[00:00:00] Speaker 00: Case number 20-1003, Tri-County Telephone Association, Inc. [00:00:05] Speaker 00: Petitioner versus Federal Communications Commission and United States of America. [00:00:10] Speaker 00: Mr. Adamchak for the petitioner, Ms. [00:00:12] Speaker 00: Sitring for the respondent. [00:00:19] Speaker 06: May please support. [00:00:21] Speaker 06: My name is Kenan Adamchak, and I represent the petitioner in this case, Tri-County Telephone Association, Inc. [00:00:27] Speaker 06: I conformed a clerk that I have reserved two minutes for rebuttal. [00:00:32] Speaker 06: Your honors, I'd also like to let you know this is my first time making a rural argument. [00:00:35] Speaker 06: I've served as second chair in several cases before this court, but it's my first time in the hot seat. [00:00:40] Speaker 02: All right, we'll go easy on you then. [00:00:43] Speaker 06: I'm sorry, sir. [00:00:44] Speaker 02: We'll go easy on you. [00:00:45] Speaker 06: Thank you, your honor. [00:00:46] Speaker 06: I appreciate it. [00:00:47] Speaker 02: Well, he said that. [00:00:48] Speaker 02: I didn't. [00:00:51] Speaker 06: Your honors, this case primarily concerns whether the FCC is permitted [00:00:56] Speaker 06: to expand universal service support by hundreds of millions of dollars to purposes unintended by Congress. [00:01:02] Speaker 06: Furthermore, this case also concerns whether the FCC is permitted to make these changes without first seeking public input regarding the impact of these changes on carriers such as TCT, who are USF contributors. [00:01:16] Speaker 06: TCT's arguments [00:01:21] Speaker 06: Section 254 of Communications Act does not permit using universal service support for disaster relief efforts. [00:01:28] Speaker 02: Can I ask a question about that? [00:01:31] Speaker 02: Yes, Your Honor. [00:01:31] Speaker 02: I want to be clear so that when the next disaster occurs, we know exactly what your position is. [00:01:38] Speaker 02: If a fire destroys all telecommunications in Wyoming and Montana, you can get nothing out of the Universal Service Fund to replace it or to repair it on emergency or other basis. [00:01:51] Speaker 02: Is that the position? [00:01:53] Speaker 06: No, Your Honor. [00:01:53] Speaker 06: According to Section 254, there's nothing explicitly states that universal service can be used for disaster relief. [00:01:59] Speaker 02: So the position is that you could not get any money if there's a disaster in your area? [00:02:08] Speaker 06: Yes, Your Honor. [00:02:11] Speaker 06: OK. [00:02:11] Speaker 06: The reason for this is one, Congress did not explicitly state [00:02:21] Speaker 06: and stage two funding, it's apparent that they were using high cost support funding for disaster relief efforts, which according to section 254B3 relates specifically to ensuring both reasonable services and reasonable rates. [00:02:39] Speaker 02: Why does it, it doesn't have the word both in it, but it says should have access to telecommunications and information services. [00:02:49] Speaker 02: that are reasonably comparable and that are available at rates that are reasonably comparable. [00:02:53] Speaker 02: But if you don't have any service at all, then you don't have access to services. [00:02:58] Speaker 02: I'm not sure what reading could mean that providing access, if otherwise you get no access, isn't covered by three. [00:03:08] Speaker 06: Your Honor, three says you need, the crucial word there is and, which distinguishes [00:03:22] Speaker 02: But you don't get any rates if you don't get any services at all. [00:03:26] Speaker 02: So if you don't have access at all, the statute provides, including low-income consumers and those in rural, insular, and high-cost areas should have access to telecommunications and information services, including, I'm sorry, that are reasonable compared to those services provided and that are available at rates that are reasonable or comparable. [00:03:50] Speaker 02: So it has to be both. [00:03:52] Speaker 02: Comparable and rates. [00:03:54] Speaker 02: So if Puerto Rico has no access and Wyoming does have access, that's not comparable, is it? [00:04:02] Speaker 06: No, it is not, your honor. [00:04:03] Speaker 06: But in order to make sure that you're ensuring comparable services for access, you must also be considering whether or not those services are being offered at comparable rates. [00:04:13] Speaker 02: Isn't the first question whether you get services at all? [00:04:17] Speaker 06: Yes, your honor, but as soon as you consider [00:04:27] Speaker 06: As the 10th Circuit said in Quest 1 when they looked at this, they said consideration rates cannot be divorced from consideration of... That's under certain extreme circumstances they were talking about in Quest 1, right? [00:04:42] Speaker 06: They were talking about in Quest 1 whether or not specifically the [00:04:50] Speaker 02: When they were talking about you have to consider rates, that was under certain extreme circumstances where subsidization would be so large that it would destroy the whole program. [00:05:00] Speaker 