................................................... 15 Rural Cellular Ass’n v. FCC, 685 F.3d 1083 (D.C. Cir. 2012) ..................................................................................................... 15 Texas v. United States, 523 U.S. 296 (1998) .................................................... 8 United States v. Winstar, 518 U.S. 839 (1996) .............................................4, 8 Utah v. U.S. Dep’t of Interior, 210 F.3d 1193 (10th Cir. 2000) ....................................................................................................... 8 Vt. Pub. Serv. Bd. v. FCC, 661 F.3d 54 (D.C. Cir. 2011) ............................................................................................................ 15 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 3 iii Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172 (1985) .......................................................... 11 STATUTES  5 U.S.C. § 553(b) ............................................................................................. 13 47 U.S.C. § 254 ............................................................................................... 13 47 U.S.C. § 254(b)(5) ................................................................................. 4, 15 47 U.S.C. § 254(e) ............................................................................................. 4 REGULATIONS  47 C.F.R. § 36.621(a)(5) ................................................................................. 12 47 C.F.R. § 54.302 ............................................................................................ 2 ADMINISTRATIVE DECISIONS  Allband Communications Cooperative Petition for Waiver of Certain High-Cost Universal Service Rules, 27 FCC Rcd 8310 (Wireline Comp. Bur. 2012) ..................................................................................................... 2, 3, 4 OTHER AUTHORITIES  10th Cir. Rule 35.1(A) ....................................................................................... 6 10th Cir. Rule 40.1(A) ....................................................................................... 7 Fed. R. App. P. 35(b)(1)(A) .............................................................................. 6 Fed. R. App. P. 35(b)(1)(B) .............................................................................. 6 Fed. R. App. P. 40(a)(2) .................................................................................... 7 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 4 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT NO. 11-9900 IN RE: FCC 11-161 ON PETITION FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION RESPONSE OF THE FEDERAL COMMUNICATIONS COMMISSION AND THE UNITED STATES OF AMERICA TO THE PETITION FOR REHEARING EN BANC OF ALLBAND COMMUNICATIONS COOPERATIVE AS TO ISSUES RAISED IN THE ADDITIONAL UNIVERSAL SERVICE FUND ISSUES BRIEFS Pursuant to the panel’s order dated July 10, 2014, respondents Federal Communications Commission (“FCC”) and United States of America submit this response to the petition for rehearing en banc filed by Allband Communications Cooperative (“Allband”). As we explain below, Allband has not come close to satisfying the stringent standard for rehearing of the panel’s May 23, 2014 decision. See In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014). The Court therefore should deny Allband’s petition. BACKGROUND I. In the order on review, the FCC comprehensively reformed two of its largest and most complex regulatory programs: universal service and Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 5 2 intercarrier compensation. Connect America Fund, 26 FCC Rcd 17663 (2011) (“Order”) (JA at 390). As relevant to Allband’s claims, the Order adopted reforms to support voice and broadband services more efficiently through federal universal service subsidies. In particular, to implement “responsible fiscal limits” on high-cost loop support subsidies, the Order imposed on all eligible telecommunications carriers a presumptive per-line loop support cap of $250 per month – to be phased in over three years. See Order ¶¶274, 279 (JA at 492, 493); 47 C.F.R. § 54.302. Relatedly, the Order also established a waiver process for carriers that can demonstrate that “reductions in current support levels would threaten their financial viability, imperiling service to consumers in the areas they serve.” Order ¶539 (JA at 566); see generally id. ¶¶539-544 (JA at 566-69). With respect