Increasing telephone penetration rates and promoting economic development on tribal lands: a proposal to solve the tribal and state jurisdictional problems.

• Author: King, Jennifer L.

1. INTRODUCTION

   The Telecommunications Act of 1996(1) ("1996 Act") instructed the Federal Communications Commission ("FCC" or "Commission") to ensure that all Americans have access to affordable telecommunications services.(2) Consistent with that mandate, the Commission now seeks to secure affordable telecommunications services for those in rural, insular, and high-cost areas.(3) More importantly, the FCC held a series of public hearings to discuss with Tribes(4) the issues they face concerning low telephone penetration rates.(5) The FCC recommended investigation of universal service in unserved and underserved areas because telephone penetration rates among low-income consumers on tribal lands lagged behind rates in the rest of the country.(6) Approximately 94.2% of all U.S. households have telephone service,(7) while subscribership on tribal lands is 46.6%.(8)

   After meeting with Indian leaders and telecommunications service providers at two formal field hearings held in New Mexico and Arizona, the FCC tentatively implemented several policies to address low telephone penetration rates on tribal lands.(9) In response to the many requests made by tribal leaders for a statement of policy that recognizes tribal sovereignty and the government's fiduciary duty to Tribes, the FCC validated its commitment to promoting a government-to-government relationship between the FCC and all federally recognized Tribes. Specifically, the FCC reaffirmed its commitment to: (1) "work with Indian Tribes on a government-to-government basis consistent with the principles of Tribal self-governance;" (2) "consult with Tribal governments prior to implementing any regulatory action or policy that will significantly or uniquely affect Tribal governments, their land and resources;" and (3) "identify innovative mechanisms to facilitate Tribal consultation in agency regulatory processes that uniquely affect telecommunications compliance activities ... and other telecommunications service-related issues on Tribal lands."(10) Despite the FCC's positive policy statements, however, it also established that such statements do not "create any right enforceable in any cause of action" against the FCC, the United States, or any other party.(11)

   Furthermore, in its effort to understand the reasons for low penetration rates on tribal lands, the FCC requested comments concerning its proposed rules on tribal jurisdiction.(12) Specifically, the FCC sought comments regarding the extent of state and tribal regulation of tribally owned or nontribally owned telecommunications carriers providing service to tribal lands.(13) This includes jurisdiction questions with respect to: (1) tribally owned or operated carriers providing service within reservations to tribal members, nontribal members, and nontribal members living on nonnative fee lands (within the reservation);(14) (2) nontribally owned or operated carriers offering service both inside and outside of the reservation; and (3) tribally owned or operated carriers offering service outside the reservation.(15) The parameters of federal, state, and tribal authority are not always clear. As the United States Supreme Court acknowledged in dicta, "[g]eneralizations on this subject [of Federal Indian policy] have become particularly treacherous."(16)

   Despite the complexities of determining tribal and state jurisdiction, the FCC tentatively established a framework to answer the jurisdictional questions posed in previous proceedings.(17) First, under 47 U.S.C. [sections] 214(e)(6),(18) the Commission may designate tribally owned and nontribally owned carriers serving tribal lands as eligible carriers.(19) The threshold question in these situations is whether the state lacks jurisdiction to designate and regulate carriers wishing to serve tribal lands.(20) The FCC must consider "whether state regulation is preempted by federal regulation, whether state regulation is consistent with tribal sovereignty and self-determination, and whether the Tribe has consented to state jurisdiction."(21) Second, when tribally owned and nontribally owned carriers seek to serve nontribal lands, even if those lands are included within the reservation's boundaries, the state commission must determine whether it has jurisdiction considering the same factors listed above.(22)

   This Note argues that the FCC's proposed tribal and state jurisdiction policies deter eligible telecommunications companies ("telcos") from serving tribal and nontribal land, because the process of petitioning the state or federal commission to determine jurisdiction takes time and goes against the principles of tribal sovereignty. Prevailing FCC proposals impede Tribes' abilities to attract carriers because current provisions do not clearly define which sovereign--the Tribe or the state--maintains taxation and regulatory authority over eligible telecommunications carriers. Lastly, although the FCC initiated a sweeping policy affirming government-to-government relations with Tribes, this policy does not extend far enough to assure Tribes that states will not infringe on their ability to create economically viable infrastructures on tribal lands.

