NASUCA v. FCCNASUCA v. FCC
The key issue presented in this petition for review is whether the Federal Communications Commission exceeded its authority, under section 332(c)(3)(A) of the Communications Act of 1934, when it issued an order that preempted the states from requiring or prohibiting the use of line items in customer billing for cellular wireless services.
This appeal also addresses three threshold issues: (1) whether, under the Hobbs Act,
I. BACKGROUND
The State Consumer Advocates filed a petition with the Commission that requested a prohibition on the use of line items by cellular wireless carriers unless the line item is mandated by state or federal law. In response to this petition, the Commission issued an order that amended the Truth-in-Billing Rules of the Commission, preempted the states from requiring or prohibiting the use of line items in customer billing for wireless service, and proposed further rulemaking to preempt the states from the regulation of billing practices of wireless service providers. The State Consumer Advocates and the Vermont Board petition for review of the Order by the Commission. Sprint Nextel Corp. and Cingular Wireless LLC (collectively, the Carriers) intervene in support of the Commission, and the State Utility Regulators intervene in support of the Vermont Board.
To explain the context of this appeal, we address three preliminary matters.
A. The Communications Act of 1934 and the Truth-in-Billing Rules
The Communications Act of 1934,
In May 1999, in response to a growing concern with consumer fraud in the provision of telecommunications services, the Commission promulgated the Truth-in-Billing Rules. In the Matter of Truth-in-Billing and Billing Format, 14 F.C.C.R. 7492 (1999) [hereinafter “First Report and Order“]. The stated purpose of the Rules was “to ensure that consumers are provided with basic information they need to make informed choices in a competitive telecommunications marketplace, while at the same time protecting themselves from unscrupulous competitors.” Id. at 7493–94. The Truth-in-Billing Rules required consumer telephone bills to (1) “be clearly organized, clearly identify the service provider, and highlight any new providers“; (2) “contain full and non-misleading descriptions of charges“; and (3) “contain clear and conspicuous disclosure of any information the consumer may need to make inquiries about, or contest charges, on the bill.” Id. at 7496 ¶ 5.
The Commission exempted wireless service providers from several of these rules, id. at 7501–02 ¶¶ 13–19, but the Commission required, among other things, “(1) that the name of the service provider associated with each charge be clearly identified on the bill; and (2) that each bill should prominently display a telephone number that customers may call free-of-charge in order to inquire or dispute any
B. The State Consumer Advocates and the Second Report and Order
The State Consumer Advocates “are state agencies designated by laws of their respective jurisdictions to represent the interests of utility consumers before regulatory agencies and in the courts.” The State Consumer Advocates petitioned the Commission for a declaratory ruling that prohibited wireless telecommunications carriers “from imposing any separate line item or surcharge on a customer‘s bill that was not mandated or authorized by federal, state or local law.” Second Report and Order, 20 F.C.C.R. at 6449 ¶ 1. A line item is “a discrete charge identified separately on an end user‘s bill.” Id. at 6462 ¶ 30. According to the State Consumer Advocates, the use of line items that were not required by federal or state law violated the Truth-in-Billing Rules and the Communications Act because these line items “do not allow customers to accurately assess what they are being billed for or permit customers to determine whether the amounts charged conform to the price charged for service.” Id. at 6454 ¶ 13 n.32.
In response to the request for a declaratory ruling filed by the State Consumer Advocates, the Commission issued a notice that solicited comments
After the public comment period closed, during the so-called “permit but disclose” proceedings, see
On March 18, 2005, the Commission issued its conclusions in an Order that addressed three issues. First, in a “Second Report and Order,” the Commission amended or clarified the Truth-in-Billing Rules and applied these rules to wireless service providers. Second Report and Order, 20 F.C.C.R. at 6454–58 ¶¶ 14–20. Second, in a “Declaratory Ruling,” the Commission denied the petition filed by the State Consumer Advocates and preempted the states from requiring or prohibiting the use of line items on monthly telephone bills by wireless service providers. Id. at 6458–6467 ¶¶ 21–36. Third, the Commission requested a “Second Further Notice of Proposed Rulemaking” that proposed to adopt new rules in the billing practices of wireless service providers. Id. at 6467–6478 ¶¶ 37–57.
