No. 21-472
`
`In The
`Supreme Court of the United States
`
`---------------------------------Ë---------------------------------
`
`BLANCA TELEPHONE COMPANY,
`
`Petitioner
`
`v.
`
`THE UNITED STATES OF AMERICA;
`FEDERAL COMMUNICATIONS COMMISSION,
`
`Respondents
`
`---------------------------------Ë---------------------------------
`
`On Petition For A Writ Of Certiorari
`To The United States Court of Appeals
`For The Tenth Circuit
`
`---------------------------------Ë---------------------------------
`
`PETITION FOR REHEARING
`
`---------------------------------Ë---------------------------------
`
`Timothy E. Welch, Esq.
`Counsel of Record
`Hill and Welch
`1116 Heartfields Drive
`Silver Spring, MD 20904
`(202) 321-1448 (cell)
`welchlaw@earthlink.net
`Counsel for Petitioner
`
`
`
`In The
`Supreme Court of the United States
`
`---------------------------------Ë---------------------------------
`
`BLANCA TELEPHONE COMPANY,
`
`Petitioner
`
`v.
`
`THE UNITED STATES OF AMERICA;
`FEDERAL COMMUNICATIONS COMMISSION,
`
`Respondents
`
`---------------------------------Ë---------------------------------
`
`On Petition For A Writ Of Certiorari
`To The United States Court of Appeals
`For The Tenth Circuit
`
`---------------------------------Ë---------------------------------
`
`PETITION FOR REHEARING
`
`---------------------------------Ë---------------------------------
`
`Timothy E. Welch, Esq.
`Counsel of Record
`Hill and Welch
`1116 Heartfields Drive
`Silver Spring, MD 20904
`(202) 321-1448 (cell)
`welchlaw@earthlink.net
`Counsel for Petitioner
`
`
`
`i
`QUESTIONS PRESENTED
`
`1. Whether the FCC’s Universal Service Fund (USF)
`grant program is a legitimate exercise of Congressional
`spending power under Pennhurst State School &
`Hospital v. Halderman, 451 U.S. 1 (1981) where the FCC
`failed to unambiguously specify the conditions and
`consequences of accepting the USF grant money.
`
`2. Whether the FCC denied Blanca’s Fifth Amendment
`right to equal protection and judicial review by
`authorizing private parties to interfere with Blanca’s
`due process and property rights.
`
`
`
`ii
`TABLE OF CONTENTS
`
`QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . .
`
`i
`
`TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . ii
`
`TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . iii
`
`PETITION FOR REHEARING . . . . . . . . . . . . . . . . . 1
`
`A. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
`
`B. Grounds For Rehearing . . . . . . . . . . . . . . . . . . . . 2
`
`1. USF Funding: Spending Power Violation . . . . . . 2
`
`2. Unreviewable Rights Interference
`By Private Party Government Agents . . . . . . 6
`
`C. No Delay Or Harm From Case Deferral . . . . . . . 8
`
`CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
`
`
`
`iii
`TABLE OF AUTHORITIES
`
`Cases
`Agility Public Warehousing v. U.S., 969 F.3d 1355
`(CAFC 2020) . . . . . . . . . . . . . . . . . . . . . . . . . . 5
`
`Buckley v. Valeo,
`424 U.S. 1 (1976) . . . . . . . . . . . . . . . . . . . . . . . 8
`
`Dept. of Homeland Sec. v. Regents of the Univ. of Cal.,
`140 S. Ct. 1891 (2020) . . . . . . . . . . . . . . . . . . 8
`
`National Federation of Independent Business v.
`Sebelius, 567 U.S. 519 (2012) . . . . . . . . . . . . . 6
`
`Pennhurst State School & Hospital v. Halderman,
`451 U.S. 1 (1981) . . . . . . . . . . . . . . . . .
`i, 1, 3, 4
`
`South Dakota v. Dole,
`483 U.S. 203 (1987) . . . . . . . . . . . . . . . . . . . . 4
`
`USAC v. Post-Confirm. Comm. of Unsec. Cred. (In re
`Incomnet), 463 F.3d 1064 (CA9 2006) . . . . . . 5
`
`Statutes
`47 C.F.R. § 1.1910(b)(3)(I) . . . . . . . . . . . . . . . . . . . . . 8
`
`47 U.S.C. § 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3
`
`Other Authorities
`Article I, Section 8, Clause 1 . . . . . . . . . . . . . . . . . . . 1
`
`Eugene Gressman, et al., Supreme Court Practice
`(9th ed. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . 9
`
`
`
`iv
`Fifth Amendment. . . . . . . . . . . . . . . . . . . . . . . .
