Calif. Flat-Fee USF Rule Must Be Preempted, Says T-Mobile Reply Brief

The California Public Utilities Commission, in opposing the emergency motion from T-Mobile and its subsidiaries to freeze the CPUC order requiring a $1.11 monthly flat USF fee per line as of April 1, contradicts the district court’s “unequivocal finding” that T-Mobile “established irreparable harm,” said the carrier’s reply brief Monday (docket 23-15490) at the 9th U.S. Circuit Court of Appeals in support of a stay.

The 9th Circuit denied T-Mobile's request for immediate administrative stay last week, while deciding its emergency motion for a stay or injunction pending its appeal. The opening brief for T-Mobile's overall appeal from the U.S. District Court of Northern California is due May 1, with the CPUC’s answer due May 30.

Attorneys for both sides asked in a stipulation Tuesday that an April 27 case management conference before U.S. Magistrate Judge Laurel Beeler in San Francisco be rescheduled for May 11 due to a scheduling conflict. Counsel for the parties are scheduled to appear April 27 before U.S. District Judge James Donato in San Francisco for a hearing on cross-motions for summary judgment and a motion to strike in MetroPCS California v. Reynolds et al, said the stipulation.

The carrier is challenging the district court’s March 31 denial of a preliminary injunction to block the CPUC’s connections-based contribution mechanism for state USF from taking effect. T-Mobile also tried, but failed, to get the district court to order a stay pending the 9th Circuit appeal (see 2304100006).

The CPUC's opposition to a stay “ignores the statutory text and relevant precedent,” said T-Mobile’s reply brief. It also “minimizes the serious public-interest harms that result from its new rule and speculates about theoretical harms from a stay,” it said. The 9th Circuit “should grant a stay pending appeal,” it said. The CPUC’s opposition brief Friday said T-Mobile shows no dire situation warranting an injunction of the new connections-based mechanism, noting “no lives hang in the balance” and “no one is threatened with deportation” (see 2304170030).

Contrary to the CPUC’s claims, appellate courts “routinely” stay “administrative decisions pending judicial review,” said T-Mobile’s reply brief. T-Mobile requested a stay or injunction pending appeal, “and the standards are essentially the same,” it said.

The CPUC acknowledges its connections-based USF rule differs from the FCC’s revenue-based rule, “but contends that this divergence avoids preemption” under the Telecommunication Act’s Section 254(f), said T-Mobile’s reply brief. But the CPUC “fails to grapple” with the text of Section 254(f), which says a state can’t adopt regulations inconsistent with the FCC’s rules to preserve and advance universal service, it said. Under that “plain meaning,” the CPUC’s connections-based rule is inconsistent with the FCC’s revenue-based rule and must be preempted, it said.

The CPUC also overlooks the FCC’s “authoritative interpretations” of Section 254(f), said T-Mobile’s reply brief. The FCC’s decisions “confirm that state universal service rules must align with the FCC rules to preserve and advance universal service,” it said. Otherwise, the state rules would be inconsistent with federal policy and therefore preempted by section 254(f), it said.

It’s “irrelevant” the FCC hasn’t reached out to “expressly” foreclose states from using connection-based USF rules, said T-Mobile’s reply brief. U.S. Supreme Court case law has required a specific, formal agency statement identifying conflict to conclude that such a conflict in fact exists, it said. Section 254(f)’s language “expressly preempting inconsistent state rules would be unnecessary and superfluous if, as the CPUC incorrectly suggests, the onus fell on the FCC to police the universal service regimes” of all 50 states, it said. The CPUC hasn’t identified “any petition asking the FCC to preempt any of the state approaches that the CPUC cites,” it said.

The CPUC also “wrongly suggests” its connections-based rule survives preemption by the FCC’s observation that the Communications Act doesn’t by its own terms require contributions to be based on revenue, said T-Mobile’s reply brief. The statute affords the FCC “discretion to determine which contribution mechanism -- in its expert judgment -- best preserves and advances universal service,” it said.

Since the FCC already determined a revenue-based mechanism furthers that objective better than a connections-based one, “the FCC’s determination binds state PUCs,” said the brief. The district court’s “contrary interpretation” of Section 254(f) “turns the statutory scheme on its head,” it said.