F I L E D
United States Court of Appeals
Tenth Circuit
PU BL ISH
June 5, 2007
UNITED STATES COURT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
W W C HOLDIN G CO., IN C.,
Plaintiff-Appellee,
v.
GR EGO RY E. SOPKIN, POLLY E. No. 06-1156
PAGE, CARL M ILLER, in their
official capacities as the
Commissioners of the Public Utilities
Commission of the State of Colorado,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 04-cv-1682-RPM )
Paul C. Gomez, First Assistant Attorney General, Denver, Colorado (John W .
Suthers, Colorado Attorney General, with him on the briefs), for Defendants-
Appellants.
Phillip R. Schenkenberg, Briggs and M organ, P.A., M inneapolis, M innesota, for
Plaintiff-Appellee.
Before BRISCO E, EBEL, and GORSUCH, Circuit Judges.
EBEL, Circuit Judge.
This case involves the question of whether and how the federal
Telecommunications Act restricts a state’s authority to impose conditions on
wireless service providers seeking to be designated as an “eligible
telecommunications carrier” (“ETC”) under Section 214(e)(2) of the Act when
those conditions would affect the interstate components of a carrier’s services.
The commissioners of the Public Utilities Commission (“PUC”) of Colorado
appeal a district court decision that enjoined the PUC from imposing “consumer
protection” conditions on W W C Holding Company (“W estern W ireless”) as part
of W estern W ireless’s request to be designated an ETC. The district court found
that the PUC’s proposed conditions constituted interstate regulation, and
concluded that the Telecommunications A ct prohibited the PUC from engaging in
such regulation. W W C Holding Co. v. Sopkin, 420 F. Supp. 2d 1186 (D. Colo.
2006). The district court also decided that the Telecommunications Act requires
the PUC to engage in a rule-making for any conditions that the PUC decides to
impose on a carrier seeking ETC designation.
W e conclude that the district court erred in both regards. W e hold that the
Telecommunications Act does not prevent the PUC from exercising its express
statutory authority under Section 214(e) of the Act in a way that affects the
interstate components of services offered by carriers w ho are otherwise subject to
the PUC’s jurisdiction. W e also conclude that Section 214(e) governs ETC
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designations and does not require state commissions to issue rules and regulations
regarding the conditions that are imposed on a carrier seeking ETC designation.
W e reverse those two holdings by the district court, and remand for further
consideration of the other issues raised in this case.
I. BACKGROUND
The Telecommunications Act of 1996 significantly changed the federal
approach to ensuring that the nation’s population has access to “universal
service.” “Universal service” includes the principles of: quality
telecommunications service at “just, reasonable, and affordable rates;” service
availability in all regions of the country; and services and rates in rural and high-
cost areas that are comparable to other areas. 47 U.S.C. § 254(b).
To develop the services and infrastructure to meet these goals, Congress
created a federal fund to which telecommunications carriers contribute, 47 U.S.C.
§ 254(d), often through fees passed on to customers. This funding is distributed
as public subsidies to telecommunications carriers who apply for and receive
designation as ETCs. 47 U.S.C. § 214(e). ETCs are eligible to receive the
subsidy by committing to offering the “universal services” prescribed by the
Federal Communications Commission (“FCC”) in the specified service area. Id.
The FCC is responsible for processing requests for ETC designation when the
telecommunications carrier is not subject to the jurisdiction of a state public
-3-
utility commission. 47 U.S.C. § 214(e)(6). However, when a carrier wishes to
obtain ETC designation for an area within a state, it is the state public utility
commission rather than the FCC that is charged with making those designations.
47 U.S.C. § 214(e)(2). The Act instructs that “[b]efore designating an additional
eligible telecommunications carrier for an area served by a rural telephone
company, the State commission shall find that the designation is in the public
interest.” Id.
States also have the option of creating their own universal service program
under Section 254(f) of the Telecommunications Act. Colorado has done so
through a state funding mechanism, and distributes state subsidies for universal
service by designating carriers as “eligible providers.”
W estern W ireless provides mobile phone services. In 2003, W estern
W ireless applied to the PUC to receive federal subsidies through an ETC
designation for specified areas in Colorado that were already served by a rural
telephone company. W estern W ireless did not seek state subsidies through an
eligible provider designation. After a hearing, the PUC decided to grant the
application for ETC designation under Section 214(e) of the Telecommunications
Act, but found that the designation would be in the “public interest” only if
W estern W ireless complied with state-specific consumer protection and
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operational standards. 1 In a petition for reconsideration, W estern W ireless
informed the PUC that it was willing to adhere to the same consumer protection
conditions that the FCC imposed on ETC designations within its purview, 2 but
argued that the PUC’s state-level conditions were designed for traditional wireline
carriers and were inappropriate for a mobile telecommunications carrier. 3
1
The PUC also conditioned the ETC designation on W estern W ireless’s
compliance with defined rate caps. The district court enjoined this condition,
finding that it constituted state-level rate regulation of commercial mobile radio
services, which is expressly preempted by Section 332 of the Telecommunications
Act. WW C Holding Co., 420 F. Supp. at 1194. The PUC has not appealed this
part of the district court’s ruling.
2
Specifically, W estern W ireless said it would comply with the standards
articulated in the FCC’s Virginia Cellular order. See In re Virginia Cellular, LLC
Petition for Designation as an ETC in the Commonwealth of Va., 19 F.C.C. Rcd.
1563 (Jan. 22, 2004).
The FCC imposes a number of requirements when it makes an ETC
designation for a carrier not subject to a state commission’s jurisdiction. 47
C.F.R. Part 54. For example, carriers must: comm it to providing service to any
customer making a reasonable request for service; submit a five-year plan for
infrastructure and service improvements; demonstrate its ability to remain
functional in emergency situations; demonstrate that it will satisfy applicable
consumer protection and service quality standards, which are met if the carrier
complies w ith the C ellular Telecommunications and Internet Associations’s
(“CTIA”) consumer code; and demonstrate that it offers a local usage plan
comparable to the one offered by the incumbent carrier in the area. 47 C.F.R. §
54.202.
3
The contested conditions involved in W estern W ireless’s ETC designation
include requirements that Western W ireless:
• will provide customer care personnel who will be available 24 hours per
day, 7 days per week by phone, or by visiting retail store outlets;
• will provide any customer, upon request, with basic universal services
within 150 working days of application;
• will ensure, for switches for more than 10,000 customers, that a permanent
(continued...)
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After the PUC denied the petition for reconsideration, W estern W ireless
brought suit in federal district court seeking to enjoin these conditions of its ETC
designation. The court granted W estern W ireless summary judgment, holding
that the PUC’s proposed conditions amounted to “unlawful regulation” of an
“interstate carrier” because W estern W ireless “bundles intrastate and interstate
services together in service packages which do not distinguish between or
separately bill for interstate and intrastate calls.” W W C H olding Co., 420 F.
Supp. 2d at 1190, 1196. The court also found that because Section 254(f)
provides that a state universal service program “may adopt regulations not
inconsistent with the [FCC’s] rules to preserve and advance universal service,”
3
(...continued)
auxiliary power and possibly additional battery reserve is installed;
• will ensure, for switches for fewer than 10,000 customers, plus microwave
radio sites and other facilities, that a mobile power source with four or
more hours of battery reserve is installed;
• will transmit a signal at strength level of negative 104 dBM ;
• will establish “local calling areas” that generally allow free calls “within
[customers’] community of interest,” including local government offices,
school districts, libraries, primary centers of business activity, police and
fire departments, and essential medical and emergency services;
• will publish an annual directory listing of customers with their names and
addresses; and
• will document customer trouble reports and report to the state during the
months exceeding eight reports per 100 customers.
