Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 1 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ACCIPITER COMMUNICATIONS INC., v. Petitioner, FEDERAL COMMUNICATIONS COMMISSION and UNITED STATES OF AMERICA, Respondents. Case No. 13-9590 MOTION FOR ESTABLISHMENT OF BRIEFING SCHEDULE Pursuant to Rule 27 of the Federal Rules of Appellate Procedure and Tenth Circuit Rule 27, Accipiter Communications Inc. ( Accipiter hereby files this Motion For Establishment of Briefing Schedule. Although this case has been transferred to this court by the Ninth Circuit as related to In re: FCC No. 11-161, Docket No. 11-9900, Accipiter s petition primarily involves separate orders adopted to implement the benchmark rule first adopted in the Federal Communications Commission ( FCC or Commission Order being reviewed in the consolidated docket, and is based on a separate rulemaking record a fact the Commission has previously acknowledged to this Court. Federal Communications 1
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 2 Commission Status Report, In re FCC 11-61, at 2 (filed Feb. 28, 2013. Moreover, Accipiter s issues and the later orders have not been briefed by the petitioners in the consolidated cases. Prompt establishment of a separate briefing schedule and oral argument would assist the court in focusing the issues involved in the instant dispute and will prevent further harm to rural telecommunications companies including Accipiter. FACTUAL BACKGROUND In November 2011, the Commission issued an Order in the Matter of Connect America Fund, WC Docket No. 10-90, et al., 26 FCC 17663 (2011 ( 2011Order. 1 In the 2011 Order, the Commission modified certain rules pertaining to the Universal Service Fund (USF and intercarrier compensation. As part of these modifications, it adopted a benchmark rule. 2011 Order, 210-227, codified at 47 C.F.R. 36.621(a(5. The rule requires that companies costs be compared to those of similarly situated companies, and the Commission delegated authority to the Wireline Competition Bureau ( WCB to implement the rule via reductions in USF support payments to telephone companies based on Quantile Regression Analysis (QRA techniques. Id., 217, 226. 1 A summary of the 2011 Order was published in the Federal Register. 76 Fed. Reg. 73830 (Nov. 29, 2011. 2
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 3 Following adoption, various parties, including Accipiter, filed with the Commission petitions for reconsideration of the 2011 Order. In its petition for reconsideration, Accipiter challenged the Commission s use of the benchmark rule to limit universal service support because, although the Commission directed its staff to distinguish between similarly situated carriers in developing QRA formulas, it appeared the QRA methodology would impose limits on universal support, regardless of actual circumstances faced by individual companies operating in sparsely-populated rural areas. Accipiter Communications Inc., Petition for Reconsideration and Clarification, WC Docket No.10-90, at 11 (filed Dec. 29, 2011. In Accipiter s view, the Commission s approach failed to identify which carriers may legitimately incur high costs due to particular factors such as population density, terrain, and operating environment, and which carriers have high costs due to waste, fraud, abuse, or other inefficiencies. While Accipiter s 2011 petition for reconsideration of the 2011 Order was still pending before the Commission, thirty one parties filed Petitions for Review of the Commission s 2011 Order in various United States Courts of Appeals, as provided in 28 U.S.C. 2342(1 and 47 U.S.C. 402(a. On December 13, 2011, the Judicial Panel on Multidistrict Litigation required all petitions for review of the 2011 Order to be consolidated in the Tenth Circuit pursuant to 28 U.S.C. 2112(a. 3
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 4 In re FCC 11-161, Docket No. 11-9900 (10th Cir. ( consolidated case. Briefing in the consolidated case was completed on June 12, 2013, and oral argument set for November 16, 2013. On April 25, 2012, the WCB issued its decision on delegated authority to implement the 2011 Order s benchmarking rule by adopting a specific QRA methodology to establish limits for purposes of calculating high-cost loop support ( HCLS. Connect America Fund, WC Docket No. 10-90, et al., 27 FCC Rcd 4235 (Wir. Comp. Bur. 2012 ( HCLS Benchmark Order. Accipiter filed with the Commission an application for review of the HCLS Benchmark Order. In its application for review, Accipiter asserted, among other things, that the HCLS Benchmark Order did not treat all similarly situated carriers in a similar fashion because it set an arbitrary cost cut-off that the WCB applied to all rural carriers regardless of whether the actual costs incurred were comparable among these carriers. Accipiter s assertion was that carriers with differing actual costs are not similarly situated and treating all rural carriers the same, regardless of their actual costs, is therefore not a correct or rational implementation of the Commission s stated similarly situated standard. On February 27, 2013, the Commission issued the Sixth Order on Reconsideration and Memorandum Opinion & Order, FCC No. 13-16, 23-26 4