to waivers of the $250 per-line cap, the FCC specifically warned carriers that it “d[id] not anticipate granting … waivers” of an “undefined duration,” but rather “expect[ed] carriers to periodically re-validate any need for support above the cap.” Id. ¶278 (JA at 493). II. Shortly after the Order was released, Allband sought a waiver of the $250 per-line cap. See Allband Communications Cooperative Petition for Waiver of Certain High-Cost Universal Service Rules, 27 FCC Rcd 8310 (Wireline Comp. Bur. 2012) (“Allband Waiver Order”). After evaluating Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 6 3 Allband’s request pursuant to its delegated authority, see Order ¶544 (JA at 569), the FCC’s Wireline Competition Bureau (“WCB”) found “good cause to grant a waiver of [the $250 per-line cap] for three years.” Allband Waiver Order ¶10. “During this time,” WCB “expect[ed] Allband to actively pursue any and all cost-cutting and revenue generating measures in order to reduce its dependency on federal high cost [universal service fund (“USF”)] support.” Id. ¶14. The Bureau also acknowledged Allband’s assertion that it had received loans from the U.S. Department of Agriculture’s Rural Utilities Service (“RUS”) to aid in constructing its telecommunications facilities, and that it would not be able to make full annual loan payments without a waiver of the cap. Id. ¶¶6, 7. WCB noted, however, Allband’s stated “willingness … to work with RUS to rework its loan terms.” Id. ¶14. WCB “d[id] not find it to be in the public interest to grant Allband an unlimited waiver,” as Allband had requested. Allband Waiver Order ¶13. Rather, “consistent with the Commission’s direction” in the Order, WCB found that it should “reassess [Allband’s] financial condition to determine whether a waiver remains necessary in the future.” Id. (citing Order ¶278 (JA at 493)). To that end, WCB set forth the showing Allband would be Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 7 4 required to make in the event that it seeks further relief at the end of the three- year waiver period. Id. ¶16.1 III. On judicial review of the Order, Allband made several attacks on the $250 per-line cap on high-cost loop support. It asserted that the cap would effect an unconstitutional taking of its property. Additional Universal Service Fund Issues Principal Brief (“Br.”) at 33-34. It argued that the rule violated due process by retroactively reversing USF programs and funding levels that it had come to rely upon. Br. at 32, 33, 35-36. Allband claimed that the per-line cap constitutes an unlawful breach of its loan agreement with RUS, citing United States v. Winstar, 518 U.S. 839 (1996). Br. at 37. It contended that the cap “should be reversed as applied to Allband based on estoppel principles.” Br. at 35. And it asserted, finally, that the cap violates statutory sufficiency principles, Br. at 31 (citing 47 U.S.C. §§ 254(b)(5) & 254(e)), and arbitrarily “fails to recognize that the destructive impacts upon Allband … are wholly unnecessary to achieve” the Order’s stated goals, Br. at 35-36. 1 Allband sought full Commission review of the WCB’s Order, asking the FCC to extend the waiver of the $250 per-line cap until 2026, when Allband’s RUS loans are scheduled to be fully repaid. Petition of Allband Communications Cooperative for Waiver of Part 54.302 and the Framework to Limit Reimbursable Capital and Operating Costs, WC Docket No. 10-90 et al. (filed Aug. 24, 2012). That petition remains pending before the agency. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 8 5 IV. A panel of this Court rejected each of these claims, several of which it also found Allband had inadequately briefed. See In re: FCC 11- 161, 753 F.3d at 1089-93 (slip op. at 131-38). With respect to Allband’s takings/confiscation claim, the panel noted that the FCC’s regulation of USF subsidies is “not reasonably comparable” to the regulatory “rate-setting” involved in the cases upon which Allband predicated its argument. Id. at 1091 (slip op. at 135) (emphasis added). In any event, the panel found Allband’s takings claim to be unripe because it had received a three-year waiver of the $250 per-line cap and had an opportunity to seek an additional waiver at the end of that period. Id. at 1091-92 (slip op. at 135). The panel also rejected Allband’s suggestion – argued both as a matter of due process and contract law – that it had a legally protected reliance interest in existing USF subsidy levels; instead, the panel stressed, the FCC had “never promised Allband or any other carriers that they would continue to receive USF funding indefinitely.” Id. at 1092 (slip op. at 137). The panel noted, in any event, that the Commission had taken Allband’s individual circumstances into effect by issuing the three-year waiver. Id. And it rejected Allband’s one-sentence estoppel claim as “inadequately briefed” and, on the merits, baseless. Id. (slip op. at 136-37). Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 9 6 Finally, the panel credited the FCC’s explanation that “there were systemic inefficiencies in the existing USF funding system” that justified the changes the agency had adopted, including the $250 per-line cap. Id. at 1093 (slip op. at 137-38). Accordingly, regardless of Allband’s individual circumstances – which the waiver otherwise reasonably takes into account – there was no basis for Allband’s claim that the per-line cap violated the statute or was arbitrary and capricious. Id. V. Allband now seeks rehearing en banc of the panel’s decision – arguing that the panel overlooked or incorrectly rejected some of its arguments. See Rehearing Petition at 1-2. ARGUMENT The standard for granting rehearing en banc is rigorous: That extraordinary procedure is reserved for cases in which “the panel decision conflicts with a decision of the United States Supreme Court or of [this] court,” Fed. R. App. P. 35(b)(1)(A), or cases involving “one or more questions of exceptional importance.” Fed. R. App. P. 35(b)(1)(B); see also 10th Cir. Rule 35.1(A) (“A request for en banc consideration is disfavored.”). Accordingly, this Court rarely grants rehearing – and Allband has entirely failed to justify rehearing under this stringent standard. In particular, Allband has established neither an “exceptional” issue to be reconsidered, nor a Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 10 7 conflict between the panel’s decision and a decision of the Supreme Court or this Court.2 I. Allband’s petition fails from the start because its sole challenge – to the application of the $250 per-line high-cost subsidy cap to its own particular circumstances – is not ripe for review. Since Allband currently has a three-year waiver of that cap (and may seek an extension of that waiver), the cap does not currently apply to Allband at all, and the harms Allband contends will befall it under the cap are entirely speculative. Thus, even if the panel had overlooked or misconstrued some point of fact or law in its decision – and it did not – any such error could not possibly constitute the type of “exceptional[ly] importan[t]” issue that is a prerequisite to en banc rehearing. The panel in this case expressly held that the waiver rendered Allband’s takings-based challenge to the cap unripe. In re: FCC 11-161, 753 F.3d at 1091-92 (slip op. at 135). Allband’s other substantive challenges to the cap are unripe for the same reason: Any harm to Allband from the cap is entirely speculative because the cap currently does not – and may never – 2 Allband does not ask for panel rehearing, but it would not qualify for relief under that exacting standard either. Panel rehearing is not available unless “a significant issue has been overlooked or misconstrued by the court.” 10th Cir. Rule 40.1(A); see also Fed. R. App. P. 40(a)(2). Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 11 8 apply to Allband. “A claim is not ripe for adjudication if,” as here, “it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.” Texas v. United States, 523 U.S. 296, 300 (1998) (internal quotation marks omitted); see also Utah v. U.S. Dep’t of Interior, 210 F.3d 1193, 1198 (10th Cir. 2000) (challenges predicated on harms that were “contingent, not certain or immediate,” were unripe). Finally, although Allband suggests that the Court should not defer review of the cap because of the expense of seeking a further waiver (Rehearing Petition at 13), it is well settled that the potential expense of participating in administrative proceedings does not satisfy threshold justiciability requirements. See FTC v. Standard Oil Co. of California, 449 U.S. 232, 243-45 (1980). II. On the merits, there is no substance to Allband’s claim that the panel overlooked or misconstrued issues presented to it. a. Allband contends that the panel ignored its argument – barely framed in its opening merits brief (see Br. at 37) – that limiting its subsidy to $250 per line would breach the government’s contractual obligations. Rehearing Petition at 