These have some similarities to the federal standards. For example, both
the federal and state programs require a carrier to have backup capacity so that it
is functional in emergencies. However, the FCC does not spell out the detailed
operational and procedural standards – such as a four-hour battery backup
window or minimum signal strength – that the PUC seeks to impose as a
condition of W estern W ireless’s ETC designation.
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the conditions imposed by the PUC on carriers seeking universal service subsidies
under an ETC designation must be promulgated through regulations. The court
concluded that because the PUC had not adopted regulations that set forth the
quality of service standards at issue, such standards could not be imposed on
W estern Wireless as a condition of ETC designation. Id. at 1195-96. The PUC
appealed those conclusions.
II. D ISC USSIO N
A. Jurisdiction and Standard of Review
The district court has authority under 28 U.S.C. § 1331 to review a state
public utility commission’s orders under the Telecommunications Act for
compliance with federal law. Verizon M d., Inc. v. Pub. Serv. Comm’n, 535 U.S.
635, 642 (2002). W e have jurisdiction to hear this appeal from the district court’s
final decision. 28 U.S.C. § 1291. 4
4
W estern W ireless argued that we have no jurisdiction because this appeal
is moot. W estern W ireless pointed to a PUC decision issued after the onset of
this litigation in which the PUC acknowledged that state law prevented it from
regulating wireless carriers, so that the PUC was not permitted to “regulate” the
service quality of w ireless carriers already designated as ETCs who were
certifying their continuing eligibility for federal subsidies. In re Proposed Rules
Regarding Annual Reporting Requirements for ETCs to be Certified to Receive
Fed. Universal Serv. Support, PU C Decision No. C06-1108 (Sept. 19, 2006)
(referring to C.R.S. §§ 40-15-401 and 40-15-402).
“Constitutional mootness doctrine is grounded in the Article III
requirement that federal courts may only decide actual ongoing cases or
controversies.” Seneca-Cayuga Tribe v. Nat’l Indian Gaming Comm’n, 327 F.3d
(continued...)
-7-
W e apply a de novo standard of review when reviewing state commissions’
interpretations of the Telecommunications Act and its regulations, as those
decisions turn on determinations of federal law. Sw . Bell Tel. Co. v. Apple, 309
F.3d 713, 717 (10th Cir. 2002); Sw . Bell Tel. Co. v. Brooks Fiber Commc’ns of
Okla., Inc., 235 F.3d 493, 498 (10th Cir. 2000). “Once federal courts determine
that state commissions properly interpreted the Act and its regulations, courts
apply an arbitrary and capricious standard to review the remaining state
comm issions’ determinations.” Apple, 309 F.3d at 717. Because today’s decision
addresses only the interpretation of the Telecommunications Act and federal law ,
our review is de novo.
B. State Authorities and Interstate Comm unications 5
4
(...continued)
1019, 1028 (10th Cir. 2003) (citation omitted). “[T]he Supreme Court has said
that a case properly brought in the first instance only becomes moot where
interim relief or events have completely and irrevocably eradicated the effects of
the alleged violation.” Bldg. & Constr. Dep’t v. Rockwell Int’l Corp., 7 F.3d
1487, 1491 (10th Cir. 1993) (quotation omitted).
The PUC, in its supplemental brief and at oral argument, stated that it
continues to assert jurisdiction over initial ETC designations and has the authority
to impose conditions in doing so. The PUC has not interpreted Decision C06-
1108 as removing such jurisdiction. M oreover, the PUC expressly declined to
extend the rules promulgated in that decision to initial ETC designations.
Therefore, this appeal is not moot.
5
W estern W ireless contends that we should not consider this argument
because the PUC did not develop it in the district court. Generally “an appellate
court will not consider an issue raised for the first time on appeal.” Hicks v.
Gates Rubber Co., 928 F.2d 966, 970 (10th Cir. 1991). However, the PUC did
(continued...)
-8-
The concept of a clean divide between interstate and intrastate jurisdiction
in the world of telecommunications regulation has long been considered
anachronistic, even before the advent of mobile telecommunications. As the
Supreme Court has observed,
w hile the [Communications] Act would seem to divide the world of
domestic telephone service neatly into tw o hemispheres -- one
comprised of interstate service, over which the FCC would have plenary
authority, and the other made up of intrastate service, over which the
States would retain exclusive jurisdiction -- in practice, the realities of
technology and economics belie such a clean parceling of
responsibility. This is so because virtually all telephone plant that is
used to provide intrastate service is also used to provide interstate
service, and is thus conceivably within the jurisdiction of both state and
federal authorities. M oreover, because the same carriers provide both
interstate and intrastate service, actions taken by federal and state
regulators within their respective domains necessarily affect the general
financial health of those carriers, and hence their ability to provide
service, in the other “hemisphere.”
La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 360 (1986). In Louisiana Public
Service Commission, the Court rejected the suggestion that the FCC’s jurisdiction
preempted state action whenever the state action impacted assets used for both
interstate and intrastate communication. Id. at 374-75.
5
(...continued)
argue to the district court that various sections of the Telecommunications A ct,
including Sections 214, 254 and 332, give the PUC express authorities to regulate
telecommunications carriers without regard to whether the exercise of such
authority can reach the interstate components of such carriers’ services. W e
conclude the PUC adequately raised this argument to the court below, particularly
in view of the pure question of law it presents for our review. See Ross v. United
States M arshal, 168 F.3d 1190, 1195 n.5 (10th Cir. 1999).
-9-
The revisions to the Telecommunications Act enacted in 1993 and 1996
continued to reflect this uneasy jurisdictional allocation between states and the
federal government. The Act provides that the FCC has no jurisdiction over
intrastate communication services, generally leaving the regulation of such
services to the states. 47 U.S.C. § 152(b). However, “Congress, by extending the
Communications Act into local competition, has removed a significant area from
the States’ exclusive control.” AT& T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 381
n.8 (1999). The Supreme Court view s the 1996 Act as reserving to states their
authority to regulate intrastate communications “[i]nsofar as Congress has
remained silent” about the regulatory matter at issue. Id. The Court noted that
the FCC “could not, for example, regulate any aspect of intrastate communication
not governed by the 1996 Act on the theory that it had an ancillary effect on
matters w ithin the [FCC’s] primary jurisdiction.” Id. See also Philip J. Weiser,
Chevron, Cooperative Federalism, and Telecommunications Reform, 52 Vand. L.
Rev. 1, 25 (1999) (describing how Congress “envisioned that the state agencies
would have an independent role in implementing a number of the A ct’s
provisions”). Therefore, in discerning the limits of a state’s regulatory authority,
we look past a mere rule of thumb demarcating jurisdiction over interstate or
intrastate communications, and instead look to the Telecommunications Act itself.
Under the Act, the FCC is charged with certain regulatory authority over
mobile services, even to the extent they have intrastate components. 47 U.S.C. §§
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152(b), 332. The FCC has exclusive jurisdiction to regulate the rates and
conditions of market entry of mobile services. 47 U.S.C. § 332(c)(3)(A).
However, states are expressly permitted to regulate the “other terms and
conditions” of commercial mobile services. Id.
Likewise, the Telecommunications Act preempts a particularly onerous
state regulation by providing that “[n]o State or local statute or regulation, or
other State or local legal requirement, may prohibit or have the effect of
prohibiting the ability of any entity to provide any interstate or intrastate
telecommunications service.” 47 U.S.C. § 253(a). However, Congress also stated
that “[n]othing in this section shall affect the ability of a State to impose, on a
competitively neutral basis and consistent with section 254 of this title,
requirements necessary to preserve and advance universal service, protect the
public safety and welfare, ensure the continued quality of telecommunications
services, and safeguard the rights of consumers.” 47 U.S.C. § 253(b).