02: They weren't just talking about rates, period. [00:05:05] Speaker 06: Yes, correct, Your Honor. [00:05:07] Speaker 06: They were also talking about that they need to balance different factors. [00:05:13] Speaker 06: with one another and as to whether or not rates would be so large would trigger the B-5 requirement of predictably it's a sufficiency of the fine and here if they use universal service support for natural disasters if it happens again it happens again it happens again you know these are billion dollar catastrophes affecting [00:05:42] Speaker 06: a lot of funding and over the long term there's no predictability of what the next disaster costs you know how much money is going to need to go to this and the fact that more money will need to go to this by the sheer nature of these extensive the damages of these hurricanes. [00:05:59] Speaker 04: Where do you get all that from the statute? [00:06:01] Speaker 04: Where do you get all that from the statute? [00:06:04] Speaker 04: Tell me what in the statute supports your [00:06:08] Speaker 04: your conclusion about disasters. [00:06:10] Speaker 04: What language in the statute does that? [00:06:15] Speaker 04: It says, as Judge Garland pointed out, should have access to telecommunications and information services. [00:06:25] Speaker 04: Should have access to it. [00:06:26] Speaker 04: What in there says that they can't use the money to provide access to people who lose it because of a hurricane? [00:06:37] Speaker 06: Because B3 focuses on access at reasonable comparable services and rates. [00:06:45] Speaker 06: It doesn't specifically say anything about people losing the service because, loss of service because of a natural disaster. [00:06:51] Speaker 06: There's nothing in the language there that says that. [00:06:55] Speaker 04: Suppose the people in Wyoming lose their service because their local phone company goes bankrupt. [00:07:01] Speaker 04: Yes. [00:07:03] Speaker 04: Suppose instead of Puerto Rico having a hurricane, [00:07:05] Speaker 04: they had lost their service because the provider, the telephone company in Puerto Rico went bankrupt. [00:07:13] Speaker 06: Then another carrier would have had to step in and offer, become a carrier of last resort to offer. [00:07:20] Speaker 04: But suppose there isn't one and the universe and the FCC decided they need to provide additional funding to provide an incentive for the new company to come in. [00:07:30] Speaker 04: They can't do that? [00:07:32] Speaker 06: I believe [00:07:35] Speaker 06: They could do that to offer to ensure access, but they must also be ensuring access to services and rates. [00:07:42] Speaker 06: See, the problem here is disaster relief constitutes a whole separate level of funding, a new support mechanism altogether. [00:07:52] Speaker 06: Why? [00:07:54] Speaker 06: Because disaster relief is basically the restoration of services. [00:08:05] Speaker 06: there to high cost areas, because high cost means that these areas cost more than the average cost of services cost the country to provide service. [00:08:18] Speaker 06: And so high cost provides carriers, the common state's carriers for the difference between the cost of providing service and the actual rates in service. [00:08:26] Speaker 06: Disaster relief is something is so broad, and Congress would have specifically considered it as a separate funding [00:08:37] Speaker 06: that there are services available to areas where it's very expensive to provide service. [00:08:44] Speaker 06: And that would trigger 254B7, where the SEC would have to have worked with a federal state joint board and universal service to come up as funding disaster relief as a principle of universal service. [00:09:04] Speaker 06: That goes into my next point about the joint board. [00:09:20] Speaker 06: laterally to expand universal service to disaster relief. [00:09:26] Speaker 02: So that argument only works if we don't agree that the principles of one through six apply, right? [00:09:41] Speaker 02: Correct your honor. [00:09:42] Speaker 02: Well, if we read the statute, particularly section three, as including [00:09:48] Speaker 02: consequences of disaster, then your argument about joint board, there is no argument about the joint board then, right? [00:09:57] Speaker 06: That is correct, Your Honor. [00:09:59] Speaker 06: The only way there would be an argument there would be if you consider funding for disaster relief to be so broad [00:10:17] Speaker 06: Or does not specifically say the FCC can act unilaterally to implement universal service support, as I was saying. [00:10:23] Speaker 06: They have to go through and receive a recommendation from the Joint Board, and then the statute specifically says the FCC will consider and assess what the Joint Board's recommendations are. [00:10:34] Speaker 01: Tell me again what provision in the statute you think bars use to the universal service [00:10:42] Speaker 01: in situations involving disaster relief? [00:10:45] Speaker 06: 254B3, which states that high-cost support is supposed to be used to ensure