Nat Lifeline Association v. FCC

Citation921 F.3d 1102
Decision Date01 February 2019
Docket NumberC/w 18-1080,No. 18-1026,18-1026
Parties NATIONAL LIFELINE ASSOCIATION, et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents Oceti Sakowin Tribal Utility Authority, Intervenor
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

John J. Heitmann, Washington, DC, argued the cause and filed the briefs for petitioners National Lifeline Association, et al.

V. Shiva Goel, Washington, DC, argued the cause for petitioner Crow Creek Sioux Tribe and intervenor Oceti Sakowin Tribal Utility Authority. With him on the joint briefs were Christopher J. Wright and John T. Nakahata, Washington, DC.

Thaila K. Sundaresan, Counsel, Federal Communications Commission, argued the cause for respondents. With her on the brief were Robert B. Nicholson and Frances E. Marshall, Attorneys, U.S. Department of Justice, Thomas M. Johnson Jr., General Counsel, Federal Communications Commission, David M. Gossett, Deputy General Counsel, and Jacob M. Lewis, Associate General Counsel. Richard K. Welch, Deputy Assistant General Counsel, Federal Communications Commission and William T. Shaw, Attorney Advisor, U.S. Department of Justice, entered appearances.

Before: Rogers and Griffith, Circuit Judges, and Randolph, Senior Circuit Judge.

Rogers, Circuit Judge:

Responding to Congressional directives, the Federal Communications Commission has adopted programs to make voice and broadband services more available and affordable for low-income consumers by providing a discount on these services through its Lifeline program. Since 1985, eligible low-income consumers may receive a monthly discount of $9.25 on qualifying services, and since 2000, low-income consumers living on Tribal lands may receive an additional $25 per month for these services through the Tribal Lifeline program in recognition of the additional hurdles to affordable telecommunications service on Tribal lands. In 2017, however, the Commission adopted two limitations that petitioners challenge: First, it limited this enhanced Tribal Lifeline subsidy to services provided by eligible telecommunications carriers that utilize their own fixed or mobile wireless facilities, excluding carriers that resell services provided over other carriers’ facilities ("Tribal Facilities Requirement"). Second, it limited the enhanced Tribal Lifeline subsidy to residents of "rural" areas on Tribal lands ("Tribal Rural Limitation").

For the following reasons, we grant the petitions for review. The Commission’s adoption of these two limitations was arbitrary and capricious by not providing a reasoned explanation for its change of policy that is supported by record evidence. In adopting the Tribal Facilities Requirement, the Commission’s decision evinces no consideration of the exodus of facilities-based providers from the Tribal Lifeline program. Neither does it point to evidence that banning resellers from the Tribal Lifeline program would promote network buildout. Nor does it analyze the impact of the facilities requirement on Tribal residents who currently rely on wireless resellers. Further, the Commission ignored that its decision is a fundamental change that adversely affects the access and affordability of service for residents of Tribal lands. Similarly, in adopting the Tribal Rural Limitation, the Commission’s decision evinces no consideration of the impact on service access and affordability. Its decision does not examine wireless deployment data related to services to which most Tribal Lifeline recipients subscribe.

Various non-harmless procedural deficiencies exist as well. The Commission failed to provide an adequate opportunity for comment on the proposed limitations. For instance, the 2017 supplemental notice of proposed rulemaking lacked key information needed for interested persons to anticipate that small towns below 10,000 in population would be excluded. Because the Commission stated that it intended to address remaining Tribal issues in a future rulemaking, petitioners reasonably did not submit current data on abandonment of the Lifeline program by facilities-based providers. Two weeks’ notice in the form of an unpublished draft order was inadequate.

I.

In the Communications Act of 1934, Congress stated its goal was to "make available, so far as possible, to all the people of the United States ... a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." 47 U.S.C. § 151. Congress reinforced this universal service goal in the Telecommunications Act of 1996, providing that "[q]uality services should be available at just, reasonable, and affordable rates" and that "[c]onsumers in all regions of the Nation, including low-income consumers ... should have access to telecommunications and information services." 47 U.S.C. § 254(b)(1), (3) ("1996 Act"). The Commission has responded, as relevant here, by adopting various iterations of the Lifeline program. Some background is required to place petitioners’ current challenges in context.