It is clear that states have authority under the Telecommunications A ct to
adopt their own universal service standards and create funding mechanisms
sufficient to support those standards, as long as the standards are not inconsistent
with the FCC’s rules, and as long as the state program does not burden the federal
program. 47 U.S.C. § 254(f). M oreover, states are given the primary
responsibility for deciding which carriers qualify as ETCs to be eligible for
subsidies from the federal universal service fund. As noted earlier, when a rural
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telephone company already serves a given area and another carrier seeks ETC
designation for the same area, the state must decide whether that designation
would be in the public interest. 47 U.S.C. § 214(e)(2).
The district court held that because W estern W ireless bundled its intrastate
and interstate services, the PUC’s conditions of ETC designation amounted to
“interstate regulation” that was preempted by the Telecommunications A ct. 6
However, nothing in the Act expressly preempts a state from exercising the above
authority to regulate carriers providing intrastate services or to designate such
carriers as ETCs simply on the basis that the requirements or ETC designation
conditions being imposed would affect some phone calls that originate and
terminate in different states. Nor does the A ct limit a state’s jurisdiction over a
telecommunications carrier merely because the carrier offers interstate and
intrastate services in “bundles” to individual consumers.
For example, Congress was w ell aw are that mobile services, “by their
nature, operate without regard to state lines as an integral part of the national
telecommunications infrastructure,” and therefore created Section 332(c)(3)(A ) to
“preem pt state rate and entry regulation of all commercial mobile services.” H .
Rpt. No. 103-111, at 260 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 587
6
Because our analysis of the Telecommunication Act’s provisions for
assigning interstate and intrastate jurisdiction bears directly upon our review of
the district court’s holding and provides the rationale for our holding, it is
integral to our decision and therefore not “dicta.”
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(emphasis added). Yet, at the same time, Congress decided to permit a state to
regulate the “other terms and conditions” of a mobile service provider, with no
explicit limitation on whether a state’s regulations affect the provision of
interstate service. These provisions do not suggest that a carrier may declare
itself exempt from all relevant regulations of a state universal service program
simply because the carrier’s rate structure does not distinguish between interstate
and intrastate calls. Instead, a carrier would need to demonstrate that a state’s
requirements effectively regulate rates or are so onerous as to constitute a barrier
to entry.
In summary, the jurisdictional delineation between state and federal
authority focuses on the types of requirements being imposed, not whether the
regulated entity offers bundled interstate services with its intrastate services. For
mobile telecommunications services, Section 332(c)(3)(A) draws the line between
regulation of rates or market entry, which is the FCC’s exclusive purview, and
“other terms and conditions,” which are permissive regulatory subjects for states.
Even though Congress was sensitive to the need to “foster the growth and
development of mobile services,” Congress envisioned that state commissions
could regulate mobile services for “such matters as customer billing information
and practices and billing disputes and other consumer protection matters;
facilities siting issues (e.g., zoning); transfers of control; the bundling of services
and equipment; and the requirement that carriers make capacity available on a
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wholesale basis or such other matters as fall within a state's law ful authority. This
list is intended to be illustrative only and not meant to preclude other matters
generally understood to fall under ‘terms and conditions.’” Id. at 588. 7
Therefore, in assigning the responsibility for regulating mobile service providers,
the “what” matters as much as the “where.”
For regulation aimed at promoting universal service, Section 254(f)
provides a hierarchy in which states cannot conflict with the federal universal
services program, but states are clearly authorized to build upon the federal
program to support universal service. See Qwest Corp. v. FCC, 258 F.3d 1191,
1203 (10th Cir. 2001) (“The Telecommunications Act plainly contemplates a
partnership between the federal and state governments to support universal
service. . . . Thus, it is appropriate – even necessary – for the FCC to rely on state
action in this area.”).
At the same time, the FCC has decided that state commissions have “the
primary responsibility for performing ETC designations” that result in
telecommunications providers being eligible for federal universal service
subsidies. In re Fed.-State Joint Bd. on Universal Serv., 20 F.C.C. Rcd. 6371,
6374 (M ar. 17, 2005) (“2005 Universal Service Order”). The FCC has
7
For example, the Eleventh Circuit recently held that a state requirement
regarding the use of line items in customer billing was properly within a state’s
Section 332 authority over the “other terms and conditions” of mobile services.
Nat’l Ass’n of State Util. Consumer Advocates v. FCC, 457 F.3d 1238, 1242
(11th Cir. 2006).
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established standards for ETC designations made by the FCC. Id. at 6372.
Although the FCC has encouraged state commissions to adopt these same
requirements, it has declined to require states to do so. Id. Instead, the FCC
generally affirmed that states have the discretion to impose additional eligibility
requirements on carriers seeking ETC designations, without reference to whether
the requirements can or cannot be applied to a carrier’s interstate components.
W e believe that section 214(e)(2) dem onstrates Congress's intent that
state commissions evaluate local factual situations in ETC cases and
exercise discretion in reaching their conclusions regarding the public
interest, convenience and necessity, as long as such determinations are
consistent with federal and other state law. . . . Consistent with our
adoption of permissive federal guidelines for ETC designation, state
com m issions will continue to maintain the flexibility to impose
additional eligibility requirements in state ETC proceedings, if they so
choose.
Id. at 6397-98.
The states’ authority to make ETC designations extends to w ireless carriers
seeking federal universal service subsidies. The FCC specifically rejected
suggestions that “consumer protection requirements imposed on wireless carriers
as a condition for ETC designation are necessarily inconsistent with section 332
of the Act.” Id. at 6384-85. Instead, the FCC decided that “states may extend
generally applicable, competitively neutral requirements [to wireless carriers] that
do not regulate rates or entry and that are consistent with sections 214 and 254 of
the Act to all ETCs in order to preserve and advance universal service.” Id. at
6384-85. Of relevance here, the FCC has not said that a state must parse out the
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application of these requirements to avoid affecting the interstate services of
carriers providing bundled services. The FCC’s interpretation of the
Telecommunications Act’s provisions addressing state ETC designations is, of
course, subject to deference. See Qwest Commc’ns Int’l, Inc. v. FCC, 398 F.3d
1222, 1229-30 (10th Cir. 2005) (citing Chevron U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 842 (1984)).
A t least one circuit court has agreed with the FCC in this regard, and w e
have found no circuit authority to the contrary. The Fifth Circuit, in Texas Office
of Public U tility Counsel v. FCC, 183 F.3d 393 (5th Cir. 1999), expressly held
that the Telecommunications Act permits states to impose some additional
eligibility requirements on carriers seeking an ETC designation. See id. at 418
(discussing Section 214(e)(2) and concluding that “nothing in the statute . . .
prohibits states from imposing their ow n eligibility requirements”). And we must
assume that the FCC’s order permitting state commissions to impose consumer
protection requirements on ETC designees is valid under the Telecommunications
Act. 8
8
The Administrative Orders Review Act (“Hobbs Act”) precludes collateral
attacks on FCC Orders by prescribing “the sole conditions under w hich the courts
of appeals have jurisdiction to review the merits of FCC orders.” Vonage
Holdings Corp. v. M inn. Pub. Utils. Comm’n, 394 F.3d 568, 569 (8th Cir. 2004)
(describing the process for petitioning for review, which must name the United
States as a party) (citing 28 U.S.C. §§ 2342, 2344; other citations omitted).
Specifically, “[e]xclusive jurisdiction for review of final FCC orders . . . lies in
the Court of Appeals. Litigants may not evade these provisions by requesting the
(continued...)