reasonable services and reasonably comparable rates. [00:10:57] Speaker 06: And also, it does not comport with the sufficiency of predictability [00:11:07] Speaker 06: disasters by the very nature are so broad and unpredictable that it requires such an increase in funding to continue to support these disaster reliefs over the long term. [00:11:18] Speaker 06: This became a billion dollar program. [00:11:23] Speaker 06: Hurricane Katrina in the past cost millions and millions and billions of dollars in overall damage. [00:11:33] Speaker 06: So those are B3 and B5 is where it does not report. [00:11:37] Speaker 06: And since it's a whole new mechanism, it would have to have been created under B7 in conjunction with the Joint Court. [00:11:45] Speaker 06: To turn to my third point, the FCC also failed here to show good cause for suspending notice in common prior to issuing the Stage 1 support. [00:11:56] Speaker 06: They argued that the annual hurricane season was a sufficiently imminent and real emergency to justify the suspension of public input before issuing another $64 million in relief to the islands. [00:12:12] Speaker 06: In a sense, the FCC created their own problem here. [00:12:18] Speaker 02: You know, they issued... You don't think the hurricane created the problem? [00:12:23] Speaker 06: Your honor, yes, the hurricane did create the problem, but they waited eight months after Hurricane Maria. [00:12:28] Speaker 02: They concluded two things there. [00:12:30] Speaker 02: One is that excess had not yet been reestablished. [00:12:34] Speaker 02: And second, another hurricane season was coming. [00:12:38] Speaker 02: Yes. [00:12:39] Speaker 02: To see how much greater of an emergency there ever would be. [00:12:44] Speaker 06: It needs to be a concrete emergency, Your Honor. [00:12:46] Speaker 06: It needs to be on the doorstep that this will happen. [00:12:49] Speaker 02: We have to wait until there's a hurricane warning coming. [00:12:53] Speaker 02: Is that what you're saying? [00:13:00] Speaker ?: I [00:13:01] Speaker 06: Yes, Your Honor. [00:13:02] Speaker 06: I believe it needs to be sufficiently imminent. [00:13:04] Speaker 06: There needs to be a clear and concrete emergency. [00:13:08] Speaker 06: A hurricane storm hit the islands every year. [00:13:13] Speaker 02: So you have to wait until either the weather service knows for sure that it's going to hit Puerto Rico or wait until after it hits and the disaster occurs. [00:13:24] Speaker 02: In a circumstance where they are ready [00:13:27] Speaker 02: not having full access because of the last hurricane and they still don't have full electrical power or anything else. [00:13:35] Speaker 06: Yes, sir. [00:13:36] Speaker 06: If they're going to base it on a hurricane, they would need to point to some other sort of emergency altogether to [00:13:43] Speaker 06: on notice and comment. [00:13:44] Speaker 02: OK, thank you. [00:13:45] Speaker 06: And they also tried to suspend notice and comment on the fact that if they didn't give the money right away, carriers were going to go out and use cheaper restoration efforts. [00:13:54] Speaker 06: There was nothing in the record that said that carriers were going to do this. [00:13:57] Speaker 06: In fact, the comments just said, the funding you gave us in the past was good, but we need more. [00:14:02] Speaker 06: We're using generators. [00:14:03] Speaker 06: It never said, hey, if you don't give us funding, we're going to find cheaper ways of doing this. [00:14:10] Speaker 06: It just said that it wasn't explicit. [00:14:13] Speaker 01: In what situations do you think, if any, that funds can be used where an area has access and then it is lost, not because of a hurricane, it's just lost. [00:14:29] Speaker 01: And so they don't have access anymore as B3 contemplates. [00:14:33] Speaker 01: Can funds ever be used there? [00:14:35] Speaker 01: I mean, it's kind of a variant of what there's Garland was suggesting, because you clearly have no access if it's lost. [00:14:42] Speaker 01: Now, you're focusing on it was a hurricane. [00:14:45] Speaker 01: Let's make it tell me anything that would be permissible once the service is lost. [00:14:51] Speaker 01: In other words, they had access and now they don't. [00:14:54] Speaker 01: In whatever area you want to put it, can funds ever be used? [00:15:01] Speaker 06: Yes, your honor. [00:15:03] Speaker 01: Give me an example, like when? [00:15:06] Speaker 06: If the facilities in that area are too expensive to operate to ensure some kind of reasonably comparable level of service. [00:15:13] Speaker 01: No, no, no. [00:15:13] Speaker 01: You're just stating the statute. [00:15:15] Speaker 01: I want a situation. [00:15:16] Speaker 01: They had access that was fine. [00:15:20] Speaker 01: No issues. [00:15:21] Speaker 01: And then something happens. [00:15:23] Speaker 01: I want to know whether you think there can ever be the scenario where something happens and now they don't have that access and don't make it a hurricane. [00:15:32] Speaker 01: Is there any situation? [00:15:34] Speaker 06: Yes, Your Honor. [00:15:35] Speaker 06: I believe there would be when in a sense where it's become too expensive to operate in that area and they need some kind of funding to bridge the gap between, you know, the cost of the carrier to [00:15:53] Speaker 06: to the consumers. [00:15:55] Speaker 04: Sorry about the dog. [00:15:56] Speaker 04: She only barks when she approves of what you're saying. [00:15:59] Speaker 01: So the disaster is a business who is holding effective control over access by the rates they charge or the services they offer suddenly jacks everything way up. [00:16:21] Speaker 01: So you effectively have a disaster. [00:16:23] Speaker 01: So access is no longer any good. [00:16:25] Speaker 01: That's good enough. [00:16:27] Speaker 05: Yes, you're right. [00:16:28] Speaker 01: Whereas a hurricane, which comes in and essentially does the same thing unexpected, it's except it's a hurricane. [00:16:34] Speaker 01: It's not a business charging new and higher exorbitant rates. [00:16:38] Speaker 01: That's not okay. [00:16:40] Speaker 01: It's not as a loss of access. [00:16:45] Speaker 01: Yeah, I don't get that. [00:16:47] Speaker 01: I don't know how you get that out of the language. [00:16:50] Speaker 06: It's because you have to read, and when the FCC implements 254B's principles, you have to read it as a whole and balance everything together. [00:17:02] Speaker 01: When you look- No, no, all I'm trying to figure out is how you make the distinction you just made. [00:17:07] Speaker 01: So now I don't have access because the businesses, the people who apply services, [00:17:12] Speaker 01: Business they are now doing a number on us and we simply can't manage it So we're in a distressed situation and we need help as opposed to a situation where a current a hurricane comes in and Does a disaster on us and we need help and you say in the former situation Business related and real and it's a true disaster. [00:17:36] Speaker 01: It's okay, but in a hurricane, it's not I don't get it and [00:17:41] Speaker 01: hurricanes are so unpredictable business pulling a number where suddenly all of these different parts of supplies furnishing services etc are no longer what they were unexpected but it's there now and there's no access and you say that's okay you can you can help them then yes I believe 254 contemplated [00:18:22] Speaker 06: these areas, but for federal aid. [00:18:25] Speaker 06: Hurricane relief and disaster relief is something on a whole nother level, a whole nother greater magnitude. [00:18:32] Speaker 06: This was focusing on allowing a business to operate in an area because it was too expensive to operate there. [00:18:39] Speaker 06: Disaster relief by its sheer size and sheer unpredictability takes it out of that bulk [00:18:45] Speaker 06: And it becomes a whole new species. [00:18:46] Speaker 01: Oh, no. [00:18:47] Speaker 01: I mean, you're wanting to change my hypothetical. [00:18:49] Speaker 01: I'm trying to give you a situation where access was fine before. [00:18:52] Speaker 01: And something now happens other than a hurricane. [00:18:56] Speaker 01: And these people need help. [00:18:57] Speaker 01: And you're saying, no, a hurricane is different than any other thing I can imagine. [00:19:01] Speaker 02: What was your answer to Judge Tatel's question about bankruptcies? [00:19:05] Speaker 06: If a carrier goes bankruptcy, another carrier would have to step in, another carrier of last resort, because there always has to be a carrier providing services to these areas. [00:19:15] Speaker 02: Well, what if there, again, just to follow up, I'm still not judge Cato's second question, imagine there's only one carrier, it's a rural area, there's only one carrier, nobody else is willing to go without more money. [00:19:28] Speaker 01: Or make it a supplier. [00:19:29] Speaker 02: Do they get more money? [00:19:31] Speaker 01: Or make it a supplier who no longer is willing to supply to the carrier. [00:19:38] Speaker 01: If they're not able to provide service after federal funding, then they need to get... That's what happens when you have a hurricane, just like either the carrier is gone or the supplier of the carrier is gone or the hurricane comes. [00:19:54] Speaker 01: You no longer can furnish the service. [00:19:57] Speaker 01: And we're struggling to try and understand how you're distinguishing one from the other. [00:20:04] Speaker 06: The only way you can distinguish one from the other is one has been contemplated by Congress. [00:20:11] Speaker 06: Businesses, the economics of it are not working in that area. [00:20:16] Speaker 06: For whatever reason, they can't service that area without support. [00:20:21] Speaker 01: Well, Council, the economics are not working post-hurricane. [00:20:26] Speaker 01: That's why you need help. [00:20:29] Speaker 04: You know, let me ask you something else. [00:20:30] Speaker 04: You know, you keep emphasizing hurricanes are unpredictable. [00:20:33] Speaker 04: And you answered in response to, I think, Judge Edwards, you said they would have to have fair degree