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 5 (rel. February 27, 2013 ( Sixth Reconsideration & Modification Order. In one section of this order, the Commission addressed Accipiter s petition for reconsideration with respect to the validity of the benchmark rule adopted in the 2011 Order. In response to Accipiter s argument that the Commission failed to address the individual circumstances of companies, the Commission concluded that because the QRA formulas would be based on an analysis of similarly situated carriers, they would successfully affect only companies with excessive expenditures. Sixth Reconsideration & Modification Order, 21. In another section of this same order, the Commission affirmed in part and modified in part the WCB s HCLS Benchmark Order. The Commission rejected arguments concerning the failure of the WCB to distinguish among similarly situated carriers, Sixth Reconsideration & Modification Order, 34, as well as other challenges to the rationality of the QRA formulas. Id., 23-30. On May 20, 2013, Petitioner Accipiter filed in the United States Court of Appeals for the Ninth Circuit a Petition for Review of both the benchmark rule as adopted in the 2011 Order 2 and of the WCB s decision on delegated authority 2 The filing of the petition for reconsideration, which was denied in relevant part, tolled the filing of this petition for review until the reconsideration petition was denied. Southwestern Bell Tel. Co. v. FCC, 180 F.3d. 307, 311 (D.C. Cir. 1999. 5
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 6 regarding implementation of that rule, as modified in the Sixth Reconsideration & Modification Order. A separate petition for review of the WCB s decision, as affirmed in part and modified in part in the Sixth Reconsideration & Modification Order, has been filed in the United States Circuit Court of Appeals for the Fourth Circuit by another party, which has now been transferred to the Tenth Circuit. 3 On June 6, 2013, the Commission filed a motion seeking to have Accipiter s Petition for Review transferred to the Tenth Circuit. Accipiter did not oppose that Motion but filed a Response on June 19, 2013, requesting that its Petition not be consolidated with In re FCC 11-161, No. 11-9900 (10th Cir.. The Ninth Circuit, by Order dated September 5, 2013 granted the Commission s Motion and the case was transferred to the Tenth Circuit. ARGUMENT The Commission sought transfer of Accipiter s Petition based on the usual rule that once cases challenging an agency order have been considered in one A summary of the Sixth Reconsideration Order & Modification Order was published in the Federal Register. 78 Fed. Reg. 16808 (Mar. 19, 2013. 3 National Telecommunications Cooperative Association v. FCC, No. 13-9587. The Court abated that case, on the belief that the decision in FCC 11-161 could moot that appeal. Although it is possible a decision by the Court vacating the benchmark rule would indeed moot this case, Accipiter believes it would serve judicial efficiency to at least allow briefing to go forward in the instant case so the Court can expeditiously address implementation issues should it be necessary to do so. 6
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 7 United States Court of Appeals, all petitions for review arising out of that underlying proceeding should be transferred to the Court in which the related petitions for review have been centralized. The rule is intended to promote judicial efficiency, and works well in situations where an original order is followed promptly by a limited number of further orders modifying the original order. Here, however, Accipiter s Petition is based largely on a different record and raises issues not currently before the Tenth Circuit in the consolidated cases. The record currently before the Court with respect to the consolidated cases does not include the delegated authority HCLS Benchmark Order or the Sixth Reconsideration & Modification Order. Moreover, the issues raised by Accipiter differ from those raised in the consolidated cases. While some individual Petitioners in that case challenge the benchmark rule, they do so on different grounds from those raised by Accipiter, and based solely on the 2011 Order. In the consolidated case, these limited Petitioners argue that the benchmark rule violates Section 254 s predictability mandate in three respects: (1 it delegates authority to devise a rule limiting USF support to its WCB in violation of its own rules and then compounds the uncertainty thereby created by (2 leaving the WCB unbounded discretion to devise the rule and subsequently (3 to revise it without 7