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W estern W ireless attempts to rely on the FCC’s orders regarding internet
voice services to support its argument that states have no jurisdiction over any
type of communications that bundles interstate and intrastate services. In 2004,
the FCC issued an order preempting a state’s attempt to regulate voice over
internet protocol (“VoIP”) services. In re Vonage Holdings Corp. Petition for
Declaratory Ruling Concerning an Order of the M inn. Pub. Utils. Comm’n, 19
F.C.C. Rcd. 22,404 (Nov. 12, 2004) (“Vonage Order”). The Eighth Circuit
affirmed the FCC’s order. M inn. Pub. Utils. Comm’n v. FCC, 483 F.3d 570 (8th
Cir. 2007).
VoIP services are provided through the internet but resemble telephone
communications and interact with both traditional wireline services and mobile
services. The locations of both the call origination and termination are irrelevant
to such services. A subscriber need only be somewhere with broadband internet
access. The M innesota Public Utilities Commission had issued an order
subjecting Vonage to the same requirements imposed on other telephone
companies in the state, such as the requirement to offer 911 emergency services
comparable to other w ireline carriers. Vonage Order, 19 F.C.C. Rcd. at 22,408.
8
(...continued)
District Court to enjoin action that is the outcome of the agency’s order.” FCC v.
ITT W orld Commc’ns, Inc., 466 U.S. 463, 468 (1984) (citing 28 U.S.C. § 2342(1)
and 47 U.S.C. § 402(a)).
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The FCC found that Vonage’s services were jurisdictionally “mixed” and
therefore theoretically subject to dual federal/state jurisdiction, but concluded that
the FCC preempted state regulation over internet services w hen, as w ith VoIP
services, it was “impossible or impractical” to separate the services into intrastate
and interstate components. Id. at 22,413. The Eighth Circuit subsequently held
that “[t]he impossibility exception, if applicable, is dispositive of the issue
whether the FCC has authority to preempt state regulation of VoIP services.”
M inn. Pub. Utils. Comm’n, 483 F.3d at 578. W estern W ireless likens VoIP
services to mobile communications, which also bundle their interstate and
intrastate services and have no technical limitations inherent to state boundaries,
in arguing that the PUC’s ETC conditions are preempted by the FCC’s
jurisdiction.
The FCC’s ruling in Vonage is simply not applicable to the issues in this
case, particularly in light of the 2005 Universal Service Order. First, the FCC
found that VoIP services are internet services, and that Congress specifically
intended internet services to be treated differently than either mobile
comm unications or traditional wireline services. The Telecommunications Act
does not provide a mixed state-federal regulatory scheme for internet services,
with the exception of provisions for blocking offensive material. 47 U.S.C. §
230. In contrast, the Act establishes a detailed regulatory scheme for commercial
mobile services, with primary jurisdiction given to the FCC, but expressly permits
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states to regulate non-rate and non-entry aspects of mobile services and requires
states designating ETCs in rural markets served by an incumbent provider to
make a public interest determination. 47 U.S.C. § 332(c)(3)(A).
Second, the FCC’s Vonage order reacted to a state decision that required
Vonage to comply with “all state statutes and regulations relating to the offering
of telephone service,” i.e. market entry requirements. Vonage Order, 19 F.C.C.
Rcd. at 22,409, 22,430. In our case, the PUC has not extended the gamut of
telephone regulations to mobile services. Instead, W estern W ireless approached
the PUC to receive federal universal service subsidies, and the PUC determined
that public interest required that an ETC designation for receipt of those subsidies
be conditioned on compliance with certain requirements that have also been
imposed on wireline companies seeking the same type of subsidies. As such,
W estern W ireless actually requested the PUC’s jurisdiction to the extent of
receiving ETC designation. And W estern W ireless cannot claim that it is being
subjected to the full panoply of wireline regulations, as not only are the ETC
conditions at issue merely a subset of those regulations, but also W estern
W ireless retains the ability to opt out of them entirely by declining any federal
universal service subsidies.
Third, the FCC’s Vonage order was based in part on a finding that the
state’s decision “directly conflicts” w ith the FCC’s approach for regulating VoIP
services. Id. at 22,415. Yet here, there is no direct conflict between the PUC’s
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conditions of ETC designation and the FCC’s regulatory approach. Instead, a
year after the Vonage decision, the FCC affirmed that state commissions could
impose consumer protection requirements on wireless carriers seeking ETC
designation. 2005 Universal Service Order, 20 F.C.C. Rcd. at 6384-85. And
while the PUC’s conditions might not be exactly what the FCC would impose if it
were the entity designating W estern W ireless as an ETC, see supra note 3, the
FCC has interpreted the Telecommunications Act as permitting states to establish
their own additional requirements.
Last, the FCC in Vonage decided that the state’s regulatory reach violated
the U.S. Constitution’s C ommerce Clause, since M innesota’s requirements w ould
have the “‘practical effect’ of regulating comm erce occurring wholly outside that
state’s borders.” Vonage Order, 19 F.C.C. Rcd. at 22,428 (quoting Healy v. Beer
Inst., 491 U.S. 324, 332 (1989)). However, Congress has the power to make
exceptions to the Commerce Clause’s restrictions on state jurisdiction and to
permit states to regulate in a way that affects interstate commerce. See New York
v. United States, 505 U.S. 144, 171 (1992) (“W hile the Commerce Clause has
long been understood to limit the States’ ability to discriminate against interstate
comm erce, that limit may be lifted . . . by an expression of the ‘unambiguous
intent’ of Congress.” (citations omitted)). W ith respect to mobile
comm unications Congress has done just that, preempting states from regulating
the rates and market entry conditions of mobile carriers, but expressly allowing
- 20 -
the states to regulate the “other terms and conditions.” 47 U.S.C. § 332(c)(3)(A).
W e must respect Congress’s decision in this matter to allow state PUCs to
exercise ETC designation authority, which has not been limited by Congress to
instances where only intrastate commerce is affected.
In summary, the Telecommunications Act does not categorically bar the
PUC from exercising jurisdiction over services that may include an interstate
component when the PUC acts w ithin its explicit authorities under the Act. 9
M oreover, the FCC, in affirming states’ authorities under Sections 214 and 254,
has not attempted to restrict the sw eep of those authorities exclusively to
intrastate services. The Act explicitly grants the FCC the authority to preempt a
state regulation that has “the effect of prohibiting the ability of any entity to
provide any interstate or intrastate telecommunications service.” 47 U.S.C.
§ 253(a), (d). However, the FCC has yet to exercise that statutory authority to
preempt the type of ETC conditions at issue in this case.
W estern W ireless’s argument in this regard points to the potential tension
between state and federal jurisdiction that permeates the Telecommunications
9
The PUC argues that the Telecommunications Act actually “requires”
carriers to be able to separate its intrastate and interstate services. However, the
PU C bases its argument on an unrelated cost allocation methodology employed by
the FCC that does not speak to the ability of a mobile carrier to separate its
interstate and intrastate services for purposes of regulatory compliance.
M oreover, the PUC never ordered W estern W ireless to separate its interstate and
intrastate services w hen it conditioned its ETC designation. As such, this
argument is both unavailing and irrelevant, and we do not, accordingly, address it
further on this appeal.
- 21 -
Act, and the absence of clear federal guidance on the extent to w hich a state’s
conditions of ETC designation imposed on a wireless provider can embrace the
type of regulation traditionally established for wireline carriers without
impermissibly burdening the federal universal services program. Untangling
those issues is simply beyond the scope of our current review . Our decision is
aimed solely at the question presented: whether the Telecommunications Act
permits a state to impose ETC conditions not related to regulation of rates or
market entry that affect the interstate components of a mobile carrier that bundles
its interstate and intrastate services.