8-10 (citing United States v. Winstar Corp., 518 U.S. 839). But although the panel did not cite Winstar, it did expressly address the argument that Allband presented – specifically citing the page of Allband’s opening brief that referred to that case. In re: FCC 11-161, 753 F.3d at 1092 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 12 9 (slip op. at 137) (citing Br. at 37). Winstar and related cases (e.g., Resolution Trust Corp. v. FSLIC, 25 F.3d 1493 (10th Cir. 1994)) hold that the federal government may be liable when it breaches a regulatory contract; but the predicate of such cases is that a regulatory contract, in fact, exists. The panel correctly found that there was no such contract here, because “the FCC, in its pre-order USF funding system, never promised Allband or any other carriers that they would continue to receive USF funding indefinitely.” In re: FCC 11-161, 753 F.3d at 1092 (slip op. at 137); see also id. at 1064 (slip op. at 80) (the Communications Act does not “guarantee[]” that USF “disbursements will be the same from year to year”).3 Nor does the $250 per-line cap unlawfully abridge any non-contractual reliance interest on Allband’s part. Contrary to Allband’s repeated assertions, the per-line cap does not constitute unlawful retroactive rulemaking – i.e., a rule that “impair[s] rights a party possessed when he acted, increase[s] a party’s liability for past conduct, or impose[s] new duties with respect to transactions already completed,” Landgraf v. USI Film Prods., Inc., 511 U.S. 3 As the Commission noted in its response brief, RUS also “did [not] agree to provide Allband universal service support (indeed, it had no authority to do so).” Federal Respondents’ Final Response to the Additional Universal Service Fund Issues Brief of Petitioners at 29. Allband identifies no federal government contractual commitment – in its loan agreement with RUS, or elsewhere – that the FCC’s USF reforms could even arguably violate. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 13 10 244, 280 (1994). Where the cap regulation applies – and it does not apply to Allband while it enjoys a waiver – the rule is entirely prospective: It does not mandate the return of USF disbursements already made, but only potentially reduces federal subsidies going forward. See In re: FCC 11-161, 753 F.3d at 1072-73 (slip op. at 95-97) (rejecting other petitioners’ retroactivity arguments). Moreover, while prospective regulation must give adequate attention to steps taken in reasonable reliance on prior rules, there is no presumption against such “secondary” retroactive effects. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 220 (1988) (Scalia, J., concurring); see also DirecTV, Inc. v. FCC, 110 F.3d 816, 826 (D.C. Cir. 1997). And even if there were some basis to Allband’s argument that it has a reasonable reliance interest in the old USF regime that would be negatively affected by immediate application of the new per-line cap, the panel properly found that “the FCC has effectively considered Allband’s unique situation by granting Allband’s petition for waiver and authorizing Allband to seek an additional waiver at the end of three years.” In re: FCC 11-161, 753 F.3d at 1092 (slip op. at 137). b. The panel also properly rejected Allband’s insubstantial due process arguments. With respect to Allband’s “takings-type” claim that the per-line Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 14 11 cap violates the Due Process Clause, the panel correctly determined that the claim was “not yet ripe because the FCC has exempted Allband for a period of three years …, and has also afforded Allband the opportunity to seek an additional waiver at the end of that time period.” In re: FCC 11-161, 753 F.3d at 1091-92 (slip op. at 135). Under established Supreme Court and Tenth Circuit precedent, no takings claim is ripe until a party has invoked the waiver process that the agency made available and been denied. See Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 194 (1985); Alto Eldorado P’ship v. County of Santa Fe, 634 F.3d 1170, 1175-77 (10th Cir. 2011). On the merits, the panel also reasonably distinguished the takings issue presented in cases such as Bluefield Waterworks & Improvement Co. v. Pub. Serv. Comm’n of W. Va., 262 U.S. 679, 690 (1923), from the argument Allband presented here. Bluefield and similar cases involved the constitutionality of regulators’ limitations on the rates utilities may charge to customers, whereas here Allband