As to the first issue, the Commission reviewed the history of the Truth-in-Billing Rules and concluded “that [wireless service providers] should no longer be exempt from [the] requirement that billing descriptions be brief, clear, non-misleading and in plain language.” Id. at 6456 ¶ 16; see also
As to the second issue, the Commission denied the petition filed by the State Consumer Advocates because “nothing in the Truth-in-Billing Order prohibits carriers from using non-misleading line items.” Id. at 6458–59 ¶ 23. Although the Commission found that consumers and state regulatory agencies were confused about the use of line items, the Commission “recognize[d] that overbroad state regulations . . . may frustrate our federal rules and the federal objective of minimizing regulatory burdens on the competitive [wireless service provider] industry.” Id. at 6459–60 ¶ 24. The Commission stated that “it is permissible for carriers to recover [regulatory] costs so long as they do so in a manner that complies” with the Truth-in-Billing Rules, but “it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge.” Id. at 6460–61 ¶¶ 26–27.
The Commission distinguished the ability of the states to mandate or prohibit line items from the ability to impose taxes, state universal service support charges, and other disclosure laws, which the Commission left undisturbed. Id. at 6464–65 ¶¶ 32–33. The Commission explained that “requiring or prohibiting the use of line items” has a “direct effect” on the ability of wireless service providers to structure rates, but other state regulations have an “indirect effect . . . on a company‘s behavior.” Id. at 6466 ¶ 34 (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. 17,021, 17,034 ¶ 23 (2000)). The Commission stated that it “may not always be clear” whether line item regulation is preempted by section 332(c)(3)(A), and it was necessary to look to the “substance, [and] not merely the form of the line item.” Id.
As to the third issue, the Commission solicited comments about “the role of states in regulating billing” and “other truth-in-billing issues.” Id. at 6468 ¶ 37. The Commission sought comments about whether other state regulation of billing practices was preempted by the Communications Act. Id. at 6474 ¶ 50. The Commission explained that “limiting state regulation of . . . billing practices [by wireless service providers] . . . will eliminate the inconsistent state regulation that is spreading across the country, making nationwide service more expensive for carriers to provide and raising the cost of service to consumers.” Id. at 6475 ¶ 52.
The State Consumer Advocates and the Vermont Board filed petitions for
C. Motions Filed After the Petition for Review
After the State Consumer Advocates and the Vermont Board petitioned for review of the Order, the Commission moved to dismiss both the petitions of the State Consumer Advocates and the Vermont Board. The Commission argued that the State Consumer Advocates lacked standing to petition for review on behalf of its members because the State Consumer Advocates failed to establish that “at least one of its members meets the minimal Article III prerequisites for standing to sue.” The Commission contended that we lacked subject matter jurisdiction to consider the petition of the Vermont Board because it was not a party to the agency proceedings under the Hobbs Act.
The Vermont Board responded that it was a “party aggrieved” because it had participated in the proceedings,
The State Consumer Advocates responded that their association has standing to challenge the Order either on behalf of its members or as a consumer of wireless service. The State Consumer Advocates argued that they have associational standing because the members of the State Consumer Advocates are charged by state statutes “to advocate on behalf of consumers.” In support of this argument, the State Consumer Advocates submitted affidavits from three individual members of the State Consumer Advocates who are consumers of wireless telecommunications service. The affidavits stated that the preemption Order “will make it difficult to enact . . . new state laws . . . that are necessary to protect wireless customers from unreasonable, misleading, deceptive or illegal line item fees and charges.” The State Consumer Advocates attached the affidavit of John Perkins, the President of the State Consumer Advocates, who testified, “NASUCA is itself a consumer of telephone services . . . . All of the monthly bills for service
In response to these arguments, the Commission moved to withdraw the motion to dismiss the State Consumer Advocates, but continued to move for dismissal of the Vermont Board. The Carriers then submitted their own motion to dismiss the petition of the State Consumer Advocates on the same grounds the Commission had argued in its withdrawn motion. We granted the motion by the Commission to withdraw its motion to dismiss the petition of the State Consumer Advocates, and we ordered that the motions to dismiss the petitions of the State Consumer Advocates and the Vermont Board be carried with the case. The motion of the Vermont Board to correct the administrative record was also carried with the case.