Today we do not pass on the questions of whether the nature and extent of
the conditions at issue here are beyond the bounds of a state’s Section 214(e)
authority, or whether they impermissibly burden the federal universal service
program under Section 254(f). W e remand to the district court for further
consideration of unresolved issues that may include those questions. However,
we do hold, contrary to the ruling of the district court, that federal law does not
automatically preclude the PUC from exercising those authorities in a way that
affects the interstate component of an ETC designee’s services.
C. Rule-M aking R equirements and the Telecommunications Act
The conditions that the PUC seeks to impose on W estern W ireless’s ETC
designation are not part of the state’s ETC regulation, see 4 Colo. Code Regs. §
- 22 -
723-2, Rule 2187, nor are they codified elsewhere. Instead, the PUC established
these conditions in an adjudicatory hearing and decision specific to W estern
W ireless. The district court, looking to the text of Section 254(f), ruled that the
PU C can impose ETC designation conditions upon an applicant only by adopting
regulations through a rule-making proceeding. W e disagree. Because the express
source of the PUC’s authority in this matter came from Section 214(e) rather than
Section 254(f), and because Section 214(e)(2) ETC designations do not require a
formal rule-making proceeding, we reverse the district court’s determination on
this question. 10
Section 254(f) provides that states may “adopt regulations” to create a state
universal service program, including “regulations” that provide “additional
definitions and standards to preserve and advance universal service,” but only if
10
The PUC failed to offer before the district court its view of how to
interpret Section 254(f). However, the court did not base its ruling on any default
by the PUC, but instead presented a detailed argument on why it concluded that
W estern W ireless’s position was correct. Therefore, we review the district
court’s conclusion on its merits.
Our statutory interpretation differs from the positions of both parties on
appeal. However, we are not limited to the parties’ positions on what a statute
means, because we review a question of statutory construction de novo. See
United Transp. Union v. Dole, 797 F.2d 823, 828 (10th Cir. 1986) (in considering
whether a party had waived the opportunity to argue for its position as to what the
statute means, “[t]he issue concerns questions of statutory interpretation urged by
the agency and accepted by the district court. Questions of law are entitled to a
de novo review ; development of a record before the agency or by the agency is
not pressing. . . . W e believe that it is necessary to correct misconceptions of
statutory meaning at the earliest opportunity for the benefit of all who must
operate under a statute's purview .” (citation omitted)).
- 23 -
“such regulations” adopt sufficient mechanisms to support those standards. 11
W hile the text of Section 254(f) could lead to the conclusion that a rule-making
proceeding is required for regulation of a state-created universal services
program, we need not resolve that question here, because the PUC’s conditions
were not imposed on W estern W ireless under the aegis of Section 254(f).
The structure of Section 254 of the Telecommunications Act delineates a
federal universal service program, see 47 U.S.C. § 254(e), and a state’s authority
to create its own such program, see 47 U.S.C. § 254(f). The provision
establishing the federal program provides that only ETCs designated under
Section 214(e) of the Act are eligible to receive federal support. 47 U.S.C. §
254(e). Because W estern W ireless sought ETC designation for federal support,
and did not seek state universal service funding, Section 254(e) is applicable.
11
The full text of Section 254(f) provides that:
A State may adopt regulations not inconsistent with the C ommission's
rules to prese rve an d ad van ce universa l service. Every
telecommunications carrier that provides intrastate telecommunications
services shall contribute, on an equitable and nondiscriminatory basis,
in a manner determined by the State to the preservation and
advancement of universal service in that State. A State m ay adopt
regulations to provide for additional definitions and standards to
preserve and advance universal service within that State only to the
extent that such regulations adopt additional specific, predictable, and
sufficient mechanisms to support such definitions or standards that do
not rely on or burden Federal universal service support mechanisms.
47 U.S.C. § 254(f).
- 24 -
On the other hand, Section 254(f) gives states the authority to adopt their
own regulations, definitions and standards “to preserve and advance universal
service,” as long as the regulations are “not inconsistent” with the FCC’s
universal service rules, and are paired with “specific, predictable, and sufficient
mechanisms” that “do not rely on or burden Federal universal service support
mechanisms.” 47 U.S.C. § 254(f). W e have read Section 254(f) as empow ering
states to require telecommunications carriers that provide intrastate services to
contribute financially to state universal service mechanisms. Sprint Spectrum,
L.P. v. State Corp. Comm’n, 149 F.3d 1058, 1061 (10th Cir. 1998). The FCC
also has consistently referred to states’ authority under Section 254(f) in the
context of funding state mechanisms by carrier contributions and disbursing those
funds for state universal services goals. For example, the FCC decided that its
federal universal service funds could no longer be used to support “multiple
connections” to a single subscriber’s residence or business, but said that Section
254(f) permitted states to use state support for multiple connections. See In re
Fed.-State Joint Bd. on Universal Serv., 19 F.C.C. Rcd. 10,800, 10,839 (June 8,
2004). “Although such state support would go beyond the scope of federal
high-cost support, we do not believe that such supplementary state funding would
‘rely on or burden Federal universal service support mechanisms’ in
contravention of section 254(f) of the Act.” Id. at 10,840. See also In re Fed.-
State Joint Bd. on Universal Serv., 18 F.C.C. Rcd. 22,559, 22,572 n.61 (Oct. 27,
- 25 -
2003) (commenting that if a state w anted to support intrastate toll services in its
universal service program, it must fund it through its own support mechanism
without relying on federal support).
It appears that Section 254(f) authorizes a state to create its own universal
service standards only to the extent that a state is providing state funding to meet
those standards. To hold otherwise would ignore the last and longest sentence of
Section 254(f). However, in this case, W estern W ireless did not seek state
subsidies. Therefore, Section 254(f) cannot be the source of the PUC’s authority
to impose operational and consumer protection requirements on W estern W ireless
as a condition of ETC designation.
In contrast, Section 214(e)(2) is the on-point source of the PUC’s authority
to impose conditions on W estern W ireless’s ETC designation, yet it contains no
textual implication that state commissions should issue rules or regulations in
doing so. Instead, the statutory language seems to assume a fact-specific
determination more appropriately done in an adjudicatory context. The statute
reads that “[b]efore designating an additional eligible telecommunications carrier
for an area served by a rural telephone company, the State commission shall find
that the designation is in the public interest.” 47 U.S.C. § 214(e)(2). This
“public interest” determination suggests that states should consider the facts
specific to the local area involved and the specific services proposed to be offered
- 26 -
by the ETC designee. The FCC’s view also is that the ETC designation process is
inherently local and fact-specific in nature:
Section 214(e)(2) of the A ct gives states the primary responsibility to
designate ETCs and prescribes that all state designation decisions must
be consistent w ith the public interest, convenience, and necessity. We
believe that section 214(e)(2) demonstrates Congress’s intent that state
commissions evaluate local factual situations in ETC cases and exercise
discretion in reaching their conclusions regarding the public interest,
convenience and necessity, as long as such determinations are
consistent with federal and other state law. . . . Furthermore, state
commissions, as the entities most fam iliar with the service area for
which ETC designation is sought, are particularly well-equipped to
determine their own ETC eligibility requirements.
2005 Universal Serv. Order, 20 F.C.C. Rcd. at 6397.
Allowing the PUC flexibility in deciding how to announce its ETC
designation requirements is consistent with general administrative law principles.
“The Supreme Court has consistently held that ‘the choice made between
proceeding by general rule or by individual, ad hoc litigation is one that lies
primarily in the informed discretion of the administrative agency.’” Nunez-Pena
v. INS, 956 F.2d 223, 225 (10th Cir. 1992) (quoting SEC v. Chenery Corp., 332
U.S. 194, 203 (1947)). But see NLRB v. Bell Aerospace Co., Div. of Textron,
Inc., 416 U.S. 267, 294 (1974) (cautioning that an administrative agency’s
discretion to choose the means of announcing new principles is subject to any
applicable statutory constraints, and therefore there may be situations in which
reliance on adjudication would amount to an abuse of discretion).