challenged the level of government subsidies it could receive. The panel properly found that the subsidy cap directly at issue here “is not reasonably comparable to a rate-setting order.” In re: FCC 11-161, 753 F.3d at 1091 (slip op. at 135). Allband’s criticism of the panel’s statement (id.) that Allband is not a “public utility” does not affect Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 15 12 the correctness of its holding on the takings question, and presents no exceptional issue for en banc rehearing. See Rehearing Petition at 12-13.4 In its merits brief, Allband cited FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307 (2012), to support its contention that the so-called “benchmarking rule” was impermissibly vague in violation of the Due Process Clause. See Br. at 32-33.5 The FCC subsequently repealed the benchmarking rule, and Allband no longer presses its vagueness challenge – acknowledging that it is moot. See Rehearing Petition at 11 n.5. Instead, Allband now argues that language in Fox stating that an existing rule or policy must provide fair notice of what it requires supports a completely different proposition – i.e., that due process prohibits the Commission from adopting even an entirely clear and prospective new per- line cap rule because Allband did not anticipate such a change years earlier. See Rehearing Petition at 13-14. The vagueness analysis in Fox has no application to this very different argument. Moreover, although it is of course true that new rules generally must be preceded by Federal Register 4 Contrary to its apparent assumption (Rehearing Petition at 13-14), Allband also has no substantive due process right to a particular level of subsidy. Cf. Atkins v. Parker, 472 U.S. 115, 129 (1985). 5 The benchmarking rule limited reimbursable capital and operating expenses in the formula used to determine high-cost loop subsidies for rate- of-return carriers. See Order ¶214 (JA at 470); 47 C.F.R. § 36.621(a)(5). Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 16 13 notice under the Administrative Procedure Act (see 5 U.S.C. § 553(b)), here there is no question that the FCC “issued a NPRM and allowed petitioners to file comments thereto.” In re: FCC 11-161, 753 F.3d at 1091 (slip op. at 134). Allband does not contend that the NPRM failed to provide adequate notice of the possibility of the $250 per-line cap.6 c. Allband asserts, finally, that the $250 per-line cap on USF high-cost support is both arbitrary and contrary to the “sufficiency” principles of 47 U.S.C. § 254. See Rehearing Petition at 16-19. These claims also present no issues for en banc rehearing. The Commission adopted the cap to establish “responsible fiscal limits on universal service support,” having determined that greater support levels “drawn from limited public funds … should not be provided without further justification.” Order ¶274 (JA at 492). As the panel recognized, such measures (among others) were designed to address “systemic inefficiencies” – undisputed by Allband – “in the existing USF funding system that required 6 The panel correctly rejected Allband’s estoppel claim as inadequately briefed; that argument amounted to a single sentence, without citation or analysis, in Allband’s opening brief (Br. at 35). See In re: FCC 11-161, 753 F.3d at 1092 (slip op. at 136); see also Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 679 (10th Cir. 1998) (“Arguments inadequately briefed in the opening brief are waived.”). In any event, the panel also properly found Allband’s estoppel argument to be without merit, because the FCC had made no representation to Allband that could support such a claim. In re: FCC 11- 161, 753 F.3d at 1092 (slip op. at 136-37). Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 17 14 a complete alteration of that system.” In re: FCC 11-161, 753 F.3d at 1093 (slip op. at 137-38); see, e.g., Order ¶287 (JA at 496) (noting that the USF reforms are “targeted at eliminating inefficiencies and closing gaps” in the system). At the same time, the Commission structured its universal service reforms to mitigate the financial impact on small, rate-of-return carriers like Allband. Thus, for example, “rate-of-return carriers will not necessarily be required to build out to and serve the most expensive locations within their service area,” Order ¶207 (JA at 468), but rather must offer broadband only upon “reasonable request,” id. ¶¶206-07 (JA at 467-68). The Order also “exempted the most remote areas” from new broadband