   Part II of this Note provides an overarching history of the Federal Universal Service Plan ("Federal Plan"), and the considerable responsibilities given to states to further the goals of universal service. Parts III and IV examine the complex development of tribal and state jurisdictional analysis. Part V applies the elaborate jurisdictional analysis uncovered in Parts III and IV, using South Dakota regulations and case law to illustrate how state regulations affect telecommunications carriers serving tribal lands. Part VI proposes that Congress must expressly limit state jurisdiction in order for telephone penetration rates to increase on tribal lands. Without state taxation and regulation, Tribes may opt to impose their regulations on eligible carriers. Furthermore, eligible carriers would not suffer from dual taxation and regulation from Tribes and states under the current Supreme Court's jurisdictional framework if the FCC lobbied Congress for express federal preemption of state jurisdiction over carriers serving tribal lands and tribal members. Tribes should also have the opportunity to contract with states to waive jurisdiction if the states have historically assumed jurisdiction over carriers serving tribal lands. This Note concludes that Tribes are sovereigns and that the FCC must do more than negotiate with them on a government-to-government basis. Because recent Supreme Court precedent seems to divest Tribes of their territorial and regulatory authority, Congress must explicitly permit Tribes' exclusive tax and regulatory authority over eligible carriers serving their lands and people.

2. GENERAL OVERVIEW OF UNIVERSAL SERVICE

   In response to Congress's mandate to implement a new universal service plan, the FCC adopted the Federal Plan in the Report and Order, entitled Federal-State Joint Board on Universal Service ("Universal Service Order"), to execute the universal service provisions of the 1996 Act.(23) The Federal Plan aimed to extend telecommunications services "to as many members of society as possible," while providing the necessary funding to support the policy.(24) The Federal Plan evidenced Congress's intent for all consumers to receive telecommunications services at nondiscriminatory prices regardless of the additional costs involved in providing service to rural areas.(25) Specifically, the Federal Plan establishes several universal service principles:

   (1) quality services should be available at just, reasonable, and affordable rates; (2) access to advanced telecommunications and information services should be provided in all regions of the Nation; (3) consumers in all regions of the Nation ... should have access to telecommunications and information services, ... that are reasonably comparable to those services provided in urban areas ...; (4) all providers of telecommunications services should make an equitable and non-discriminatory contribution to ... universal service; (5) there should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.(26) In addition, the Federal Plan funds "single-party service; voice grade access to the public switched network; DTMF signaling or its functional equivalent; access to emergency services; access to operator services; access to interexchange service; access to directory assistance; and toll limitation services for qualifying low-income consumers."(27)

   Only eligible telecommunications carders may receive support from the Federal Plan, which uses federal subsidies to offset costs of telephone service to low-income individuals.(28) The Federal Plan defines an eligible telecommunications carder as simply a common carder that must provide universal support services by "using its own facilities or a combination of its own facilities," and that is required to "advertise the availability of such services and the charges ... using media of general distribution."(29)

   Since the 1996 Act seeks to increase competition in the telecommunications industry at the local service level and provide reasonable and affordable rates, Congress delegated to states the authority to designate and regulate telecommunications carriers eligible for universal service under the Federal Plan.(30) In essence, "state commissions [would be] on the front lines and [would] have a tremendous responsibility to act as the administrators of federal and state universal service programs."(31)

   1. State Obligations in Implementing Universal Service

      Traditionally, states must ensure that universal service is available at just, reasonable, and affordable rates. Under the 1996 Act, states are given significant responsibility to maintain universal service in a competitive environment.(32) Specifically, section 254(f) of the 1996 Act provides:

      A...