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Al Hee Claims Ownership of Federal Subsidies--Court Laughs
By Robert Thomas @ 2:47 AM :: 3348 Views :: DHHL, Ethics

Fed Cir: FCC Giving Isn't A Taking - Don't Disguise Your Challenge To Reduction In Subsidies As A Takings Case

by Robert Thomas, InverseCondemnation, April 1, 2021

Go read the Federal Circuit's opinion in Sandwich Isles Communications, Inc. v. United States, No. 20-1446 (Apr. 1, 2021), especially the very-dense fact section. There's a lot there: acronyms, bureaucracy-speak, family-inside politician dealings, tax fraud convictions, and the like. So what's a case like this doing in the Court of Federal Claims and the Federal Circuit, which (for our purposes) deals with takings claims against the United States?

Skip forward to page 7, where we get to the heart of the plaintiff's complaint:

In January 2019, SIC filed this suit in the Claims Court, alleging that the cumulative effect of the FCC’s reductions in SIC’s federal subsidies resulted in a taking of property without just compensation.

Slip op. at 7 (footnote omitted).

Yes, you read that right: this was a violation of the Givings Clause.

Consequently, the CFC dismissed the complaint for lack of subject matter jurisdiction. First, because this really sought review of the FCC's actions (and you know you don't go to the CFC for that kind of review, you go to the court of appeals. Second, because there's no property interest "in receiving support payments from FCC-administered funds." Slip op. at 8.

The Federal Circuit affirmed. You can't bring a Tucker Act claim (a "gap filler" as the court noted) when Congress has otherwise provided a comprehensive, detailed statute that provides its own remedies. The Federal Communications Act is one of those latter types. Comprehensive. Detailed. With a specific judicial review provision. The question the Federal Circuit resolved was whether in the Communications Act, Congress intended to withdraw Tucker Act jurisdiction. Yes, the court concluded (and it wasn't a new issue). In a recent 2018 decision, the Federal Circuit held that the Communications Act did just that. Examining the "true nature" of the plaintiff's claim, the court concluded that it really just seeks review of the FCC's order:

In analyzing whether subsection 402(a) applies, we “must look to the true nature of [the plaintiff’s] claim, not how plaintiff characterize[s] it.” Folden, 379 F.3d at 1359 n.13. Here, SIC’s takings claim is based on its disagreement with FCC decisions regarding the amount of subsidies SIC could receive from the USF and NECA pools. SIC also takes issue with the FCC’s 2013 order, which denied SIC’s petition for waiver of the $250 per-line, per-month cap on high-cost universal service support. These allegations take aim at FCC orders and seek to “enjoin, set aside, annul, or suspend” them. See 47 U.S.C. § 402(a). Because SIC’s takings claim challenges FCC actions and orders governed by 47 U.S.C. § 402(a), the statutory scheme set forth in the Communications Act displaces the Claims Court’s Tucker Act jurisdiction.

Slip op. at 14-15. No we didn't, the plaintiff asserted, "this is a takings case, not a challenge to the order."

Sorry, no deal held the court. The claim "is premised on [the plaintiff's] disagreement with the amount of subsidy funding it has received from the FCC-administered funds[.]" Slip op. at 15. Go take it up -- including your takings claim -- with the FCC as the statute requires.

SIC also maintains that it could not have raised its takings claim as a challenge to any FCC order because “a takings claim asserted in an appeal from the FCC’s order would be unripe.” Appellant’s Br. 12–13. At the same time, however, SIC alleges that “a confiscatory rate takings claim is ripe when its impacts are known” and the “impacts of the FCC’s 2011 rates have been fully manifested.” Id. ready ripe when SIC filed its 2015 petition.” Id. SIC’s ripeness allegations, which seem to be a moving target, miss the mark. The fact remains that SIC has not raised its takings claim before the FCC, which it was required to do be-fore seeking judicial review. See Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194–95 (1985) (“[A] claim that the application of government regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.”), overruled on other grounds by Knick v. Twp. of Scott, 139 S. Ct. 2162, 2179 (2019).

Slip op. at 15-16.

What about the CFC's alternative basis for dismissal, the conclusion that the plaintiff does not possess a property interest in a government subsidy? No analysis from the Federal Circuit, other than "[w]e have considered SIC's remaining arguments and find them unpersuasive." Slip op. at 17.

There's a lesson this case teaches: takings claims are takings claims, and not a desperate last-line-of-defense solution to every legal problem.


PDF: Sandwich Isles Communications, Inc. v. United States, No. 20-1446 (Fed. Cir. Apr. 1, 2021)  

LSM: Federal Circuit Dismisses Hawaiian Telecom’s $27M Subsidy Dispute


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