`
`i, 7, 8
`
`Fourteenth Amendment. . . . . . . . . . . . . . . . . . . . . . . 7
`
`Stephen M. Shapiro, et al., Supreme Court Practice
`(11th ed. 2019) . . . . . . . . . . . . . . . . . . . . . 1, 2, 9
`
`
`
`1
`PETITION FOR REHEARING
`
`Pursuant to Rule 44.2, Blanca Telephone Company
`hereby seeks rehearing of the Court’s November 15, 2021
`order denying certiorari in No. 21-472. Petitioner further
`requests that the Court defer consideration of this case
`pending final resolution of the Government’s argument
`asserted in United States v. Texas, No. 21-588. In
`support whereof, the following is respectfully submitted:
`
`A. Summary
`
`Rule 44.2 requires a rehearing petitioner to
`demonstrate either substantial intervening circumstances
`or substantial grounds not previously presented. This
`rehearing petition satisfies both prongs of Rule 44.2.
`
`First, the expenditure of Federal USF funds under
`the Spending Power authorized by Article I, Section 8,
`Clause 1 of the Constitution must be accompanied by
`“unambiguous” conditions. Pennhurst State School &
`Hospital v. Halderman, 451 U.S. 1, 17-18 (1981)
`(Rehnquist, J.). Not only did the FCC fail to cite an
`“unambiguous” rule, it failed to cite any rule violation
`whatsoever. See Section B.1. below.1
`
`Second, Blanca filed No. 21-472 on September 24,
`2021. On October 18, 2021 the United States, Respondent
`here, filed as petitioner in United States v. Texas, et al.,
`
`1 New questions presented can be raised in a rehearing petition
`because “the Court’s jurisdiction over the case is established by a
`timely petition for certiorari.” Stephen M. Shapiro, et al.,
`Supreme Court Practice 15-23 (11th ed. 2019).
`
`
`
`2
`No. 21-588; certiorari was granted in on October 22, 2021.
`In No. 21-472 the FCC authorized private companies to
`interfere with Blanca’s property and procedural due
`process rights. In No. 21-588 the Government asserts
`that it is improper for government to authorize private
`parties, acting under color of law, to interfere with
`protected rights. The Government’s inconsistent
`positions taken in No. 21-472 and No. 21-588 violate
`Blanca’s right to equal protection. See Section B.2. below.2
`
`B. Grounds For Rehearing
`1. USF Funding: Spending Power Violation
`
`USF funding is in the nature of a contract for
`services between the Government which promotes
`universal telecom service, 47 U.S.C. § 151, and rural
`carriers which provide telecom service to high cost areas.
`Using its own funds a carrier seeking USF funding makes
`an up front investment in telecom equipment and then
`applies for USF reimbursement. From the USF funding
`recipient’s point of view, the USF acts as a revolving fund
`of the carrier’s own money.3 Blanca’s CA10 Brief at 6-8;
`Blanca’s CA10 Reply at 18-19. From the Government’s
`perspective, the nation receives telecom service in hard
`
`2 Similar issues coming to the court in other still pending cases
`are properly raised in a rehearing petition. Stephen M. Shapiro,
`et al., Supreme Court Practice 15-19 (11th ed. 2019).
`3 The Government concedes that the USF funds are Blanca’s
`personal property: the FCC is seizing Blanca’s USF funding stream
`to pay down the “debt” that the FCC asserts that Blanca owes to
`the Universal Service Administrative Company (USAC), a non-
`governmental entity. Blanca’s CA10 Brief at 50.
`
`
`
`3
`to serve areas it would not otherwise have received.
`Contrary to the express purpose of § 151, the FCC’s
`penalty in this case did not expand telecom service in
`rural areas, it terminated and penalized it.
`
`In No. 21-472 Blanca used USF funding to provide
`telecom service to USF eligible areas. However, without
`specifying any rule violation, Slip Op. App. 36, 37 n.17;
`Blanca Cert. Petition i, 1, 10, 13, 18-20, 25-27, and years
`after knowingly accepting the benefit of Blanca’s
`universal telecom service, the FCC determined that
`Blanca’s telecom service was ineligible for USF
`reimbursement in a novel asset forfeiture proceeding
`which improperly used the Debt Collection Improvement
`Act (DCIA) to assess damages in favor of the USAC, a
`non-governmental entity. The FCC is requiring Blanca
`to pay for the public telecom service which was provided
`up to eleven years before the FCC issued its June 2016
`asset forfeiture order.
`
`Respondents argued below that the USF is a
`Federal “grant” program. Respondents’ CA10 Brief at
`33. However, that circumstance is not a license for the
`Government to avoid the “unambiguous” notice
`requirement or to make up rules in an asset forfeiture
`order. Federal grant programs promulgated under the
`Federal spending power, like the subject USF program,
`are viewed “in the nature of contract” and “if Congress
`intends to impose a condition on the grant of federal
`moneys, it must do so unambiguously.” Pennhurst State
`School & Hospital v. Halderman, 451 U.S. 1, 17-18 (1981)
`(Rehnquist, J.).