In 1985, the Commission created the Lifeline program to ensure that low-income consumers had access to affordable, landline telephone service following the divesture of AT&T.1 Recognizing that "[a]ccess to telephone service has become crucial to full participation in our society and economy" and that "an increase in fixed charges for telephone service" could "cause a significant number of subscribers to cancel service," the Commission provided an offset of subscriber line charges for low-income households. See 1985 Order , note 1, at 941–42. In 1997, still concerned "over the low subscribership levels among low-income consumers," the Commission, in response to § 254 of the 1996 Act, transformed the Lifeline program into a stand-alone universal service program "designed to make residential service more affordable for low-income consumers."2

The Lifeline program thus offers each eligible low-income household a baseline monthly discount of $9.25 to offset the costs of a wireline or wireless voice and broadband service plan. 47 C.F.R. § 54.403(a)(1). Lifeline service may be provided only by eligible telecommunications carriers ("ETCs"), which are either certified by state public service commissions or designated by the Commission. 47 U.S.C. § 214(e)(2), (6). The discount is provided as a subsidy to these ETCs, which in turn pass through the subsidy to provide their services to low-income consumers at reduced costs. 47 C.F.R. § 54.403(a)(1). The ETCs may allow eligible low-income consumers, as defined by § 54.409, to apply their discount to any service plan meeting certain minimum service standards. Id . § 54.401(b).

In 2000, the Commission established the Tribal Lifeline program to provide an enhanced monthly subsidy of $25 for residents of federally recognized Tribal lands.3 See 47 C.F.R. § 54.403(a)(3). There was a "need for immediate Commission action to promote the deployment of telecommunications facilities in tribal areas and to provide the support necessary to increase subscribership ... for the benefit of those living on" Tribal lands. 2000 Tribal Lifeline Order , note 3, ¶ 5. At that time, statistics showed that households on reservations and other Tribal lands had the lowest reported telephone subscribership levels in the nation. Id. ¶¶ 5, 26. The Commission recognized that the critical lack of access to telecommunications services on Tribal lands threatened Tribes’ access to no less than "education, commerce, government, and public services" and therefore their "tribal sovereignty and self-governance." Id. ¶ 23.

The Commission’s "primary goal" in adopting the enhanced subsidy was to "reduce the monthly cost of telecommunications services for qualifying low-income individuals on tribal lands, so as to encourage those without service to initiate service and better enable those currently subscribed to maintain service." Id. ¶ 44. It determined that a "substantial additional amount of support" was necessary to increase subscribership in view of "(1) the extraordinarily low average per capita and household incomes in tribal areas, (2) the excessive toll charges that many subscribers incur as a result of limited local calling areas on tribal lands, (3) the disproportionately low subscribership levels in tribal areas, and (4) the apparent limited awareness of, and participation in, the existing Lifeline program." Id. Three secondary benefits of the enhanced Tribal subsidy were: (1) encouraging deployment of telecommunications facilities on Tribal lands that currently lack such facilities, (2) spurring competition from new entrants offering alternative technologies, and (3) reducing barriers to increased penetration that are caused by limited local calling areas. Id. ¶¶ 52–58.

Prior to adopting the enhanced Tribal subsidy, the Commission had consulted various Tribal leaders in formal field hearings, Commissioner-level meetings, and informal meetings. The Commission then "reaffirm[ed] ... principles of Tribal Sovereignty and the Federal Trust Responsibility," and committed going forward, "to the extent practicable, [to] consult with Tribal governments prior to implementing any regulatory action or policy that will significantly or uniquely affect Tribal governments, their land and resources."4 The Commission also agreed to streamline processes and procedures placing "undue burdens" on Indian Tribes. Tribal Policy Statement , note 4, at 4082 ¶ 4.

To keep pace with various market forces resulting in the phase out by major carriers from the Lifeline program, the Commission decided to allow non-facilities-based providers (or "wireless resellers") to provide Lifeline services, beginning in 2005. Under the 1996 Act, an ETC must "offer the services that are supported by Federal universal service support mechanisms" "either using its own facilities or a combination of its own facilities and resale...

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