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 8 abiding by APA notice and comment procedures. 4 Here, Accipiter challenges the benchmark rule variables as actually implemented by the WCB on delegated authority, and affirmed by the Commission, over the 16-month period following issuance of the 2011 Order. Among other things, Accipiter plans to show that the Commission s decision upholding the WCB s Order was irrational because the WCB s implementation of the rule on delegated authority does not comply with the Commission s stated conclusion in the 2011 Order that all similarly situated carriers be treated the same. Moreover, the consolidated petitions for review have been pending for over a year and a half, the briefing schedule has been completed, and oral argument in that case set for November 19, 2013. Accipiter needs a fair opportunity to fully brief its own issues raised in its Petition for Review. The Orders challenged have already had a direct and substantial impact on Accipiter s business operations and, for this reason, Accipiter requests timely judicial review of its Petition. In particular, Accipiter does not want its Petition held in abeyance pending the 4 Joint Universal Service Fund Principal Brief, In re: FCC 11-161, No. 11-9900 at 36-37 (filed July 11, 2013. Other Petitioners in the consolidated cases raise a wide range of other issues not involved in Accipiter s Petition for Review, such as the Commission s authority to preempt state regulation of intrastate intercarrier compensation, to require provision of broadband services as a condition to receiving universal service support, to establish a reverse auction for determining universal service support for wireless carriers, among many other issues. 8
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 9 outcome of the consolidated case. Accipiter s issues should be set for separate briefing as expeditiously as possible, and the issues considered by the Court as quickly as possible should the benchmark rule be upheld or remanded to the agency by the court in its review of In re FCC 11-161, Docket No. 11-9900. Accipiter needs a prompt ruling because the FCC has already implemented the benchmark rule, and it is having an impact on companies receiving universal service support. Although Accipiter has received a temporary waiver of the rules from the WCB, that waiver is scheduled to expire, and the rule is scheduled to apply, at the end of 2014. Accipiter Communications, Inc. Petition for Temporary Waiver of Certain High-Cost Universal Service Rules, DA 13-105 (Wir. Comp. Bur., rel. Jan. 30, 2013. The rules as applied to Accipiter need to be settled well before this time in order that it can continue making investments necessary to build its telecommunications and broadband network. Uncertainty as to the status of the implementation is adversely impacting all investment, which uncertainty needs to be eliminated as quickly as possible. Given the impending expiration of Accipiter s waiver, a lengthy period for filing and disposition of this case, similar to the 20 months that the consolidated petitions have been pending before this Court, undoubtedly because of the complexity of those consolidated cases and the need for approximately 35 separate briefs to address the varied interests and parties, would cause substantial damage to 9
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 10 Accipiter s investment opportunities, and consequently its ability to continue providing service to the public. Accipiter submits that this Court could allow the parties to submit briefs on Accipiter s limited and different issues this fall. Oral argument could then be scheduled in this case until the earlier of an adverse Court decision in In re: FCC 11-161, or six months from November 19, 2013, whichever date occurs first. This would position Accipiter s issues for a prompt resolution by the Court thereafter. Accipiter has discussed this motion with counsel for Respondents and they do not consent to the motion and reserve the right to oppose it. For the above-stated reasons, Accipiter requests that the Court establish a briefing schedule, but hold oral argument after a decision is issued in FCC 11-161. Dated: September 17, 2013 Respectfully submitted, Cynthia Crawford LeClair Ryan 1101 Connecticut Ave., N.W. Suite 600 Washington, D.C. 20036 (202 659-6727 cynthia.crawford@leclairryan.com Of Counsel By: /s/ Gregory J. Vogt Gregory J. Vogt Law Offices of Gregory J. Vogt, PLLC 101 West Street, Suite 4 Black Mountain, NC 28611 (828 669-2099 gvogt@vogtlawfirm.com Counsel for Accipiter Communications, Inc. 10
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 11 CERTIFICATE OF COMPLIANCE 1. This filing complies with the typeface requirements of Fed. R. App. P. 32(a(5 and 10th Cir. R. 32(a and the type style requirements of Fed. R. App. P. 32(a(6 because this filing has been prepared in a proportionally spaced typeface using Microsoft Word for Mac 2008 in 14-point Times New Roman font. 3. All required privacy redactions have been made. 4. I hereby certify that I have scanned for viruses the Portable Document Format version of the attached document. I scanned the document using ClamXav, Version 2.3.4 for Macintosh (updated for viruses as of September 17, 2013, and according to that program, the document was free of viruses. /s/ Gregory J. Vogt September 17, 2013 11
Appellate Case: 13-9590 Document: 01019126441 Date Filed: 09/17/2013 Page: 12 CERTIFICATE OF SERVICE I hereby certify that, on September 17, 2013, I caused the foregoing document to be electronically filed with the Court via e-mail. I also certify this document was furnished through ECF electronic service to all parties in this case through a registered CM/ECF user. This document is available for viewing and downloading on the CM/ECF system. /s/ Gregory J. Vogt September 17, 2013 12