Sorenson Communications Inc. v. Federal Communications Commission
410 U.S. App. D.C. 278
| D.C. Cir. | 2014Background
- FCC administers a TRS Fund to reimburse providers for Internet Protocol Captioned Telephone Service (IP CTS); providers previously reimbursed at a per‑minute rate and served ~150,000 users.
- Sorenson distributed IP CTS-capable phones for free (unlike most competitors), which the FCC associated with a sharp increase in Fund payouts.
- FCC issued an Interim Order (Jan 2013) without notice-and-comment citing "good cause," imposing (inter alia) a $75 price-floor for reimbursable devices (or third‑party certification if distributed < $75) and a default‑off caption setting for IP CTS phones.
- After notice-and-comment, the FCC issued a Final Order (Aug 2013) that: eliminated the third‑party certification option and made $75 the eligibility threshold (except state programs), and kept the default‑off rule but allowed exemptions for those unable to enable captions.
- Sorenson challenged both the Interim and Final Orders under the APA and the ADA; the D.C. Circuit vacated the Interim Order for lack of good cause and also vacated the $75 Rule and the Default‑Off Rule as arbitrary and capricious, remanding the rest of the Final Order to the FCC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FCC had "good cause" to bypass APA notice-and-comment for the Interim Order | Sorenson: FCC lacked record evidence of an emergency; delay would not cause imminent harm | FCC: Rapid Fund depletion justified immediate action to prevent fiscal harm | Held: No good cause; agency failed to show a fiscal emergency with supporting facts → Interim Order vacated |
| Whether the $75 price‑floor violated APA (arbitrary and capricious) | Sorenson: Rule unsupported by evidence; no showing of fraud or why $75 deters it | FCC: Predictive judgment and common‑sense support the rule to deter misuse | Held: Vacated as arbitrary and capricious; Commission offered no evidence linking fraud to price or explaining $75 selection |
| Whether default‑off caption setting violated APA (arbitrary and capricious) | Sorenson: Rule unsupported and contradicted by evidence showing no fraud and negative user impact | FCC: Anticipated reduced misuse and that concerns would subside over time | Held: Vacated as arbitrary and capricious; Commission ignored contrary evidence and failed to justify the rule |
| Whether the court should vacate the entire Final Order | Sorenson: Seeks full vacatur of Final Order | FCC: Many other provisions are severable and valid | Held: Partial vacatur; only the Interim Order and the two challenged rules vacated; remainder of Final Order left intact and remanded |
Key Cases Cited
- Envirocare of Utah, Inc. v. NRC, 194 F.3d 72 (D.C. Cir. 1999) (agency has no interpretive authority over the APA)
- N.J. Dep’t of Envt’l Protection v. EPA, 626 F.2d 1038 (D.C. Cir. 1980) (good‑cause inquiry must be meticulous and demanding)
- Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012) (narrow construction of APA good‑cause exception)
- Mid‑Tex Elec. Coop. v. FERC, 822 F.2d 1123 (D.C. Cir. 1987) (impracticability is fact‑ and context‑dependent)
- Jifry v. FAA, 370 F.3d 1174 (D.C. Cir. 2004) (good cause upheld only in emergency situations threatening life or property)
- Council of the S. Mountains, Inc. v. Donovan, 653 F.2d 573 (D.C. Cir. 1981) (life‑saving emergency justified bypassing notice)
- Motor Vehicles Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (arbitrary-and-capricious standard; agency must articulate rational connection between facts and action)
- Nat’l Tel. Coop. Ass’n v. FCC, 563 F.3d 536 (D.C. Cir. 2009) (deference to predictive economic judgments with evidentiary basis)
- Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014) (agency predictions require logic and evidence, not speculation)
- Checkosky v. S.E.C., 23 F.3d 452 (D.C. Cir. 1994) (agency action cannot rest on common sense alone without factual support)
- El Rio Santa Cruz Neighborhood Health Ctr., Inc. v. HHS, 396 F.3d 1265 (D.C. Cir. 2005) (agency must address contrary evidence)
- MD/DC/DE Broad. Ass’n v. FCC, 236 F.3d 13 (D.C. Cir. 2001) (severability standard for upholding rest of rule when parts are invalidated)