ASSURANCE WIRELESS USA, L.P. V. ALICE REYNOLDS, No. 23-15490 (9th Cir. 2024)
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A group of telecommunications carriers, including Assurance Wireless USA, L.P., MetroPCS California, LLC, Sprint Spectrum LLC, T-Mobile USA, Inc., and T-Mobile West LLC, sued the California Public Utilities Commission (CPUC) over a rule change. The CPUC had altered the mechanism for charging telecommunications providers to fund California’s universal service program. Previously, the program was funded based on revenue, but due to declining revenues, the CPUC issued a rule imposing surcharges on telecommunications carriers based on the number of active accounts, or access lines, rather than revenue.
The carriers sought a preliminary injunction against the access line rule, arguing that it was preempted by the Telecommunications Act, which requires providers of interstate telecommunications services to contribute to the Federal Communications Commission's (FCC) universal service mechanisms on an equitable and nondiscriminatory basis. The carriers argued that the access line rule was inconsistent with the FCC's rule and was inequitable and discriminatory.
The United States District Court for the Northern District of California denied the preliminary injunction. The court found that the carriers were unlikely to succeed on the merits of their express preemption claims. It held that the access line rule was not inconsistent with the FCC's rule and was not inequitable or discriminatory.
On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court's decision. The appellate court agreed that the carriers were unlikely to succeed on the merits of their claims. It held that the access line rule was not inconsistent with the FCC's rule and was not inequitable or discriminatory. The court concluded that the carriers had failed to show that the access line rule burdened the FCC's universal service programs or that it unfairly advantaged or disadvantaged any provider.
Court Description: Telecommunications Act The panel affirmed the district court’s order declining to preliminarily enjoin a California Public Utilities Commission rule changing the mechanism for charging telecommunications providers to fund California’s universal service program.
The Telecommunications Act requires providers of interstate telecommunications services to “contribute, on an equitable and nondiscriminatory basis, to the specific, * The Honorable Eugene E. Siler, United States Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation. predictable, and sufficient mechanisms established by the Federal Communications Commission to preserve and advance universal service.” The FCC has interpreted the “equitable and nondiscriminatory” requirement to require “competitive neutrality.” Under 47 U.S.C. § 254(f), the Act places similar requirements on carriers that provide intrastate services, but, subject to consistency with federal law and competitive neutrality, it gives states the discretion to decide the “manner” that will ensure “the preservation and advancement of universal service in that State.” Until recently, universal service in California was funded based on revenue. Faced with declining revenues, CPUC issued a rule imposing surcharges on telecommunications carriers based not on revenue but on the number of active accounts, called access lines. The carriers sought a preliminary injunction of the access line rule as expressly preempted by § 254(f).
The panel held that the district court properly exercised its discretion in denying preliminary injunctive relief because the carriers were unlikely to succeed on the merits of their express preemption claims. The panel held that § 254(f) preempts state regulations that are “inconsistent with” FCC regulations and that are not “equitable and nondiscriminatory.” The carriers did not show a likelihood of success on their claim that the access rule was "inconsistent with” the FCC rule because, while the access line rule differed from the FCC’s rule funding interstate universal service programs, the carriers did not show that the access line rule burdened those programs. The panel also rejected the carriers’s likelihood of success on their claim that the access line rule was preempted because it was inequitable and discriminatory contrary to § 254(f).
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