- 27 -
Given the thrust of the statutory language of Section 214(e)(2) giving states
the authority to evaluate specific local facts in ETC decisions, and the absence of
any authority suggesting that such determinations must be done through
promulgation of rules, we hold that the PUC is not required to engage in a rule-
making proceeding when imposing conditions pursuant to making an ETC
designation.
III. Conclusion
For the aforementioned reasons, we REVERSE in part the district court’s
decision. W e hold that the PUC’s authority to make an ETC designation under
Section 214(e)(2) under the Telecommunications Act is not curtailed merely on a
showing that the exercise of such authority affects the interstate components of a
carrier’s services. W e also hold that the PUC need not engage in a rule-making
proceeding to impose conditions on ETC designations that are authorized by
Section 214(e)(2) of the Act. W e recognize that W estern W ireless has raised a
number of other questions about the conditions that the PUC seeks to impose. W e
REM AND to the district court for consideration of the remaining issues in this
matter.
- 28 -
06-1156, W W C H olding C o., Inc. v. Sopkin
G O R S U C H , J . , C i r c u it J u d g e , d i s s e n ti n g .
T h o u g h r e lu c ta n t t o p a r t c o m p a n y w i t h m y c o ll e a g u e s , I f e e l
c o n s t r a in e d to d o s o i n t h i s c a s e b e c a u s e th e m a j o r i t y r e v e rs e s t h e d is t r i c t
c o u r t e m p l o yi n g a r g u m e n t s t h a t t h e a p p e l l a n t n e v e r m a d e b e f o r e t h a t c o u r t ,
never pressed on appeal, and many of w hich the appellant has expressly
d i s a v o w e d . T h e y a r e a rg u m e n ts , a s w e ll , t o w h i c h th e a p p e l l e e h a s n e v e r
h a d th e c h a n c e to r e s p o n d . S k e p t i c a l o f m y o w n c a p a c it y t o a r r i v e p u r e ly b y
j u d i c ia l s e lf - d i r e c ti o n a t t h e o p ti m a l u n d e r s t a n d in g o f a c o m p l e x c o rn e r o f
f e d e r a l c o m m u n i c a ti o n s l a w , a n d c o n c e r n e d a b o u t p r o c e e d i n g w i t h o u t a t
l e a s t a f f o r d i n g t h e a f f e c t e d l i ti g a n t s n o t ic e a n d a n o p p o r tu n i ty t o b e h e a r d
o n t h e o r i e s p u rs u e d b y th e c o u r t , I r e s p e c tf u lly d is s e n t.
T o b e g in a t t h e b e g in n i n g , i n C o u n t I o f it s c o m p l a in t W W C H o l d i n g
Company (“W estern W ireless”) contested the authority of the Public
U t i li t ie s C o m m i s s i o n o f t h e S t a t e o f C o l o r a d o ( “ P U C ” o r “ C o m m i s s i o n ” ) t o
r e g u la te r a te s u n d e r 4 7 U .S . C . § 3 3 2 ( c ) ( 3 ) o f th e T e l e c o m m u n i c a ti o n s A c t
o f 1 9 9 6 ( th e “ A c t ” o r “ 1 9 9 6 A c t ” ) . I n C o u n t II , W e s te r n W i r e le s s
c h a l le n g e d t h e C o m m i s s io n ’ s a u t h o r it y u n d e r 4 7 U .S .C . § 1 5 1 t o i m p o s e
c o n d it i o n s , r e s p e c ti n g e it h e r r a te s o r n o n - r a te te r m s o f s e r v i c e , o n t h e
c o m p a n y’ s b u n d l e d in t e r s t a te s e r v i c e o f f e ri n g s . A f te r a c a r e f u l a n a lys i s , t h e
d i s t r i c t c o u r t e n jo i n e d th e P U C ’ s r a te -s e tt i n g f o r a y, e x p la in i n g t h a t S e c ti o n
3 3 2 ( c ) ( 3 ) ( A ) p r o h i b i t s s t a te s f r o m r e g u la ti n g t h e e n tr y o f o r t h e r a te s
c h a r g e d b y a w i r e l e s s c a r r i e r . N o t a b l y, t h e P U C h a s n o t a p p e a l e d t h i s
c e n tr a l d e te r m i n a ti o n o f th e d is t r i c t c o u r t . T h u s , t h e f ir s t i s s u e r e m a i n i n g
for our resolution on appeal concerns that portion of Count II w hich
s u r v i v e d – n a m e l y, W e s t e r n W i re l e s s ’ s c h a l le n g e t o t h e C o m m i s s io n ’ s
a u th o r i t y t o r e g u la te n o n -r a te te r m s a n d c o n d itio n s o f its s e r v ic e s .
I n a s e c tio n title d “ S ta te A u th o r i tie s a n d I n te r s ta te C o m m u n ic a tio n s , ”
the majority approaches this question by pursuing the broad thesis that state
c o m m i s s i o n s a r e f re e to r e g u la te a n y n o n - r a te te r m s a n d c o n d it i o n s o f
i n t e r s t a te s e r v i c e p ro v i d e d b y m o b i l e s e r v i c e e l i g i b l e te le c o m m u n i c a ti o n s
c a r r ie r s ( “ E T C s ” ) . M a j . O p . a t 9 - 2 2 . Y e t , t h e C o m m i s s io n i ts e l f n e v e r –
e i t h e r b e f o re th e d is tr ic t c o u rt o r o n a p p e a l – a d v o c a te d s u c h a th e o r y.
Indeed, in its briefs and again at oral argument the Commission expressly
d i s c la i m e d a n y a u t h o r it y t o r e g u l a te t h e t e r m s a n d c o n d i ti o n s o f W e s t e r n
W i re l e s s ’ s i n t e r s t a t e s e rv ic e s . S e e , e .g ., R e p ly B r . a t 9 ; A p lt. A p p . a t 2 2 7 .
A c c o rd i n g t o t h e C o m m i s s i o n , i t s o r d e r m e r e ly s e e k s t o i m p o s e c o n d it i o n s
o n W e s te r n W i r e le s s ’s i n t r a s t a t e s e r v i c e s , a n d i t h a p p e n s t o a f f e c t W e s t e r n
W i re l e s s ’ s i n t e r s t a t e o f f e r in g s o n l y b y v i rt u e o f W e s t e r n W i re l e s s ’ s
independent (and presumably lucrative) business decision to bundle
i n t r a s t a t e a n d in te rs ta te s e rv ic e o f f e r i n g s .
T o b e s u r e , t h e p a rt i e s c a n n o t s t i p u l a te to a f a l s e r e a d in g o f a s t a tu t e ,
a n d w e a re n o t r i g i d l y p r e c lu d e d f r o m d e c id i n g a c a s e o n a n u n a r g u e d b u t
a p p a r e n t p o in t o f la w . S e e U n i t e d S ta t e s v . I n t e r n a t i o n a l B u s i n e s s M a c h in e s
-2-
C o r p . , 5 1 7 U .S . 8 4 3 , 8 6 6 - 6 8 ( 1 9 9 6 ) ( K e n n e d y, J ., d i s s e n ti n g ) ( c o ll e c ti n g
a u th o r i t y) . B u t j u s t b e c a u s e w e h a v e th e p o w e r t o r e s o l v e a q u e s t i o n o f
c o u r s e d o e s n o t m e a n w e m u s t , o r s h o u l d , a lw a ys d o s o . I n d e e d , w h e n a
party “cho[o]se[s] not to” pursue a legal theory potentially available to it,
w e g e n e r a lly ta k e th e p ru d e n tia l p o s itio n th a t it is “ in a p p r o p r i a te . . .
w i t h o u t t h e b e n e f it o f th e p a rt i e s ’ b r i e f in g ” to p u r s u e th a t t h e o r y i n o u r
o p i n i o n s . I d . a t 8 5 5 ( m a j o r i ty o p i n i o n ) ( in t e r n a l q u o t a ti o n o m i tt e d ) ; s e e
g e n e r a l l y S p e c t o r M o t o r S e r v s ., I n c . v . W a l s h , 1 3 9 F .2 d 8 0 9 , 8 2 3 ( 2 d C i r.
