Global TelLink v. Federal Communications Commission
859 F.3d 39
| D.C. Cir. | 2017Background
- The FCC’s 2015 Order set permanent per-minute rate caps and ancillary-fee caps for inmate calling services (ICS), and—for the first time—applied caps to intrastate ICS calls; it also imposed reporting requirements and excluded site commissions from cost calculations.
- Petitioners (five ICS providers and state/local authorities) challenged the Order’s intrastate rate caps, exclusion of site commissions, use of industry-averaged cost data, ancillary-fee caps, and reporting requirements; one petitioner separately raised preemption and due-process claims.
- The FCC later informed the court it would not defend two key positions: (1) authority to cap intrastate rates under §276 and (2) lawfulness of using industry-wide averages to set caps; but the FCC did not withdraw the Order.
- The D.C. Circuit reviewed the Order under the APA (arbitrary-and-capricious) and, where appropriate, statutory-construction principles (Chevron inapplicable to positions the FCC abandoned).
- The court vacated the intrastate rate-cap provision, the categorical exclusion of site commissions, the use of industry-averaged cost data, and the video-visitation reporting requirement; it remanded ancillary-fee caps and site-commission issues for further proceedings and dismissed the preemption and due-process claims as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FCC authority to impose permanent intrastate rate caps under §276 | FCC lacks authority; §152(b) presumes against intrastate regulation and §276 does not equate to §201 ratemaking | FCC: §276’s "fairly compensated" mandate authorizes intrastate caps to curb market failure | Vacated intrastate caps as beyond §276 authority; §276 does not support §201‑style "just and reasonable" intrastate rate capping on this record |
| Exclusion of site‑commission payments from cost calculus | Site commissions are real costs required to obtain contracts and must be recoverable; excluding them makes caps below cost | FCC treated site commissions as inducements/ profit apportionment not costs to be recovered | Vacated categorical exclusion of site commissions as arbitrary and capricious; remand to determine legitimate ICS‑related portions |
| Use of industry‑averaged cost data to set rate caps | Averaging hides wide regional/cost variation and produces caps below many providers’ actual costs | FCC used weighted averages and efficiency arguments to justify caps | Vacated averaging methodology as arbitrary and capricious for failing to ensure "each and every" call is fairly compensated; remand required |
| Ancillary fee caps (interstate vs intrastate) | Caps improperly constrain legitimate recovery and may exceed authority | FCC: ancillary fees are "in connection with" interstate calls under §201(b) and can be used to evade per‑minute caps | Upheld ancillary‑fee caps to the extent tied to interstate authority under §201; remanded to allow FCC to segregate interstate vs intrastate components |
| Reporting requirements (video visitation; site commissions) | Reporting burdens and scope unlawful or unsupported | FCC: reporting needed for oversight and to assess services such as video visitation | Vacated video‑visitation reporting requirement as beyond statutory authority; upheld site‑commission reporting requirement |
| Preemption & due process (Pay Tel) | FCC failed to preempt inconsistent state caps and denied procedural access to cost data | FCC argued either not ripe or moot after reconsideration | Dismissed as moot in light of vacatur of intrastate caps and subsequent events |
Key Cases Cited
- United States v. W.T. Grant Co., 345 U.S. 629 (1953) (voluntary cessation and mootness doctrine)
- Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (2000) (stringent standard for mootness after voluntary cessation)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (two‑step framework for reviewing agency statutory interpretation)
- United States v. Mead Corp., 533 U.S. 218 (2001) (when agency action carries the force of law and Chevron applies)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary and capricious / reasoned decisionmaking standard)
- New England Pub. Commc’ns Council, Inc. v. FCC, 334 F.3d 69 (D.C. Cir. 2003) (scope of §276 intrastate authority and limits tied to statutory text)
- Illinois Pub. Telecomms. Ass’n v. FCC, 117 F.3d 555 (D.C. Cir. 1997) (§276 authorizes regulation of local coin compensation; discussion of locational monopolies)
- Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S. 355 (1986) (section 152(b) presumption against intrastate FCC regulation)
- AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999) (limits on ancillary federal authority over intrastate matters)
- MCI Telecommunications Corp. v. AT & T Co., 512 U.S. 218 (1994) (statutory structure and context in agency interpretation)