Vermont and Maine regulators are trying to attack the FCC’s...

with the Court of Appeals for the D.C. Circuit. But the state regulators “have failed to make” their case that the FCC abused its discretion under the Administrative Procedure Act, the commission’s lawyers said. The case stems from a remand in the so-called Qwest II case, in which the commission found that under section 254(b)(3) of the Telecom Act that rural and urban rates “are reasonably comparable.” The state regulators have challenged, claiming, among other things, that the FCC “failed to compare rural rates in each state to a national average urban rate.” But Carr and Flood said that claim was “barred by section 405(a) of the [Telecom] Act because petitioners never presented it to the agency.” In any case, the commission isn’t bound statutorily or by court ruling to follow that methodology, Carr and Flood said. “Nor was the FCC required to lower the rate benchmark that is used to determine whether rural rates in a particular state satisfy section 254(b)(3),” Carr and Flood wrote. “When the FCC has reasonably interpreted the relevant statutory terms, as it did in the [Qwest II] Order, setting the rate benchmark is a line-drawing exercise that falls within the agency’s unique expertise,” Carr and Flood wrote. A victory for the state regulators would have created “a $2.725 billion annual increase in universal service funding,” Carr and Flood wrote.