of certainty that a hurricane was on the way. [00:20:40] Speaker 04: But if you look at the commission's explanation for its good cause, it wasn't all dependent on a new hurricane. [00:20:48] Speaker 04: It said, it said, it said, [00:20:52] Speaker 04: Given the emergency situation and the devastation to communications networks caused by the hurricane, the sooner they get more money, the sooner services can be restored. [00:21:07] Speaker 04: They're just saying this is an emergency in Puerto Rico. [00:21:10] Speaker 04: We don't even need another hurricane to justify good cause here. [00:21:16] Speaker 04: Hurricane Maria was a once in a century storm that caused devastating damage. [00:21:24] Speaker 04: Even after months of recovery, even after months of recovery efforts, the majority of citizens in Puerto Rico still like access to service. [00:21:33] Speaker 04: That has nothing to do with the future hurricane. [00:21:35] Speaker 04: They're just saying, hey, it's a disaster. [00:21:38] Speaker 06: My reading of that paragraph is, sorry, your honor. [00:21:44] Speaker 06: My understanding is that paragraph ended up and they said these islands are still continuing to recover from the last hurricane. [00:21:54] Speaker 06: We're one month out from hurricane season. [00:21:56] Speaker 06: They need this money now. [00:21:57] Speaker 06: It wasn't because they need this money now because they're continuing. [00:22:01] Speaker 04: Oh, I just read you the three sentences which say that. [00:22:05] Speaker 06: The final sentence connects it to the next hurricane season starting June 1, 2018. [00:22:12] Speaker 06: So it's a buildup to a month out, and they need the money now because the hurricane season is going to start one month later. [00:22:19] Speaker 06: So ultimately, or the overarching reason was the annual hurricane season. [00:22:27] Speaker 04: That's not the way I read it. [00:22:28] Speaker 04: Sure, they say another hurricane could come. [00:22:30] Speaker 04: New hurricane services says and. [00:22:34] Speaker 04: It says and. [00:22:36] Speaker 04: It says and the next hurricane service will commence on June 1. [00:22:40] Speaker 04: It's an and. [00:22:44] Speaker 06: Correct, that is an and, but the buildup is to the next heart. [00:22:49] Speaker 04: Okay. [00:22:52] Speaker 04: Judge Edwards, Judge Garland, do you have any further questions? [00:22:54] Speaker 04: No, no, I'm okay. [00:22:56] Speaker 04: Okay, we'll hear from the government. [00:22:58] Speaker 06: Thank you, honors. [00:23:00] Speaker 03: Good afternoon, and may it please the court, I'm Sarah Citron for the FCC. [00:23:05] Speaker 03: And as the court has, I think, recognize this case turns on the agency statutory mandate to ensure access to quality reliable communication services in all regions of the United States. [00:23:20] Speaker 03: I'd like to spend a little time explaining why, in the agency's view, that was a reasonable decision here to, in the particular circumstances facing these territories after devastating hurricanes, it was a reasonable implementation of Section 254 to decide to subsidize communications infrastructure in these regions that would be resilient to future storms. [00:23:49] Speaker 02: If you don't mind, I hate to put you on another topic, but I do have another interest here for just a moment. [00:23:59] Speaker 02: This is on the issue raised by opposing counsel about why was a rule 54.7 waived and why wasn't there forbearance as there was in the Katrina circumstances. [00:24:17] Speaker 02: When I reread the [00:24:19] Speaker 02: Katrina order, it seemed to me that those waivers and forbearances had to do with things that did have to be waived and forborn, like the lifeline rule and other rules. [00:24:38] Speaker 02: And that in this particular kind of issue about whether it covers hurricanes was not [00:24:45] Speaker 02: There was no rule before that had to be forborn and no rule that had to be waived. [00:24:52] Speaker 02: Am I wrong about that? [00:24:53] Speaker 02: Or is there some other explanation for why it wasn't done in this case? [00:24:57] Speaker 03: You're correct that there was no rule that had to be forborn with respect to the or waived. [00:25:05] Speaker 03: in the case of 54.7. [00:25:06] Speaker 03: As to the interpretation of Katrina, I'll concede that it isn't abundantly clear. [00:25:14] Speaker 03: I wouldn't rule out that that discussion pertained also to the high cost program, although you're quite right that the main relief in that order concerned other aspects of the universal service programs. [00:25:29] Speaker 03: But I would know for the court's attention that forbearance [00:25:34] Speaker 03: in even in the Katrina order was an alternative approach. [00:25:38] Speaker 03: The commission first in that context clarified that this was permissible under section 254E and kind of as suspenders that were perhaps unnecessary [00:25:49] Speaker 03: even in Katrina, but certainly for the reasons you suggested, Judge Garland, were unnecessary here. [00:25:56] Speaker 03: The commission also forebore