II. STANDARD OF REVIEW
We review our subject matter jurisdiction de novo. Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001). We review whether a party has standing to challenge an order de novo. Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir.), cert. denied, ___ U.S. ___, 126 S. Ct. 377 (2005). We review the authority of the Commission to regulate under the Communications Act based on the standard enunciated in Chevron U.S.A. v. Natural Resource Defense Council, 467 U.S. 837, 842–43, 104 S. Ct. 2778, 2781 (1984).
Before we address the petitions for review, we must consider issues about our jurisdiction. We first address whether the Vermont Board is a “party aggrieved” by the Order under the Hobbs Act.
A. The Vermont Board Is Not a “Party Aggrieved” Under the Hobbs Act.
The Communications Act provides, “Any proceeding to enjoin, set aside, annul, or suspend any order of the [Commission] . . . shall be brought as provided by and in the manner prescribed in” the Hobbs Act.
The Vermont Board presents three arguments that it is a “party aggrieved” by the Order.
1. Participation in the First Report and Order Does Not Render the Vermont Board a “Party Aggrieved.”
The Vermont Board argues that the comments it submitted in the proceedings for the First Report and Order confer party status on it to petition for review. Because the docket number for the First Report and Order, Docket No. 98-
The reliance by the Vermont Board on the docket number to argue that it is a “party aggrieved” by the Second Report and Order is misplaced. Under the Hobbs Act, “[a]ny party aggrieved by the final order” may petition for review.
The Vermont Board is not a “party aggrieved by the final order” because the Vermont Board petitions for review of the Second Report and Order.
2. The Ex Parte Letter Submitted by the Vermont Board Failed to Comply with Regulations Issued by the Commission.
The Vermont Board also contends that it participated in the Commission proceeding because it submitted an ex parte letter that it asserts was erroneously excluded from the administrative record. The Commission did not include the letter in the administrative record because the Vermont Board electronically submitted notice of the letter during the “Sunshine” period when no communication was allowed with the Commissioners. See
We have discretion to correct the administrative record to “supply any omission from the record or correct a misstatement.”
The regulations of the Commission provide that ex parte presentations are allowed during the permit-but-disclose period of the agency proceeding.
The Vermont Board concedes that its electronic submission on March 4 failed to include a cover letter to explain that it provided notice for the March 3 ex parte letter. There was no way for the Commission to discern that the letter electronically filed on March 4 disclosed an ex parte communication that timely had been submitted to the five Commissioners. Because the electronic submission failed to identify that it disclosed an ex parte letter submitted on March 3, it is not
We deny the motion to supplement the record with the ex parte letter. “We must give substantial deference to an agency‘s interpretation of its own regulations,” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S. Ct. 2381, 1286 (1994), and the Commission was not “arbitrary and capricious” when it excluded the letter from the administrative record,