service obligations, id. ¶533 (JA at 564-65), and “provide[d] rate-of-return carriers … access to a new explicit recovery mechanism,” which guarantees “stable and certain revenues that the current intercarrier system can no longer provide,” id. ¶291 (JA at 496-97). Finally, the Commission established a waiver process to take into account the special circumstances of carriers for which application of the FCC’s general USF rules may be unwarranted. Id. ¶¶278-79 (JA at 493), 539-44 (JA at 566-69). Surveying the FCC’s overall package of reforms, including the $250 per-line cap, the panel reasonably rejected claims that the Order provides insufficient support to achieve the purposes of the universal service statute. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 18 15 See In re: FCC 11-161, 753 F.3d at 1054-60 (slip op. at 59-72). With respect to rural carriers, in particular, the panel determined that the Commission’s analysis was “both reasoned and reasonable” and “entirely consistent with the overarching universal service principles outlined in 47 U.S.C. § 254(b), including the principle that ‘[t]here should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.’” Id. at 1071 (slip op. at 92) (quoting 47 U.S.C. § 254(b)(5)). Allband’s only response to the panel’s reasonable holding essentially reduces to the claim that, to be lawful, the FCC’s per-line cap must produce sufficient financial support to carriers everywhere and in all circumstances. To the contrary, courts repeatedly have held that it is reasonable for the FCC to rely on a waiver process to address unforeseen shortfalls in USF subsidies that may arise in specific instances.7 Particularly given that Allband has successfully invoked such a process here, the panel correctly rejected Allband’s remaining APA and statutory claims. In re: FCC 11-161, 753 F.3d at 1092-93 (slip op. at 137-38). 7 See Rural Cellular Ass’n v. FCC, 685 F.3d 1083, 1095 (D.C. Cir. 2012); Vt. Pub. Serv. Bd. v. FCC, 661 F.3d 54, 65 (D.C. Cir. 2011); Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1104 (D.C. Cir. 2009); Alenco Commc’ns, Inc. v. FCC, 201 F.3d 608, 622 (5th Cir. 2000). Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 19 16 CONCLUSION Because Allband has not satisfied the stringent standard for en banc rehearing, its petition should be denied. Respectfully submitted, WILLIAM J. BAER ASSISTANT ATTORNEY GENERAL ROBERT B. NICHOLSON ROBERT J. WIGGERS ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 JONATHAN B. SALLET GENERAL COUNSEL DAVID M. GOSSETT ACTING DEPUTY GENERAL COUNSEL JACOB M. LEWIS ASSOCIATE GENERAL COUNSEL RICHARD K. WELCH DEPUTY ASSOCIATE GENERAL COUNSEL /s/ Laurence N. Bourne LAURENCE N. BOURNE JAMES M. CARR MAUREEN K. FLOOD COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 August 7, 2014 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 20 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT IN RE: FCC 11-161 NO. 11-9900 CERTIFICATE OF COMPLIANCE Pursuant to the requirements of Fed. R. App. P. 32(a)(7) and this Court’s order dated January 15, 2014, I hereby certify that the accompanying Response of the Federal Communications and the United States of America to the Petition for Rehearing En Banc of Allband Communications Cooperative as to Issues Raised in the Additional Universal Service Fund Issues Briefs in the captioned case contains 3,384 words. /s/ Laurence N. Bourne Laurence N. Bourne Counsel Federal Communications Commission Washington, D.C. 20554 (202) 418-1740 (Telephone) (202) 418-2819 (Fax) August 7, 2014 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 21 CERTIFICATE OF DIGITAL SUBMISSION I, Laurence N. Bourne, hereby certify that with respect to the foregoing: (1) there are no required privacy redactions to be made per 10th Cir. R. 25.5; (2) if required to file additional hard copies, that the ECF submission is an exact copy of those documents; (3) the digital submission was scanned for viruses with Symantec Endpoint Protection, version 11.0.7200.1147, updated on August 7, 2014 and according to the program is free of viruses. /s/ Laurence N. Bourne Laurence N. Bourne Counsel Federal Communications Commission Washington, D.C. 20554 (202) 418-1750 Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 22 11-9900 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT In re: FCC 11-161 CERTIFICATE OF SERVICE I, Laurence N. Bourne, hereby certify that on August 7, 2014, I electronically filed the foregoing Response of the Federal Communications