`
`
`
`4
`If Congress desires to condition the States’ receipt
`of federal funds, it ‘must do so unambiguously . . . ,
`enabl[ing] the States to exercise their choice
`knowingly, cognizant of the consequences of their
`participation.
`
`South Dakota v. Dole, 483 U.S. 203, 208 (1987)
`(Rehnquist, C.J.). The legitimacy of a Federal grant
`program rests upon whether the grant recipient
`“voluntarily and knowingly accepts the terms of the
`‘contract.’” Pennhurst State School & Hospital v.
`Halderman, 451 U.S. at 18.4
`
`The lower court found that the FCC never cited
`any rule which prohibited Blanca’s use of USF funding.
`Blanca Cert. Petition at 25. Accordingly, the FCC never
`provided the required “unambiguous” notice, or any
`notice, to Blanca regarding USF fund use. Therefore,
`the FCC’s ongoing monthly seizure of Blanca’s property
`violates Blanca’s right to procedural due process.
`
`The FCC’s June 2016 civil asset forfeiture violated
`Blanca’s due process right to prior notice because:
`
`! the FCC failed to provide “unambiguous” notice of the
`conditions attached to the Federal spending of USF
`money. Pennhurst v. Halderman.
`
`4 If the Halderman rule requires State participation, the State of
`Colorado authorizes Blanca’s receipt of USF funding and has never
`objected to Blanca’s use of USF funding. Blanca and Colorado are
`required to follow Federal USF regulations. Blanca Cert. Petition
`at 3-4, 37. Colorado’s USF responsibility is substantial.
`
`
`
`5
`! the FCC’s June 2016 civil forfeiture order, and the
`FCC’s subsequent orders, failed to cite a legislative rule
`violation or any rule which even suggested that Blanca
`could not use USF funding to provide mobile telephone
`exchange service in a rural area during the 2005-2010
`USF accounting period. Blanca Cert. Petition at 11, 18
`& n.5.
`
`! Blanca was cited for violating the FCC’s June 2016
`synthesis of three rule parts which the FCC later
`described as a USF “framework.” Blanca Cert. Petition
`at 13-14.
`
`Not only does the Tenth Circuit’s deferential
`ratification of the FCC’s contract adjudication in a civil
`forfeiture proceeding fail to account for Blanca’s right
`to notice of a contract rule before the rule is applied, the
`lower court’s decision conflicts with the Federal Circuit’s
`decision that the DCIA does not provide Federal agencies
`with contract adjudication authority. Agility Public
`Warehousing v. U.S., 969 F.3d 1355, 1364 (CAFC 2020)
`(the DCA “does not give the United States a freestanding
`mechanism to create a debt”).5 See also USAC v. Post-
`Confirm. Comm. of Unsec. Cred. (In re Incomnet), 463
`F.3d 1064, 1071 (CA9 2006) (the FCC “has no ability to
`control the USF through direct seizure”). Blanca Cert.
`Petition at 10-11.
`
`5 This case presents the Court with an opportunity to determine
`whether the Debt Collection Act authorizes federal agencies to
`adjudicate debt claims, resolving a conflict between the 10th Circuit
`and the Federal Circuit which has national jurisdiction.
`
`
`
`6
`Moreover, the FCC’s June 2016 civil forfeiture
`order is impermissibly “coercive” because it induces USF
`“framework” compliance by withholding 100% of Blanca’s
`USF funding, plus interest and penalties. South Dakota
`v. Dole, 483 U.S. at 211 (threat of 5% penalty of program
`money is an acceptable “relatively mild encouragement”).
`National Federation of Independent Business v. Sebelius,
`567 U.S. 519, 581 (2012). Blanca Cert. Petition at i, 20-
`21, 34-36 (the FCC’s seizure of all of Blanca’s USF
`funding, plus interest and penalties, is punitive).
`
`Failure to review this case would leave Federal
`agencies empowered, without time limitation, to create
`post facto rules to claw back trillions of Federal dollars
`which have been spent since 1787. Government by
`dunning letter is the antithesis of limited government
`and is plainly prohibited by constitutional and statutory
`due process and notice requirements.
`
`2. Unreviewable Rights Interference
`By Private Party Government Agents
`
`In No. 21-588 the United States argues that the
`Constitution prohibits the State of Texas from using its
`sovereign law making power to avoid judicial review of
`a state law which impinges upon the constitutionally
`protected abortion right by authorizing private citizens,
`rather than government officials, to impinge upon the
`protected right. Brief of Petitioner United States at 4,
`12, No. 21-588, filed October 27, 2021.