3. No Exception Exists to Allow the Vermont Board to Petition for Review of the Order.
The Vermont Board alternatively argues that, even if it did not participate in the proceedings, it is a party entitled to petition for review of the Order for two reasons. First, the Vermont Board contends that it is a “party aggrieved” because it is subject to the Order. Second, the Vermont Board argues that “party status is not
The argument that the Vermont Board may petition for review because it is subject to the Order fails because the Vermont Board misunderstands the scope of our jurisdiction. The Hobbs Act confers the courts of appeals with subject matter jurisdiction to review the orders of administrative agencies. “Since petitioners were never parties to the rulemaking proceedings, this court simply does not have jurisdiction over their claim.” Gage v. U.S. Atomic Energy Comm‘n, 479 F.2d 1214, 1218 (D.C. Cir. 1973). The cases cited by the Vermont Board are inapposite because they involve the extension of personal jurisdiction, Gilchrist v. Gen. Elec. Cap. Corp., 262 F.3d 295, 300–01 (4th Cir. 2001), R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 955 (4th Cir. 1999), or the relaxation of prudential standing requirements, Devlin v. Scardalletti, 536 U.S. 1, 7–8, 122 S. Ct. 2005, 2009–10 (2002). These cases do not allow a court to expand the statutory grant of subject matter jurisdiction to review an agency decision.
The argument that a petitioner need not be a party when the petitioner challenges the authority of an administrative agency runs contrary to our precedent. We have held that “[a] ‘party aggrieved’ is one who participated in the agency proceeding.” Ala. Power Co., 311 F.3d at 1366. In support of its argument, the Vermont Board cites two decisions from the Fifth Circuit, see Wales Transp., Inc. v. ICC, 728 F.2d 774, 776 n.1 (5th Cir. 1984); Am. Trucking Ass‘ns, Inc. v. ICC, 673 F.2d 82, 84 n.4 (5th Cir. 1982), but we are bound by our decision that a petitioner must be a “party aggrieved” without regard to the type of challenge the petitioner seeks to bring. Ala. Power Co., 311 F.3d at 1366; cf. Baros v. Tex. Mexican Ry. Co., 400 F.3d 228, 238 n.24 (5th Cir. 2005) (stating that the exception to party status discussed in American Trucking Ass‘ns has been “squarely rejected by some of our sister circuits“); see also Erie-Niagara Rail Steering Comm. v. Surface Transp. Bd., 167 F.3d 111, 112 (2d Cir. 1999) (concluding that the discussion in American Trucking Ass‘ns is dictum and Wales Transportation erroneously relied on American Trucking Ass‘ns). The Vermont Board is not a “party aggrieved” entitled to petition for review of the Order by the Commission.
We grant the motion by the Commission to dismiss the petition of the Vermont Board. Neither the participation of the Vermont Board in the First Report and Order nor the ex parte letter that was procedurally deficient confer party status on the Vermont Board, and no exception excuses the failure of the Vermont Board to participate in the proceedings of the Commission. We lack jurisdiction to consider the petition filed by the Vermont Board.
B. The State Utility Regulators May Proceed As an Intervenor.
C. The State Consumer Advocates Have Standing to Petition for Review.
The Constitution of the United States limits the subject matter jurisdiction of federal courts to “Cases” and “Controversies.”
The Carriers move to dismiss the State Consumer Advocates for failure to establish associational standing. The Carriers contend that the State Consumer Advocates cannot establish that at least one of their members has suffered particularized injury and only the member agencies of the State Consumer Advocates have the authority to petition for review. The State Consumer Advocates argue that we need not address this argument because they have standing on an alternative ground.
The State Consumer Advocates argue that they need not rely on associational standing because they are a consumer of wireless telecommunications services that receives bills. The affidavit submitted by the State Consumer Advocates from the President of their organization stated, “NASUCA is itself a consumer of telephone services, both wireline and wireless. It presently has wireline service with Verizon and AT&T and wireless service with Verizon Wireless. All of the monthly bills for service received by NASUCA contain line
The State Consumer Advocates have established “general factual allegations of injury resulting from the defendant‘s conduct.” Lujan, 504 U.S. at 561, 112 S. Ct. at 2136. The State Consumer Advocates contend that, because the preemption of the Commission affects the ability of the states to regulate the disclosure of charges on consumer wireless bills, the Order adversely affects the interests of the State Consumer Advocates as a consumer of wireless service. The complaints of the State Consumer Advocates are redressable by granting the petition and vacating the Order of the Commission. That disposition would allow the states to require or prohibit the use of line items by wireless service providers, which the State Consumer Advocates contend would protect consumers from fraud.