Commission and the United States of America to the Petition for Rehearing En Banc of Allband Communications Cooperative as to Issues Raised in the Additional Universal Service Fund Issues Brief with the Clerk of the Court for the United States Court of Appeals for the Tenth Circuit by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Joseph K. Witmer Kathryn G. Sophy Bohdan R. Pankiw Shaun A. Sparks Pennsylvania PUC P.O. Box 3265 Harrisburg, PA 17105-3265 Counsel for: Pennsylvania PUC Charles A. Zdebski James C. Falvey Jennifer E. Lattimore Eckert Seamans Cherin & Mellott 1717 Pennsylvania Avenue, N.W. 12th Floor Washington, D.C. 20006 Counsel for: Core Communications, Inc. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 23 2 Ernest C. Cooper Robert G. Kidwell Mintz Levin Cohn Ferris 701 Pennsylvania Avenue, N.W. Suite 900 Washington, D.C. 20004 Counsel for: NCTA David Bergmann 3293 Noreen Drive Columbus, OH 43221-4568 Counsel for: NASUCA Paula Marie Carmody MD Office of People’s Counsel Suite 2102 6 St. Paul Street Baltimore, MD 21202 Counsel for: NASUCA Christopher J. White New Jersey Division of Rate Counsel P.O. Box 46005 Newark, NJ 07101 Counsel for NASUCA John H. Jones Office of the Ohio Attorney General 180 E. Broad Street, 6th Floor Columbus, OH 43215 Counsel for: PUC of Ohio Craig S. Johnson Johnson & Sporleder 304 E. High Street Suite 200 Jefferson City, MO 65102 Counsel for: Choctaw Telephone Company David H. Solomon Craig E. Gilmore Charles L. Keller Wilkinson Barker Knauer, LLP 2300 N Street, N.W., Suite 700 Washington, D.C. 20037 Counsel for: T-Mobile USA, Inc. David A. LaFuria Russell Lukas Todd B. Lantor David L. Nace Lukas, Nace, Gutierrez & Sachs Suite 1200 8300 Greensboro Drive McLean, VA 22102 Counsel for: Cellular South, Inc.,et al. Benjamin H. Dickens, Jr. Gerard J. Duffy Mary J. Sisak Robert M. Jackson Blooston & Mordkofsky 2120 L Street, N.W., Suite 300 Washington, D.C. 20037 Counsel for: Choctaw Telephone Company, et al. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 24 3 William S. McCollough McColloughHenry, PC 1250 South Capital of Texas Highway Suite 2-235 West Lake Hills, TX 78746 Counsel for: Halo Wireless, Inc. Heather M. Zachary Elvis Stumbergs Wilmer Cutler, et al. 1875 Pennsylvania Avenue, N.W. Washington, D.C. 20006-1420 Counsel for: AT&T Inc. Robert B. Nicholson Robert J. Wiggers U.S. Department of Justice Antitrust Division, Appellate Section 950 Pennsylvania Avenue, N.W. Washington, D.C. 20530 Counsel for: USA Bridget Asay State of Vermont office of the Attorney General 109 State Street Montpelier, VT 05609 Counsel for: Vermont PSB David R. Irvine Jenson Stavros & Guelker 747 East South Temple, Suite 130 Salt Lake City, UT 84102 Counsel for: Direct Communications Cedar Valley, LLC, et al. Mark J. O’Connor E. Ashton Johnston Helen E. Disenhaus Lampert, O’Connor & Johnston, PC 1776 K Street, N.W., Suite 700 Washington, D.C. 20006 Counsel for: The Voice On The Net Coalition, Inc. Christopher M. Heimann Gary L. Phillips Paul K. Mancini AT&T Inc. 1120 20th Street, N.W., Suite 1000 Washington, DC 20036 Counsel for: AT&T Scott H. Angstreich Brendan J. Crimmins Joshua D. Branson Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC 1615 M Street, N.W., Suite 400 Washington, D.C. 20036 Counsel for: Verizon Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 25 4 Christopher J. Wright Wiltshire & Grannis LLP 1200 18th Street, N.W. Washington, D.C. 20036 Counsel for: Level 3 Communications, LLC and Sprint Nextel Corporation Thomas Jones David P. Murray Nirali Patel Willkie, Farr & Gallagher LLP 1875 K Street, N.W. Washington, D.C. 20006 Counsel for: TW Telecom, Inc. Glenn Richards Pillsbury Winthrop Shaw Pittman 2300 N Street, N.W. Washington, D.C. 20037-1122 Counsel for: The Voice on the Net Coalition David E. Mills J.G. Harrington Dow Lohnes PLLC 1200 Ner Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036-6802 Counsel for: Cox Communications, Inc. Robert A. Long, Jr. Gerald J. Waldron Yaron Dori Enrique Armijo Covington & Burling LLP 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2401 Counsel for: CenturyLink, Inc. Genevieve Morelli ITTA 1101 Vermont Avenue, N.W. Suite 501 Washington, D.C. 20005 Counsel for: ITTA Clare E. Kindall Assistant Attorney General Department Head-Energy Office of the Attorney General Ten Franklin Square New Britain, CT 06051 Counsel for Connecticut PURA Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 26 5 Gregory J. Vogt Law Offices of Gergory J. Vogt 2121 