1943) (H and, J., dissenting) (It is not “desirable for a low er court to
e m b r a c e th e e x h il a r a ti n g o p p o r t u n i t y o f a n ti c ip a ti n g a d o c tr i n e w h i c h m a y
b e i n t h e w o m b o f tim e , b u t w h o s e b ir th is d is ta n t.” ) , v a c a te d s u b n o m .,
S p e c t o r M o t o r S e r v s . , I n c . v . M c L a u g h l i n , 3 2 3 U .S . 1 0 1 ( 1 9 4 4 ) . 1 O u r
c a u ti o n f lo w s i n p a r t f r o m a r e c o g n it i o n o f o u r d e p e n d e n c e o n th e tr a d it i o n s
o f th e a d v e r s a r i a l p r o c e s s i n t e s t i n g t h e is s u e s f o r o u r d e c is i o n a n d th e e rr o r
w e r i s k w h e n w e s t r i k e o u t o n o u r o w n ; i t f lo w s , t o o , f r o m c o n c e r n f o r t h e
a f f e c t e d p a r t i e s t o w h o m w e t r a d i t io n a l l y e x t e n d n o t i c e a n d a n o p p o r t u n i t y
t o b e h e a rd o n th e is s u e s th a t a f f e c t th e m . S e e Z a m o r a v . E l it e L o g i s ti c s ,
1
The majority cites as contrary authority United Transportation Union v.
Dole, 797 F.2d 823 (10th Cir. 1986). M aj. Op. at 23 n.10. But there the court
emphasized that, quite unlike here, the legal theory it pursued had been
“thoroughly argued in the trial court.” Dole, 797 F.2d at 828.
-3-
I n c ., 4 7 8 F .3 d 1 1 6 0 , 1 1 8 3 -8 4 (1 0 th C ir . 2 0 0 7 ) ( e n b a n c ) ( G o r s u c h , J .,
c o n c u r r in g ) . 2
M y c o n c e r n w i t h s t r i k i n g o u t o n a n e w c o u r s e th e p a rt i e s h a v e n o t
a d v o c a t e d o r b e e n p e r m i t t e d to a d d r e s s , e v e n th r o u g h s u p p l e m e n t a l b r i e f in g ,
i s h e i g h t e n e d b y t h e s e t t i n g o f t h i s p a r ti c u l a r d i sp u t e . T h i s c a s e i n v o l v e s a
c o m p l e x a n d r e l a t iv e l y u n s t u d i e d c o r n e r o f t h e c o n t ro l li n g s t a t u t o r y
r e g i m e . 3 N o is s u e o f c o n s titu tio n a l g r a v ity o r p e r s o n a l lib e r t y is a t s ta k e .
A n d t h e p a rt i e s w e r e a f f o r d e d th e f u ll b e n e f i t o f h ig h l y c o m p e t e n t c o u n s e l
a n d th u s p r e s u m a b ly m a d e d e l i b e r a te a n d in f o r m e d ta c ti c a l d e c is i o n s
r e g a r d i n g w h ic h le g a l th e o ri e s to p u r s u e ( a n d n o t p u r s u e ) .
M e a n w h i l e , t h e m a j o r i t y i m p l i c it l y r e je c ts t h e P U C ’ s u n d e r s t a n d in g o f
i t s o w n o r d e r w i t h o u t p a u s i n g t o c o n s i d e r w h e t h e r t h e a g e n c y i s e n t i tl e d t o
2
These same rationales undergird our general prudential practice of
declining to entertain even those arguments actually pursued by a party but only
raised for the first time on appeal, as well as those arguments preserved before the
district court but raised on appeal only in a reply brief. See Hill v. Kemp, 478
F.3d 1236, 1250-51 (10th Cir. 2007); Tele-Communications, Inc. v. Comm’r of
Internal Revenue, 104 F.3d 1229, 1233 (10th Cir. 1997) (“In order to preserve the
integrity of the appellate structure, we should not be considered a ‘second-shot’
forum, a forum where secondary, back-up theories may be mounted for the first
time.”).
3
See Jim Chen, Subsidized Rural Telephony and the Public Interest: A
Case Study in Cooperative Federalism and Its Pitfalls, 2 J. Telecomm. & High
Tech. L. 307, 314 (2003) (hereinafter “Chen”) (describing § 214(e) as a
“seemingly obscure provision” of the A ct).
-4-
s o m e d e g re e o f d e f e r e n c e r e g a rd i n g t h e m e a n i n g o f it s o w n d e c re e . 4 T h e
m a jo r i t y’ s n o v e l t h e o r y a ls o t r e a d s i n t o a lo n g s t a n d in g n a ti o n a l d i s c u s s i o n
a b o u t t h e p r o p e r r o l e o f c o m p e ti n g f e d e r a l a n d s t a te a u th o r i t i e s i n t h e
r e g u l a t i o n o f t h e t e l e c o m m u n i c a t i o n s in d u s t r y, 5 a n d i t a p p e a r s t o c o m e d o w n
rather strongly in favor of one competing school of thought.6 N either is its
a n a l ys i s a b o u t t h e r o l e o f s t a t e s i n t h e r e g u l a t i o n o f i n t e r s t a t e
t e le c o m m u n i c a ti o n s a lt o g e th e r s e lf - e v id e n t o r f r e e f r o m q u e s t i o n . 7 P e r h a p s
4
See, e.g., C olo. Interstate Gas Co. v. Nat’l Gas Pipeline Co. of Am., 885
F.2d 683, 688 (10th Cir. 1989) (noting the “deference we owe to [an
administrative agency’s] interpretation of its own orders”).
5
See, e.g., Kyle D. Dixon & Philip J. W eiser, A Digital Age
Communications Act Paradigm for Federal-State Relations, 4 J. Telecomm. &
High Tech. L. 321, 342-43 (2006); Chen at 308-317, 362-69; Peter W . Huber,
M ichael K . Kellogg & John Thorne, Federal Telecommunications Law §§ 3.3.3-
3.9 at 223-270 (2d ed. 1999).
6
See Chen at 309-13 (describing competing camps of those who have
pushed for deregulation of the telecommunications industry and those who have
pushed for devolution of regulatory power from the federal government to the
states, and labeling proponents of the latter perspective members of the “Colorado
school” in recognition of the home of certain perceived advocates of this
position).
7
By way of example, the court appears to invert the Supreme Court’s
requirement of an express congressional intention prior to permitting states to
regulate interstate commerce. See M aj. Op. 20-21 (quoting New York v. United
States, 505 U.S. 144, 171 (1992)). The majority posits that by “expressly
allowing the states to regulate the ‘other terms and conditions’” of mobile
services, and by Congress’s failure to limit this authority “to instances w here only
intrastate commerce is affected,” Congress has expressed an unambiguous intent
to permit states to regulate interstate commerce. M aj. Op. at 21. But, while
Congress may be faithfully characterized as having unambiguously given states
authority to regulate “other terms and conditions” of mobile services, this is not at
(continued...)