The Carriers argue that the State Consumer Advocates may not rely on their status as a consumer of wireless service as a basis for standing because the State Consumer Advocates “chose not to base [their] right to seek review on [their] own receipt of phone bills” in the petition for review. We disagree. When ruling on motions to dismiss for lack of standing, federal courts may consider affidavits and other factual materials in the record. See Lujan v. Nat‘l Wildlife Fed‘n, 497 U.S. 871, 881, 110 S. Ct. 3177, 3185 (1990) (considering affidavits submitted in response to a motion for summary judgment to establish standing); FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 233, 110 S. Ct. 596, 609 (1990), overruled in part on other grounds by City of Littleton v. Z.J. Gifts D-4, LLC, 541 U.S. 774, 124 S. Ct. 2219 (2004) (“[S]tanding . . . must affirmatively appear in the record.” (internal quotations and citations omitted) (emphasis added)). Because the State Consumer Advocates have established standing to petition for review as a consumer of wireless service through the affidavit of their President, we deny the motion by the Carriers. We next turn to the merits of the petitions for review filed by the State Utility Regulators and the State Consumer Advocates.
D. The Commission Exceeded Its Authority When It Preempted State Regulation of Line-Item Billing Under Section 332(c)(3)(A).
“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land[,] . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
“Where Congress has directed an administrator to exercise his discretion, his judgments are subject to judicial review only to determine whether he has
Federal law may preempt state law in three ways. First, express “[p]re-emption occurs when Congress, in enacting a federal statute, expresses a clear intent to pre-empt state law.” La. Pub. Serv. Comm‘n, 476 U.S. at 368, 106 S. Ct. at 1898. Second, conflict preemption occurs “when there is outright or actual conflict between federal and state law.” Id. Third, field preemption occurs “where compliance with both federal and state law is in effect physically impossible.” Id. “[T]he categories of preemption are not rigidly distinct . . . field pre-emption may be understood as a species of conflict pre-emption.” Crosby v. Nat‘l Foreign Trade Council, 530 U.S. 363, 373, 120 S. Ct. 2288, 2294 (2000); see Caleb Nelson, Preemption, 86 Va. L. Rev. 225, 262 (2000).
“When we consider issues that arise under the Supremacy Clause . . . , we start with the assumption that the historic police powers of the states are not superseded by federal law unless preemption is the clear and manifest purpose of Congress.” Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1122 (11th Cir. 2004). “Although the Constitution makes a few of the federal government‘s powers exclusive, the states retain concurrent authority over most of the areas in
In the Second Report and Order, the Commission preempted state regulation of line-item billing based on the express language of the Communications Act. See 20 F.C.C.R. at 6462–63 ¶ 30, 6466 ¶ 35. The Commission concluded that the language of section 332(c)(3)(A) of the Communications Act “‘prohibit[s] states from prescribing, setting or fixing rates’ of wireless service providers.” Id. at 6462
“When a court reviews an agency‘s construction of the statute which it administers, it is confronted with two questions.” Chevron U.S.A., 467 U.S. at 842–43, 104 S. Ct. at 2781. First, we consider “whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, . . . the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. To determine if “Congress has directly spoken to the precise question at issue,” id., courts interpret the language of the statute and apply traditional cannons of statutory construction, see MCI Telecomms. Corp., 512 U.S. at 229, 114 S. Ct. at 2231. “The construction put on a statute by the agency charged with administering it is entitled to deference by the courts, and ordinarily that construction will be affirmed if it has a reasonable basis in law[, b]ut the courts are the final authorities on issues of statutory construction.” SEC v. Sloan, 436 U.S. 103, 118, 98 S. Ct. 1701, 1712 (1978) (internal citations and quotations omitted); see also Chevron U.S.A., 467 U.S. at 842–43, 104 S. Ct. at 2781–82.