Eisenhower Avenue, Suite 200 Alexandria, VA 22314 Counsel for: National Exchange Carriers Association, Inc. Craig S. Johnson Johnson & Sporleder, LLP 304 E High Street, Suite 200 P.O. Box 1670 Jefferson City, MO 65102 Counsel for: Choctaw Telephone Company Matthew A. Brill Latham & Watkins 555 11th Street, Suite 1000 Washington, D.C. 20004 Counsel for: Rural Cellular Association Mark A. Stachiw MetroPCS Communications, Inc. 2250 Lakeside Blvd. Richardson, TX 75082 Counsel for: MetroPCS Communications, Inc. Michael B. Wallace Rebecca Hawkins Wise Carter Child & Caraway, P.A. 401 E. Capitol Street Heritage Building, Suite 600 Jackson, MS 39201 Counsel for: Cellular South, Inc. Paul M. Schudel Thomas J. Moorman Woods & Aitken LLP 301 South 13th Street, Suite 500 Lincoln, Nebraska 68508 Counsel for: Nebraska Rural Independent Companies Justin W. Kraske Montana Public Service Commission 1701 Prospect Avenue P.O. Box 202601 Helena, MT 59620-2601 Counsel for : Monta Public Service Commission Steven H. Thomas McGuire Craddock & Strother, PC 2501 N. Harwood, Suite 1800 Dallas, TX 75201 Counsel for: Halo Wireless Michael E. Glover Christopher M. Miller Verizon Communications, Inc. 1320 N. Courthouse Road, 9th Flr. Arlington, VA 22201 Counsel for: Verizon Walter H. Sargent II, Esq. 1632 N. Cascade Avenue Colorado Springs, CO 80907 Counsel for Transcom Enhanced Services, Inc., et al.. Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 27 6 Samuel L. Feder Luke C. Platzer Jenner & Block LLP 1099 New York Avenue, N.W. Washington, D.C. 20001 Counsel for: Comcast Corporation Richard A. Askoff, Sr. National Exchange Carrier Association, Inc. 80 South Jefferson Road Whippany, NJ 07981 Counsel for: National Exchange Carriers Association, Inc. Caressa D. Bennet Kenneth C. Johnson Daryl A. Zakov Anthony K. Veach Bennet & Bennet, PLLC 4350 East West Highway, Suite 201 Bethesda, MD 20814 Counsel for: Rural Telecommunications Group, Inc. and Central Texas Telephone Cooperative, Inc. Robert A. Fox Kansas Corporation Commission 1500 SW Arrowhead Road Topeka, KS 66606 Counsel for The State Corporation Commission of the State of Kansas Ivan C. Evilsizer Evilsizer Law Office, PLLC 2301 Colonial Drive, Suite 2B Helena, MT 59601-4995 Counsel for: Ronan Telephone Company, et al. Dennis Lopach Montana Public Service Commission 1701 Prospect Avenue P.O. Box 202601 Helena, MT 59620 Counsel for: Montana Public Service Commission Sean Conway James E. Tysse Akin Gump Strauss Hauer & Feld 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Counsel for: Gila River Indian Don L. Keskey 505 N. Capitol Avenue Lansin, MI 48933 Counsel for: Allband Community, et al. Communications Cooperative Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 28 7 Alan L. Smith 1169 East 4020 South Salt Lake City, UT 84124 Counsel for Direct Communications Cedar Valley, LLC, et al. Roger D. Dixon, Jr. Law Offices of Dale Dixon 7316 Esfera Street Carlsbad, CA 92009 Counsel for: North County Communications Corporation David Cosson 2154 Wisconsin Avenue, N.W. Washington, D.C. 20007 Counsel for: Eastern Nebraska Telephone Company H. Russell Frisby, Jr. Dennis Lane Harvey L. Reiter Stinson Morrison Hecker 1775 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Counsel for: Eastern Nebraska Telephone Company Holly R. Smith James B. Ramsay NARUC 1101 Vermont Ave., N.W., Suite 200 Washington, D.C. 20005 Counsel for: NARUC Maureen A. Scott Janet F. Wagner Wesley C. Van Cleve Arizona Corporation Commission Legal Division 1200 West Washington Phoenix, AZ 85007 Counsel for: Arizona Corporation Commission Raymond L. Doggett, Jr. D. Mathias Roussy, Jr. Virginia State Corp. Commission Office of General Counsel P.O. Box 1197 Richmond, VA 23218-1197 Counsel for: Virginia State Corporation Commission Rick Chessen Neal M. Goldberg Jennifer McKee Steven F. Morris NCTA 25 Masschusetts Avenue, N.W. Suite 100 Washington, D.C. 20001 Counsel for: NCTA Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 29 8 Michael C. Small Akin Gump Strauss Hauer & Feld 2029 Century Park E., Suite 2400 Los Angeles, CA 90067 Counsel for: Gila River Indian, et al John B. Capehart Akin Gump Strauss Hauer & Feld 1700 Pacific Ave., Suite 4100 Dallas, TX 75201 Counsel for: Gila River Indian, et al Jeffrey A. Lamken Lucas M. Walker Molo Lamken 600 New Hampshire Ave., NW Suite 660 Washington, DC 20037 Counsel for: Windstream Communications, Inc. /s/ Laurence N. Bourne Appellate Case: 11-9900 Document: 01019291468 Date Filed: 08/07/2014 Page: 30