The FCC has authority to reject a telecom carriers’ tariffs, even...

tariffs for not using an “add back” in setting rates it charged for network access. In a decision written by Judge Thomas Griffith, the court said the accounting issue was complex but the decision was “relatively straightforward because, at its core, petitioners’ challenge cannot overcome the broad delegation of power Congress has given the Federal Communications Commission to suspend petitioners’ rates and determine whether they are ‘just and reasonable.'” Verizon had complained it was unreasonable for the FCC to require that it revise its 1993 and 1994 tariffs to comply with the add-back rule several years after the tariffs were instituted. Griffin concluded: “But Congress has expressly authorized the FCC to do what petitioners urge it cannot: suspend petitioners’ tariffs upon their filing, subject the petitioners to an accounting order to track revenue earned under the tariffs, and determine at a later date whether petitioners’ tariffs contain ‘just and reasonable’ rates.” The court concluded that the FCC “reasonably applied its ‘quasi-legislative authority.'” The “add- back” accounting procedure originally was a feature of rate- of-return regulation and involved “adding back” refunds for prior excess earnings into calculations for current earning periods. The more recent application of add-back was used by the FCC under price cap regulation, which replaced rate-of- return. The ILECs had applied add-back in different ways, depending on how it affected their finances, the court also noted: “We fail to see how the FCC’s determination on add- back was arbitrary. Given the conflicting uses of add-back by various LECs depending upon whether add-back would contribute to their financial well-being, the Commission sought to take a uniform, fair position on add-back and reasonably chose the position most consistent with its price cap regime.” Chief Judge Douglas Ginsburg and Judge Judith Rogers also were on the panel.