Conference Group, LLC v. Federal Communications Commission
405 U.S. App. D.C. 420
| D.C. Cir. | 2013Background
- The FCC’s Universal Service Fund (USF) requires contributions from providers of "telecommunications" under 47 U.S.C. § 254(d); the FCC delegated administration to USAC.
- InterCall, Inc. provides a stand‑alone audio‑bridging teleconferencing service that purchases underlying toll telephony from carriers.
- USAC audited InterCall and concluded its audio‑bridging services were toll teleconferencing and subject to direct USF contributions; InterCall sought Commission review.
- The FCC, after notice and comments, held in the InterCall Order that InterCall’s audio‑bridge is "telecommunications," not an "information service," and requires prospective direct USF contributions; it directed USAC to apply the decision to "similarly situated" providers.
- The Conference Group and Cisco WebEx challenged the InterCall Order, arguing the FCC unlawfully adopted an industry‑wide legislative rule without APA notice‑and‑comment and that the decision was arbitrary and capricious.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FCC converted an USAC adjudication into an industry‑wide legislative rule without APA notice and comment | The Conference Group: the InterCall Order imposed new legislative obligations on the industry without APA §553 notice and comment | FCC: the action was a statutory interpretation rendered in an adjudication (not legislative rulemaking) and the FCC may proceed by adjudication | Held: The InterCall Order was an adjudication/interpretative precedent, not legislative rulemaking; APA notice‑and‑comment not required |
| Whether the audio‑bridging service is "telecommunications" or an "information service" | InterCall/The Conference Group: audio bridging is an information service and not subject to direct USF contributions | FCC/USAC: the bridge merely facilitates transmission (routing ordinary calls); add‑ons are not sufficiently integrated to change the character of the transmission | Held: FCC properly classified InterCall’s audio bridge as "telecommunications"; add‑on features do not convert it into an information service |
| Whether non‑party providers have standing to challenge the InterCall Order’s merits | The Conference Group: it will be harmed by industry‑wide application and increased costs; thus it may challenge the merits | FCC: non‑parties lack Article III standing to attack the merits of another party’s adjudication absent imminent, concrete application | Held: The Conference Group has standing to challenge procedural rulemaking, but lacks standing to challenge the merits of an adjudication; Cisco WebEx lacks standing at all |
| Effect of FCC language applying decision to "similarly situated" providers | The Conference Group: the language makes the adjudication an effective legislative rule with binding industry effect | FCC: noting precedential effect is inherent in adjudication; the phrase does not convert an adjudication into rulemaking | Held: The "similarly situated" language does not transmute the adjudication into rulemaking; precedential effect alone does not create rulemaking requirements |
Key Cases Cited
- Brand X Internet Services v. FCC, 545 U.S. 967 (addresses statutory classifications of telecommunications vs. information services)
- AT&T v. FCC, 454 F.3d 329 (treating a first‑time FCC classification in an order as adjudication)
- Teva Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303 (standing to preemptively challenge agency adjudicative policy when harm is effectively certain)
- Bell Aerospace Co. v. United States, 416 U.S. 267 (discussing limits and precedential effect of adjudication)
- Sea‑Land Serv., Inc. v. DOT, 137 F.3d 640 (specimen on lack of standing based on potential precedential effect)
- Shipbuilders Council of America v. United States, 868 F.2d 452 (mere potential precedential effect is insufficient for Article III standing)