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m o s t s i g n i f ic a n tl y o f a ll , n o n e o f th i s i s r e a ll y n e c e s s a r y. W h a t r e m a i n s o f
C o u n t I I c a n b e r e s o l v e d r e a d i l y, w i t h o u t a n y o f t h e s e d i f f i c u l t ie s a n d w i t h
f a it h f u ln e s s t o t h e s t a tu t o r y s c h e m e b e f o r e u s , o n a b a s i s f u ll y v e tt e d b y t h e
parties and district court.8
T h e r e a s o n s t h a t g i v e m e p a u s e a b o u t t h e c o u rt ’ s d i s p o s i t i o n o f C o u n t
I I r e c u r w i th r e s p e c t to C o u n t IV . B e f o r e t h e d i s tr ic t c o u r t, W e s t e r n
W i r e le s s a r g u e d th a t, e v e n if th e C o m m i s s i o n h a d th e a u th o r i t y t o o v e r s e e
7
(...continued)
all obviously the same thing as expressly bestowing states with authority to
regulate interstate commerce in this endeavor. Indeed, the majority seems to read
Congress’s silence regarding the effect of any such state regulation on interstate
commerce into an unambiguous expression of intent.
8
Congress expressly allowed state commissions to regulate intrastate
services, see 47 U.S.C. § 152(b), and, more specifically, to impose “terms and
conditions” on intrastate services provided by wireless carriers. 47 U.S.C. §
332(c)(3)(A ); see also Fed.-State Joint Bd. on Universal Serv., 20 F.C.C.R. 6371,
6384-85 (2005) (“2005 Universal Service Order”); accord Tex. Office of Pub.
Util. Counsel v. FCC, 183 F.3d 393, 418 (5th Cir. 1999). W estern W ireless
points to nothing in the Act that preconditions this undisputed state authority on a
further inquiry into whether an ETC applicant has made an independent business
decision to bundle (regulated) intrastate services w ith (nonregulated) interstate
services. To be sure, Congress specified that the FCC may preempt any state
regulation that it finds to be so onerous as to erect a barrier to entry, amount to
rate regulation, or otherwise interfere with the ability of an entity to provide
telecommunications service. See 47 U.S.C. § 253(a), (d); id. § 332(c)(3)(A). But
W estern W ireless has not begun to assert before us (or, apparently, the FCC) that
the conditions specified by Congress for relief apply here. Instead, it asks us to
fashion out of whole cloth a new rule absolving carriers from state regulation any
time a wireless carrier makes the independent business decision to bundle its
services. W e are not free to substitute our judgment for Congress’s and write into
a comprehensive statutory regime a new , low er bar for relief than the Legislature
itself chose to enact. M ore than that we need not say to resolve C ount II.
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t h e n o n - r a te te r m s a n d c o n d it i o n s o f it s E T C s e r v i c e , S e c ti o n 2 5 4 ( f )
r e q u ir e d th e C o m m i s s i o n t o p r o c e e d t h r o u g h f o r m a l r u l e m a k i n g p r o c e s s e s
r a t h e r th a n , a s i t d i d h e r e , b y i m p o s i n g i n f o r m a l c o n d i ti o n s o n W e s t e r n
W i r e le s s ’ s E T C d e s i g n a ti o n . A p l t . A p p . a t 8 8 - 9 1 . T h e C o m m i s s i o n
r e s p o n d e d b y s u g g e s t i n g o n l y t h a t t h e v a li d i t y o f th e c o n d it i o n s i t i m p o s e d
on W estern W ireless hinge on w hether it engaged in the unlaw ful rate
r e g u l a t i o n c h a lle n g e d in C o u n t I . S e e A p l t. A p p . a t 2 2 7 - 2 8 . A t s u m m a r y
j u d g m e n t , th e d i s t r i c t c o u r t a g r e e d w i t h W e s t e r n W i r e l e s s ’ s a s s e r t i o n i n
C o u n t I V t h a t t h e P U C m a y o n l y e s t a b li s h q u a li t y o f s e r v i c e s t a n d a rd s
t h r o u g h f o r m a l r e g u l a ti o n s a d o p t e d p u r s u a n t to S e c t io n 2 5 4 ( f ) .
The majority reverses on the basis that Section 254(f) speaks only to
s t a te u n iv e r s a l s e r v i c e f u n d s u b s i d y i s s u e s a n d , t h u s , t h a t n o t h i n g i n t h a t
provision can be a source of, or a limitation on, a state’s authority in
imposing “operational and consumer protection requirements” on an ETC
d e s i g n e e . M a j . O p . a t 2 6 ; s e e g e n e r a lly id . a t 2 4 - 2 8 . O n c e a g a i n , h o w e v e r ,
t h e P U C n e v e r p u r s u e d s u c h a th e o r y f o r r e v e rs a l; t h e d is t r i c t c o u r t n e v e r
h a d th e c h a n c e to p a s s u p o n i t ; a n d W e s t e r n W i r e le s s h a s n e v e r h a d th e
o p p o r t u n i t y t o r e s p o n d t o i t . I n f a c t , w h e n a s k e d a t o r a l a r g u m e n t w h e th e r
S e c t i o n 2 5 4 (f ) a p p lie d o n ly to s ta te u n iv e r s a l s e r v ic e f u n d s , b o t h p a r t i e s
a n s w e r e d in th e n e g a tiv e .
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M e a n w h i l e , a n d o n c e a g a in , t h e m a j o r i t y’ s s e lf - c h a rt e d c o u rs e d o e s
not obviously flow from our precedent and is not im mune to question.9 A t
t h e s a m e t i m e , t h i s c a s e c o u ld h a v e b e e n r e a d il y r e s o l v e d o n th e b a s i s o f th e
p a r t i e s ’ a c tu a l a r g u m e n ts w h i l e f u ll y p r e s e r v i n g t h e v ia b il i t y o f th e
m a j o r i t y’ s t h e o r y. 1 0 E v e n i f i n t h e f u l l n e s s o f t i m e t h e m a j o r i t y p r o v e s t o
h a v e b e t t e r e d b o th p a r t i e s r e g a rd i n g t h e s c o p e a n d m e a n in g o f S e c ti o n
254(f), for reasons already explored I am reluctant to proceed dow n this
p a th w i t h o u t f ir s t a t l e a s t a f f o r d i n g t h e p a rt i e s a f f e c te d b y o u r d e c is i o n
notice and an opportunity to be heard. See supra pp. 2-4.
I r e s p e c tf u lly d is s e n t.
9
W hile the latter two sentences of Section 254(f) do concern universal
service subsidies, the first sentence is not obviously so limited, indicating that
“[a] State may adopt regulations not inconsistent with the Commission’s rules to
preserve and advance universal service.” M oreover, contrary to the majority’s
suggestion that the FCC has spoken of Section 254(f) only in the context of a
state universal service fund, in at least one decision the Federal-State Joint Board
on Universal Service indicated that Section 254(f) may limit a state’s rule-making
power in another area, a state commission’s designation of the service area for
ETC designation. See Fed.-State Joint Bd. on Universal Serv., 12 F.C.C.R. 87,
181 (1996) (Recommended Decision).
10
Before the district court, the PUC argued only that Count IV should
stand or fall w ith the court’s resolution of Count I concerning rate regulations.
W ith Count I indisputably having fallen, so in fairness ought Count IV. W hile
perhaps seemingly all too facile or straightforward, resolving the case in this
manner would have the virtue of adjudicating the case both modestly and on the
basis of the parties’ chosen arguments, while leaving the majority’s theory of the
statute open and available for litigants wishing to pursue it another day. To be
sure, on appeal the PU C sought to raise additional arguments for reversal. But w e
generally will not consider such late-blossoming arguments, see supra note 2, and
the majority today itself does not address them.
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