and waived 54.7. [00:26:00] Speaker 03: But that wasn't necessary in the context of this case. [00:26:05] Speaker 02: OK, thank you. [00:26:05] Speaker 02: I'm sorry to interrupt your train of argument. [00:26:07] Speaker 02: Go ahead. [00:26:07] Speaker 03: No, that's quite all right, of course. [00:26:11] Speaker 03: What I wanted to emphasize or push back on a little bit here is the characterization of Tri-County that the commission had agreed to subsidize disaster relief using their catchphrase writ large. [00:26:26] Speaker 03: What the commission was doing here was not funding construction of roads or hospitals or emergency food rations. [00:26:33] Speaker 03: the commission was subsidizing the kinds of facilities that are necessary to provide access to critical communication services. [00:26:40] Speaker 02: I don't, I don't to be, unless opposing council says otherwise, I didn't understand them to mean food or roads. [00:26:48] Speaker 02: I understood them to mean access to telecommunication services. [00:26:52] Speaker 02: And I understood them to simply be arguing that you can't do that in a disaster. [00:26:57] Speaker 02: That's all. [00:26:57] Speaker 02: Well, and, and with wrong, but I don't think that they were suggesting that you were providing roads. [00:27:04] Speaker 03: Assuming that understanding of their argument, Judge Garland, then I think I was also hearing in several of the questions from the court the point that the statute doesn't anywhere include a carve out for [00:27:23] Speaker 03: when services are unavailable because of natural disaster. [00:27:27] Speaker 03: And I think that's quite right. [00:27:29] Speaker 03: So the commission here was serving its core function of applying the principles set forth in 254B to the particular circumstances in these particular territories. [00:27:43] Speaker 03: And it concluded that here, the best way to ensure access and continued access to these services was to fund upfront [00:27:53] Speaker 03: the kinds of facilities that would be resilient in the event of future storms. [00:28:00] Speaker 03: The territories, the record showed, are unusually prone to storms. [00:28:04] Speaker 03: Of course, they're islands. [00:28:07] Speaker 02: So- What about the amounts of money provided? [00:28:10] Speaker 03: The amounts of money provided in the Stage 1 order, Your Honor? [00:28:16] Speaker 02: Stage 1 and Stage 2. [00:28:19] Speaker 03: I don't think there's a challenge to the amount of money in stage two, except to say I heard Council say today and it's part of the briefs that the money was so large that this is an [00:28:34] Speaker 03: This is going to explode the Universal Service Fund. [00:28:37] Speaker 03: It can't be sustained. [00:28:38] Speaker 03: And in response to that, I would just say these are defined. [00:28:44] Speaker 02: I understand that, but maybe I misread their brief. [00:28:47] Speaker 02: You're saying that they're challenged to the amounts of money only related to stage one? [00:28:55] Speaker 03: I think they have a procedural argument as to stage one only that the commission did not adequately explain the amount of money it chose, which was the 64.2 million that it awarded in emergency relief on a one-time basis. [00:29:10] Speaker 03: That argument, we have the threshold objection that as to this issue and all of the other issues in the case, besides the question of the commission statutory authority, [00:29:20] Speaker 03: that Tri County does not have standing to challenge. [00:29:23] Speaker 02: Okay before we are going to get to that I promise but as long as we're on the I will do it in reverse order on the amounts first. [00:29:32] Speaker 02: I just want to be clear so you don't think that they're arguing that the amounts in stage two are not supported it's only the amounts in stage one? [00:29:40] Speaker 03: That's right your honor. [00:29:41] Speaker 02: What do you understand what is the explanation for the amount in stage one? [00:29:46] Speaker 03: As to stage one, the commission made what was a high level determination based on what it saw. [00:29:53] Speaker 03: As far as progress toward restoration from the initial immediate distribution of relief, which was of a little over $65 million, that given that progress, a roughly equivalent amount of money should enable carriers to complete the remaining restoration work in a roughly equivalent amount of time. [00:30:21] Speaker 03: I think in the circumstances here, that explanation was adequate. [00:30:27] Speaker 03: There was a real urgency to repairing these networks, and the commission necessarily couldn't know for certain how much it would cost. [00:30:38] Speaker 03: This was one-time interim relief. [00:30:42] Speaker 03: Neither Tri County nor anyone else has pointed to any evidence that the Commission ignored or any reason to think that this number was grossly off base. [00:30:53] Speaker 03: And in addition, the Commission didn't leave carriers with a blank check. [00:30:58] Speaker 03: It put in place safeguards. [00:31:00] Speaker 03: It specifically delineated the