The Commission premised the preemption of state regulation of line item billing on the language of section 332(c)(3)(A). That provision states that “no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services.”
The language of section 332(c)(3)(A) unambiguously preserved the ability of the States to regulate the use of line items in cellular wireless bills. Although the term “rates charged” is not defined in the Communications Act, the meaning of this term is clear in this context. A straightforward reading of the complementary phrases “regulate entry of or the rates charged” and “other terms and conditions,”
A “rate,” as defined by the Oxford English Dictionary, is “[t]he amount of a charge or payment . . . having relation to some other amount or basis of calculation.” Oxford English Dictionary (2d ed. 1989). Other dictionaries define a “rate” as “[a]n amount paid or charged for a good or service,” Black‘s Law
The prohibition or requirement of a line item affects the presentation of the charge on the user‘s bill, but it does not affect the amount that a user is charged for service. State regulations of line items regulate the billing practices of cellular wireless providers, not the charges that are imposed on the consumer. Because the presentation of line items on a bill is not a “charge or payment” for service, Oxford English Dictionary (2d ed. 1989), it is an “other term or condition” regulable by the states,
The Commission argues that the Second Report and Order is consistent with
In the Second Report and Order, the Commission failed to follow the common definition of “rates” employed in its previous decisions. The Commission has stated that “‘rate’ is defined in the dictionary as an ‘amount of payment or charge based on some other amount.‘” Sw. Bell Mobile Sys., Inc., 14 F.C.C.R. at 19,901 ¶ 19. The Commission has also ruled that the phrase “rates charged” “‘prohibit[s] states from prescribing, setting or fixing rates’ of wireless service providers.” Cellular Telecomms. Indus. Ass‘n v. FCC, 168 F.3d 1332, 1336 (D.C. Cir. 1999) (quoting Pittencrieff Commc‘ns., Inc., 13 F.C.C.R. 1735, 1745 ¶ 20 (1997)).
Until now, the Commission has consistently applied the distinction between “rates” and “other terms and conditions” to interpret whether a regulation amounts
The Commission, by contrast, has defined a line item on a bill as something for which “a consumer receives no tangible product.” First Report and Order, 14 F.C.C.R. at 7531 ¶ 61. According to the definitions espoused by the Commission,
The Commission also failed adequately to explain its conclusion that a line item falls within the definition of “rates” because the use of line items has an alleged direct effect on rates. In the Second Report and Order, the Commission explained that “requiring or prohibiting the use of line items” has a “direct effect” on the ability of wireless service providers to structure rates, but other state regulations have an “indirect effect . . . on a company‘s behavior.” Second Report and Order, 20 F.C.C.R. at 6466 ¶ 34 (quoting Wireless Consumers Alliance Order, 15 F.C.C.R. 17,021, 17,034 ¶ 23 (2000)). The Commission requested further comments because it “recognize[s] that the line between prohibited and permissible state regulations of line items may not always be clear.” Id. (internal quotations and citations omitted). The attempt by the Commission to distinguish the regulation of line items on cellular wireless bills from the imposition of universal
That the prohibition or requirement of a line item has some effect on the charge to the consumer does not necessarily place a regulation within the meaning of “rates” and outside the ambit of state regulation of “other terms and conditions.” The Commission argues that rate regulation includes the regulation of “rate structures” and “rate levels,” id. at 6463 ¶ 31, but rate levels and rate structures are still components of “rates.” The inclusion of the specific components “rate levels” or “rate structures” within the general term “rates” does not magically expand the authority of the Commission beyond what the statutory language allows.