`
`In No. 21-472 the FCC violated Blanca’s property
`and procedural due process right by using private parties,
`the National Exchange Carrier Association (NECA) and
`
`
`
`7
`the Universal Services Administrative Company (USAC),
`to enforce an industrial code and to collect a judgment
`entered by the FCC on behalf of USAC. The damages
`USAC is collecting for itself include contracted “debt,”
`interest, and penalties. Blanca Petition 9-10, 13-14, 19,
`23-24 (“The FCC-USF Conundrum”), 34, 40; Slip Op. App.
`3. The FCC misused the Debt Collection Improvement
`Act of 1996 (DCIA) to vindicate NECA/USAC’s private
`interests by awarding damages and by authorizing USAC
`to collect against Blanca as if USAC were itself a
`governmental entity. Blanca Cert. Petition 16, 34-35,
`40-41.
`
`A basic problem in No. 21-472 is that the lower
`court waffled on whether NECA and USAC are private
`parties or government agents. NECA and USAC were
`alternatively assigned public and private characteristics
`depending upon which characteristic facilitated the lower
`court’s grant of deference to the FCC’s decision. For
`instance, NECA provided the government function of
`rule notice, Slip Op. App. 37 n.17, but the lower court
`determined that the 2013 NECA settlement did not bind
`the United States because USF settlement and USF
`administration are “private” activities not subject to
`judicial review. Slip Op. App. 41; Blanca Cert. Petition
`at 31. The lower court also determined that the FCC’s
`debt adjudication was “pure debt collection” under the
`DCIA, Slip Op. App. 21, even though the “debt” does not
`involve any Federal funds and is payable to, and collected
`by, a non-governmental entity, USAC, rather than the
`United States. Blanca Cert. Petition at 4, 20.
`
`“Equal protection analysis in the Fifth Amendment
`area is the same as that under the Fourteenth
`
`
`
`8
`Amendment.” Buckley v. Valeo, 424 U.S. 1, 93 (1976);
`see also Dept. of Homeland Sec. v. Regents of the Univ.
`of Cal., 140 S. Ct. 1891, 1903 (2020) (examining “the
`equal protection guarantee of the Fifth Amendment’s
`Due Process Clause” relating to DACA policy recision).
`Accordingly, the Government cannot fairly or rationally
`maintain that private party enforcement of governmental
`rules which hide from judicial review private party
`violations of guaranteed rights is proscribed in No. 21-
`588, but is simultaneously properly prescribed in No.
`21-472.
`
`C. No Delay Or Harm From Case Deferral
`
`Holding No. 21-472 in abeyance pending final
`resolution of the Government’s argument in No. 21-588
`that it is improper for government to use private parties
`to enforce laws which interfere with protected rights will
`not cause any harm either to the Government or to the
`FCC’s private party rule enforcers. USAC has been
`collecting debt, interest, and penalties from Blanca since
`January 2018. The silver lining underlying the FCC’s
`continuing, multi-year violation of 47 C.F.R.
`§ 1.1910(b)(3)(I) (prohibiting the FCC from collecting
`during debt litigation), Blanca Cert. Petition at 16, 20,
`is that deferring consideration of No. 21-472 will not
`affect the Government or its private party rule enforcers
`in the slightest degree. They will continue to extract
`money from Blanca on a monthly basis, subject to a future
`return to Blanca upon a ruling favorable to Blanca; case
`deferral will not impose any cost or delay upon any third
`party.
`
`
`
`9
`Case deferral will ensure that Blanca is not treated
`differently merely because its case arose first.
`
`On multiple occasions, the Court has adopted the
`procedure we request here in order to prevent like
`cases from being treated differently. . . . the
`“interests of justice” recognize that common claims
`should not be treated differently on the basis of
`no more than the “timing of litigation in different
`courts.”
`
`Stephen M. Shapiro, et al., Supreme Court Practice APP-
`248-249 (11th ed. 2019) citing Eugene Gressman, et al.,
`Supreme Court Practice 818-821 (9th ed. 2007).
`
`CONCLUSION
`
`For the reasons presented above, consideration
`of this case should be deferred pending final resolution
`of the Government’s private party enforcement argument
`in No. 21-588. After resolution of the issue in No. 21-588,
`and for the reasons presented above and in the petition
`for certiorari, Blanca’s petition should be granted.
`
`Respectfully submitted,
`Counsel of Record
`Timothy E. Welch, Esq.
`Hill and Welch
`1116 Heartfields Drive
`Silver Spring, MD 20904
`welchlaw@earthlink.net
`(202) 321-1448
`Counsel for Petitioner
`
`
`
`CERTIFICATE OF COUNSEL
`
`I hereby certify that this petition for rehearing
`is presented in good faith and not for delay and that it
`is restricted to the grounds specified in Rule 44.2.
`
`/s/_________________________
` Timothy E. Welch
`
`
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