permitted uses of these funds. [00:31:05] Speaker 03: It required carriers to give certifications before and after receiving the funds. [00:31:09] Speaker 03: It directed the administrator of the Universal Service Fund to conduct audits. [00:31:14] Speaker 03: So in these circumstances, I think the commission's analysis that roughly the same amount of money would achieve the necessary remaining repair work in roughly the same amount of time was adequate. [00:31:27] Speaker 02: Okay, so now if we could return to what should be our first question, which is the standing argument. [00:31:32] Speaker 02: You argue that Tri-County doesn't have standing to challenge the Stage 1 order, right? [00:31:37] Speaker 02: Yes, Your Honor. [00:31:38] Speaker 02: And that's because the money was from cash reserves, is that right? [00:31:42] Speaker 03: Yes. [00:31:43] Speaker 02: Is it not true that if the FCC had not used... That's a double negative. [00:31:48] Speaker 02: If the FCC had not used its cash reserves to pay for the Stage 1 order, [00:31:54] Speaker 02: it could have used them to lower the required contributions in stage two or in the future. [00:32:01] Speaker 02: Isn't that right? [00:32:02] Speaker 03: You're right that it could perhaps have done so. [00:32:05] Speaker 02: Well, it would have, wouldn't it? [00:32:08] Speaker 02: Because the regulation, 45 CFR 54.709B says, [00:32:16] Speaker 02: contributions for the following quarter will take into consideration the projected cost of the support mechanisms for that quarter and the excess contributions carried over from the previous quarter. [00:32:28] Speaker 03: I'm turning to the regulation, but I believe it also contains an exception that the Commission need not do that. [00:32:37] Speaker 02: Yeah, so maybe not. [00:32:38] Speaker 02: Maybe they wouldn't. [00:32:41] Speaker 02: Doesn't it seem likely that if they had [00:32:44] Speaker 02: full amount of money already in excess that there would be less of a contribution required thereafter, you know, the next quarter? [00:32:52] Speaker 03: I don't believe Tri County has established that it's likely and let me point you to in particular paragraph 19 of the stage one order. [00:32:59] Speaker 03: In paragraph 19 the commission is talking about what would happen if [00:33:06] Speaker 03: applicants applied for funds and part, a portion of these stage one funds and the agency would set aside an allotment from that pool of money for a particular carrier, but then the carrier didn't ultimately qualify as an eligible telecommunications carrier. [00:33:24] Speaker 03: and therefore it couldn't receive the funds. [00:33:27] Speaker 03: What the commission said it would do in those circumstances or that it was reserving the right to do was redirect that provider's allocation toward other universal service purposes, such as increasing the funding available for long-term rebuilding of voice and broadband networks in the territories. [00:33:46] Speaker 03: And so the commission was signaling that it might well increase the size of the long-term fund, the stage two fund, [00:33:54] Speaker 03: or it could have put that money toward other universal service contributions. [00:33:58] Speaker 02: So I don't... Right, but it could only put it towards the uses that are authorized by the statute. [00:34:04] Speaker 02: And if it already had the money for those uses, it couldn't just... It's not like it's unlimited how much the FCC can increase contributions. [00:34:16] Speaker 02: It has to be based on a need for the money, doesn't it? [00:34:19] Speaker 03: That's right, Your Honor. [00:34:20] Speaker 02: I don't... If they have an extra... [00:34:23] Speaker 02: I don't know, billion dollars. [00:34:25] Speaker 02: Doesn't it suggest that, yes, it's possible that there will be more needs and new needs, but there'll be a billion dollars more money available for those more needs and new needs. [00:34:38] Speaker 03: Perhaps, Your Honor, and I don't want to belabor the point, I just want to say with respect to this amount of cash reserve, it was created by a system of uniform contributions that was a time-limited [00:34:52] Speaker 03: program in the ordinary you know the way the universal service program has run historically before the uh 2011 reforms and how it it has it continues to operate today collections are uh made based on projected demand one quarter out so this was an unusual circumstance where there was this cash reserve and it was [00:35:18] Speaker 03: created by the commission in this time for a time limited period to account for special needs that arose during that period. [00:35:29] Speaker 02: I still don't see how that has any effect on the standing argument. [00:35:33] Speaker 02: If you have you do have the money for whatever reason the money was there and that would [00:35:41] Speaker 02: reduce the amount of money needed for expenditures, no matter how many further expenditures you think you need, you still have to subtract the amount that you already have. [00:35:50] Speaker 02: And that suggests you don't need a new contribution