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Quest Corp. v. FCC

Ninth Order of FCC establishing funding mechanism to support universal telecommunications services in high-cost areas overturned because agency did not provide sufficient reasoning or record evidence to support its reasonableness.

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The full case caption appears at the end of this opinion.

Agencies play an important role in rational governance because they develop expertise in specialized areas. Principles of checks and balances, however, demand that agencies provide full explanation for their actions to enable effective judicial review. In the cases before us, we reverse and remand the Ninth Order of the Federal Communications Commission (FCC) because it does not provide sufficient reasoning or record evidence to support its reasonableness. The order established a federal funding mechanism to support universal telecommunications services in high-cost areas. The consolidated petitions for review challenge the sufficiency of this funding mechanism in view of certain statutory principles, such as achieving reasonably comparable rates for basic telephone services in rural and urban areas. We do not decide the underlying issue of whether the funding is in fact sufficient; rather, we conclude that the FCC has not supported why the funding is sufficient. In particular, the FCC did not (1) define key statutory terms adequately; (2) set forth a rational basis for the particular benchmark it selected; (3) adequately induce state mechanisms to support universal service; or (4) explain how this piece of federal support for universal service relates to other funding mechanisms. In this posture, we must reverse and remand the Ninth Order for further agency proceedings.

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