Court Stays FCC Limits on Tribal Lifeline Resellers, Urban Areas; Likely Success on Merits Cited

Federal judges blocked, for now, FCC restrictions on enhanced tribal Lifeline subsidies that bar resellers and residents of non-rural areas from the extra low-income USF support. The commission's 2017 order "will be stayed pending further [court action] insofar as the Order purports to limit eligibility for the Tribal Lifeline enhanced subsidy to 'facilities-based' service providers, and to limit eligibility for that program to 'rural areas,'" said the Friday ruling by a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit in National Lifeline Association v. FCC, No. 18-1026, and a consolidated case. They said petitioners showed a "likelihood of success on the merits" of their challenges, and that they'll suffer "irreparable injury absent a stay." Some said the decision further complicated an FCC proposal to ban resellers from Lifeline support in general.

“We disagree with today’s D.C. Circuit decision," emailed an FCC spokesperson. "Because of today’s ruling, American taxpayers will be required to continue to pay for $34.25 a month in subsidies for Lifeline consumers in Tulsa, Oklahoma, while those in rural Appalachia and Detroit only receive $9.25 a month. This makes no sense, and we will continue to fight to eliminate the waste, fraud, and abuse that has too long plagued this vital program.” In adopting a Lifeline order-NPRM last November, the FCC also said funneling the additional tribal support to facilities-based providers would encourage broadband deployment on Native American reservations (see 1711160021).

The National Lifeline Association is pleased the court agreed with its arguments and "took action so that the case can be decided without Tribal Lifeline subscribers or the companies who do good work in serving them suffering irreparable harm," emailed NaLA counsel John Heitmann of Kelley Drye, whose group represents Lifeline wireless resellers participating in the tribal program. "[I]t appears that the Court understood that wireless resellers play a critical role in connecting low income consumers to essential communications services through the Lifeline program and that disconnecting consumers does not put them first nor does it further the Lifeline program’s core goal of ensuring that our nation’s most vulnerable consumers stay connected by making service affordable."

The panel cited petitioner arguments the FCC failed to account for the lack of alternative service providers many tribal customers have. "Petitioners have provided evidence that many tribal customers will lose access to vital telecommunications services under the Order’s new eligibility requirements, and the Order fails to meaningfully consider this effect," said the order of Judges Sri Srinivasan, Patricia Millett and Cornelia Pillard. The FCC also "has not shown that the historical record supports its assertion that these new requirements will encourage development of communications infrastructure in underserved areas, thus preventing mass disconnection. On the contrary, petitioners credibly assert that providers have generally declined to offer Lifeline service in many tribal regions."

On irreparable harm, "The service provider petitioners here have shown that implementation of the Order will result in substantial, unrecoverable losses in revenue that may indeed threaten the future existence of their businesses," the panel said. The "tribal petitioners have shown that implementation of the Order is likely to result in a major reduction, or outright elimination, of critical telecommunications services for many tribal residents, which are vital for day-to-day medical, educational, family care, and other functions." It also said the FCC didn't show a stay will result in "significant harm to the government or the public," while petitioners showed "a substantial risk that tribal populations will suffer widespread loss of vital [telecom] services without a stay."

The Crow Creek Sioux Tribe and the Oceti Sakowin Tribal Utility Authority, two other petitioners, said they're "very pleased" the court blocked an order "that would have effectively ended Lifeline service on many Tribal lands." Tribal residents "like many low-income consumers, rely on Lifeline service from wireless resellers, who are the primary, and sometimes only, providers of Lifeline service," they emailed. “Our people have long suffered from flawed federal government policies and actions, so the Court’s decision today is an important step in righting past injustices and allowing residents of Tribal lands to obtain critical Lifeline services,” said Joe Redcloud, OSTUA executive director.

The decision "puts at risk" the FCC's broader proposal to bar pure resellers from any Lifeline participation, said Gigi Sohn, fellow at the Georgetown Law Institute for Technology Law and Policy. "This panel saw right through" the argument that subsidizing facilities-based providers exclusively will lead to more deployment, "Lifeline has nothing to do with promoting deployment. It's to promote [service] adoption.” The stay "is an ominous ruling for what is the heart" of Chairman Ajit Pai Lifeline proposal, she said. "If I’m the chairman, I certainly wouldn’t proceed with the proposal while this case is playing out." The Lifeline NPRM "is incredibly unpopular among Lifeline advocates and poor people, and even among industry," she said. "I don’t think he has Hill support either. So who’s supporting this? For what purpose is he doing this? Does he want to get embroiled in a losing proposition, legally and politically?"

"I think the FCC had a better argument to ban resellers from the enhanced Tribal subsidy than they do for the proposed broader ban blocking resellers from any Lifeline recovery," emailed NARUC General Counsel Brad Ramsay. "The court had to find substantial likelihood of success on the merits of the appeal. Anyway you cut it, that’s good news for NARUC and the 70% of Lifeline consumers served by resellers." NARUC opposes the proposed reseller ban.

Lifeline Notebook

TracFone asked the FCC to direct the Universal Service Administrative Co. "to expedite efforts to obtain access to key databases" or postpone a "hard launch" of a Lifeline national verifier until such access has been secured. Alternatively, "the Commission should direct USAC to accept documentation produced through third parties’ automated access to state databases as part of the Verifier’s manual process, including MCO [managed care organization] letterhead proof of Medicaid eligibility," said the Lifeline-backed provider emergency petition posted Friday in docket 11-42. Since the "soft launch" of the national verifier in six states (where providers have the option of using it but don't have to) "it has become clear that USAC’s implementation ...suffers from a significant and unnecessary flaw: USAC is launching the Verifier before obtaining access to key databases necessary to automatically verify subscriber eligibility based on participation in qualifying federal programs, particularly Medicaid," TracFone said. "Compounding this problem is USAC’s policy of rejecting reliable, authentic proof of eligibility generated by [MCOs through] its manual eligibility verification process."