for that amount, whatever it is. [00:35:57] Speaker 03: I think that that's not the way this would have operated necessarily. [00:36:02] Speaker 03: I can see that it's possible it would have operated that way. [00:36:04] Speaker 03: And that is just because Tri-County's contributions and the contribution factor [00:36:11] Speaker 03: For this program was fixed for the period through the end of 2018 and that was the period of time during which the Commission contemplated using these cash reserves. [00:36:23] Speaker 03: So I don't think Tri-County has established a substantial likelihood that had there been no need for the funds during that period, the commission would necessarily have rolled them over to reduce the contribution factor in future quarters. [00:36:40] Speaker 03: But I'd maintain that at any rate, the commission's stage one order should survive on the merits. [00:36:48] Speaker 03: And I'm happy to address merits questions you may have. [00:36:53] Speaker 03: There were in the discussion of notice, I just say I would agree Judge Garland with your point that this was not an emergency of the commission's making. [00:37:03] Speaker 03: And I think Judge Tatel recognized that the commission in paragraph 24 of the stage one order made clear that it was responding to an acute problem that which Tri-County does not dispute that [00:37:19] Speaker 03: communities in these regions lacked access to critical communication services during this period. [00:37:27] Speaker 03: And so the commission [00:37:29] Speaker 03: reasonably address that as an emergency and determines that the good cause exception though narrow applied because further delay would prevent people from having access to these necessary services and I don't think it undermines the commission's analysis on that point that it also recognized that a new hurricane season [00:37:55] Speaker 03: was approaching, but the paragraph does say, and a new hurricane season was approaching. [00:38:03] Speaker 03: It isn't the case that the commission rested solely on that point. [00:38:08] Speaker 03: If there are no further questions, I'd ask that the petition be dismissed as to the Stage 1 order, but otherwise denied. [00:38:17] Speaker 04: Thank you. [00:38:20] Speaker 04: Mr. Adamczyk, I think you're out of time, but you can have two minutes. [00:38:23] Speaker 06: Thank you, your honor. [00:38:25] Speaker 06: I would like to address the standing argument that the FCC's council brought up. [00:38:37] Speaker 04: Which standing argument? [00:38:38] Speaker 04: Are you talking about the allocation issue or the one Judge Garland was pursuing? [00:38:43] Speaker 06: The usage of the high-cost account reserve fund. [00:38:46] Speaker 06: Okay. [00:38:48] Speaker 06: The high-cost reserve fund is intended [00:38:53] Speaker 06: us to take excess contributions and apply them to four quarters to offset demand. [00:38:59] Speaker 06: If the FCC had a sufficient amount of money to do that, then it could address other issues, other initiatives. [00:39:06] Speaker 06: Clearly here, what happened was the FCC said by December 8, 2018, the reserve account was depleted from all these other projects that were going on. [00:39:18] Speaker 06: So they weren't using it as the primary purpose of that account was. [00:39:25] Speaker 06: They had circumvented the primary purpose and focusing on all these other initiatives and they ran out of money on the fund. [00:39:32] Speaker 06: They said in 2018 that we ran out of money on the fund and we direct USAC going forward to make sure that there's enough contributions going forward to focus on the purposes of that fund. [00:39:46] Speaker 06: So by the time the stage one order was issued [00:39:51] Speaker 06: May 2018 made no mention of using the high cost cash account in that order. [00:39:56] Speaker 06: And then three months later, they direct USAC to pay out the stage one funding from the high cost cash account. [00:40:03] Speaker 06: And then by the end of that year, they admitted that the funding wasn't there. [00:40:07] Speaker 06: So clearly it had an impact going forward on USF contributions because it wasn't being used for its primary purpose. [00:40:19] Speaker 06: needed to offset future contributions. [00:40:23] Speaker 06: And while all this was going on, future contributions skyrocketed to where now we're at. [00:40:29] Speaker 02: Excuse me, can you tell us the citation at the end of 2018 where they said, we've run out of money and now we need to increase contributions? [00:40:40] Speaker 06: Yes, your honor. [00:40:41] Speaker 06: I believe I have that citation in my reply brief. [00:40:44] Speaker 02: OK, just tell me the page of the reply brief. [00:40:46] Speaker 02: That'll be sufficient. [00:40:47] Speaker 06: It was on, sorry, Your Honor, it was on page six of the reply brief. [00:41:01] Speaker 02: Okay, thank you. [00:41:04] Speaker 06: If there are no further questions, TCT requests that this court reverse and vacate the FCC's decisions. [00:41:10] Speaker 06: Thank you. [00:41:11] Speaker 04: Thank you, case is submitted.