The Commission has disavowed the argument that a regulation with some effect on prices is per se rate regulation under section 322(c)(3)(A). The Commission, for example, has upheld state regulations that require wireless service providers to contribute to the state-wide universal service fund as an “other term or condition.” Pittencrieff, 13 F.C.C.R. at 1742 ¶¶ 42–43, aff‘d sub nom. Cellular Telecomms. Indus. Ass‘n, 168 F.3d at 1332. The Commission, in Pittencrieff, expressly rejected the argument that the imposition of a universal service fee was rate regulation because it “impacts the rates that a [wireless service] provider charges its customers.” Id. at 1745 ¶ 20. The Commission stated, “The Commission has found the ‘rates charged by’ language to prohibit states from
We can discern no logical distinction between what the Commission terms a “direct effect” caused by the regulation of line items and the alleged “indirect effect” caused by the imposition of universal service charges. Second Report and Order, 20 F.C.C.R. at 6466 ¶ 34. The Commission fails to explain why the imposition of universal service charges, which increases the amount a consumer is charged, is more attenuated to the amount a consumer pays for service than the regulation of line items, which affects the presentation of matters on a bill. The Commission is unable to articulate a logical distinction between these two
The Commission also contends that the Second Report & Order “is consistent with prior Commission statements equating ‘line items’ with ‘rate elements.‘” Second Report and Order, 20 F.C.C.R. at 6463 ¶ 30 & n.83. In support of this argument, the Commission relies on its decision in Federal-State Joint Board of Universal Service, 17 F.C.C.R. 24,952 (2002). In that decision, the Commission ruled that incumbent local exchange carriers may “recover their federal universal service contributions costs through a separate line item” as long as carriers do not “include[] a mark-up above the relevant contribution factor.” Id. at 24,970 ¶ 31.
This argument fails for at least two reasons. First, Federal-State Joint Board is inapposite because the authority of the Commission to regulate federal universal service contribution derives from section 254(d) of the Communications Act, not section 332(c)(3)(A). The decision in Federal-State Joint Board does not govern whether the regulation of line items by the states is preempted under section 332(c)(3)(A). Compare
In the Second Report and Order, the Commission also misconstrued the legislative history of section 332(c)(3)(A). See Second Report and Order, 20 F.C.C.R. at 6464 ¶ 32. The House Committee Report regarding section 332(c)(3)(A) explained that “other terms and conditions” of wireless service, which are regulated by the states, “include such matters as customer billing information and practices and billing disputes and other consumer protection matters.” H.R. Rep. No. 103-111, at 211 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 588. Because “our sole concern is the intent of Congress . . . , it is necessary to look to the administrative and legislative background of the enactment.” United States v. Zacks, 375 U.S. 59, 62, 84 S. Ct. 178, 180 (1963). Contrary to the argument of the Commission, the legislative history shows that Congress intended to leave the authority to regulate line items with the states.
The Commission dismisses this statement from the legislative history as unpersuasive because it “nowhere suggests that states may regulate rates in the
This argument is flawed for at least two reasons. First, the Second Report and Order belies the contention by the Commission that line items are not a “billing practice.” In the Order, the Commission expressly classifies the use of line items as a “billing practice.” Id. Second, although we agree that the “substance, not merely the form” of a regulation governs whether it is rate regulation, id., the Commission does not articulate the “substance” that distinguishes whether a regulation of line items is a billing practice or rate regulation. The prohibition or requirement of the use of line items on wireless bills involves “billing information and practice,” not “rates.”
The interpretation of the term “rates” urged by the Commission deprives the complementary phrase “other terms and conditions” of all meaning.
The interpretation by the Commission that the prohibition or requirement of line items is expressly preempted by the language of section 332(c)(3)(A) is not supported by the common definition of “rates.” A “rate,” as defined in the
IV. CONCLUSION
We GRANT the motion to dismiss the petition of the Vermont Board for lack of subject matter jurisdiction. We DENY the motion by the Vermont Board to correct the administrative record. We also DENY the motion by the Carriers to dismiss the petition of the State Consumer Advocates for lack of standing. Because the Communications Act allows the states to regulate line item billing for wireless services, we GRANT the petitions for review filed by the State Consumer Advocates and the State Utility Regulators and VACATE the Second Report and Order.